Federal Appeals Court Overturns FCC’s Net Neutrality Rules

The complicated ruling affirmed that the Federal Communications Commission has authority to regulate the Internet, but shot down its so-called Open Internet Order

An appellate court panel delivered a major blow Tuesday to the Federal Communications Commission’s ability to prevent Internet service providers from favoring certain content providers, ruling that the FCC didn’t have legal authority to impose the Net Neutrality conditions it enacted.

In a complicated ruling in which one of the three judges partially agreed and partially dissented, the panel of the U.S. Court of Appeals for the District of Columbia affirmed that the FCC has authority to regulate the Internet but overturned the FCC’s so-called Open Internet Order.

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The Court cited an FCC decision against classifying companies providing broadband Internet services as part of common carrier service like telephones and instead as an information service.

“Given that the Commission has chosen to classify broadband providers in a manner that exempts them from treatment as common carriers, the Communications Act expressly prohibits the Commission from nonetheless regulating them as such,” said the opinion written by Judge David S. Tatel. “Because the Commission has failed to establish that the anti-discrimination and anti-blocking rules do not impose per se common carrier obligations, we vacate those portions of the Open Internet Order.”

The decision came down in a case in which Verizon challenged the FCC order that would have limited Internet providers from giving one Internet content provider a fast lane to consumers’ desktop and a rival, a slower lane, at least for wired Internet connections. Consumer groups and some Hollywood unions had contended that the fast track would give established web sites a major advantage and make it difficult for alternative sites to compete.

While the decision was not surprising — judges on the case repeatedly were skeptical about the legality of FCC’s regulatory schemes — it immediately drew concerns from backers of Net Neutrality.

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“We’re disappointed that the court came to this conclusion,” said Free Press president and CEO Craig Aaron in a statement. “Its ruling means that Internet users will be pitted against the biggest phone and cable companies — and in the absence of any oversight, these companies can now block and discriminate against their customers’ communications at will.”

“The order struck down today left much to be desired, but it was a step toward maintaining Internet users’ freedom to go where they wanted, when they wanted, and communicate freely online. Now, just as Verizon promised it would in court, the biggest broadband providers will race to turn the open and vibrant Web into something that looks like cable TV. They’ll establish fast lanes for the few giant companies that can afford to pay exorbitant tolls and reserve the slow lanes for everyone else.”

Public Knowledge senior VP Harold Feld said his group was disappointed, but also noted the court affirmation that the FCC has authority over the Internet.

“Nobody got what they wanted,” he said in a statement. He suggested the Court had taken away FCC flexibility in ways that could complicated future efforts by the FCC to ensure the build-out of broadband to rural areas and in other ways as well.

FCC Chairman Tom Wheeler said in a statement that the FCC will consider “all available options” concerning the ruling, including the possibility of appealing it.

“I am committed to maintaining our networks as engines for economic growth, test beds for innovative services and products, and channels for all forms of speech protected by the First Amendment,” he said. “We will consider all available options, including those for appeal, to ensure that these networks on which the Internet depends continue to provide a free and open platform for innovation and expression, and operate in the interest of all Americans.”