FCC, Net Neutrality Lose Out to Verizon in District Court Ruling

By Michelle Maisto  |  Posted 2014-01-14
court ruling

FCC, Net Neutrality Lose Out to Verizon in District Court Ruling

The U.S. Court of Appeals for the District of Columbia has released an 81-page judgment on the case of Verizon vs. the Federal Communications Commission (FCC), siding with Verizon. Verizon sued the FCC in 2011, challenging its Open Internet Order, which insisted that all Internet traffic must be treated equally—a practice also popularly referred to as net neutrality.

"Our task as a reviewing court is not to assess the wisdom of the Open Internet Order regulations, but rather to determine whether the Commission has demonstrated that the regulations fall within the scope of its statutory grant of authority," the Court wrote in the Jan. 14 judgment.

It continued: "The Commission has established that section 706 of the Telecommunications Act of 1996 vests it with affirmative authority to enact measures encouraging the deployment of broadband infrastructure. … 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. 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."

A Verizon Policy Blog post said no side got what it entirely wanted.

The court rejected Verizon's position that Congress doesn't give the FCC jurisdiction over broadband access and upheld the commission's disclosure rules. However, the court also decided the FCC can't "impose last century's common carriage requirements on the Internet and struck down rules that limited the ability of broadband providers to offer new and innovative services," wrote Randal Milch, general counsel and executive vice president of public policy, law and security at Verizon.

Milch added that what hasn't changed is "consumers' ability to access and use the Internet as they do now."

Net Neutrality Suffers a Hit

Net neutrality supporters are calling the decision a blow to consumer freedoms.

The court's decision is "poised to end the free, open and uncensored Internet that we have come to rely on," Michael Copps, a former FCC commissioner and a special advisor to Common Cause, a "nonpartisan" organization that pushes for "accountable government for the public interest," said in a Jan. 14 statement.

"Without prompt, corrective action by the Commission to reclassify broadband," Copps added, "this awful ruling will serve as a sorry memorial to the corporate abrogation of free speech."

Harold Feld, senior vice president of consumer advocacy group Public Knowledge, said that the group was, of course, "disappointed" by the decision.

"The Court has taken away important FCC flexibility, and its opinion could complicate FCC efforts to transition the phone network to IP technology, promote broadband build-out and other matters," Feld said in a Jan. 14 statement.

He added that the court did, however, uphold the commission's authority to regulate broadband.

"To exercise that authority, the FCC must craft open Internet [protections] that are not full-fledged common carrier rules," said Feld. "Alternatively, if the FCC needs broader authority, it can classify broadband as a title 2 common carrier service. Both of these are viable options."

FCC, Net Neutrality Lose Out to Verizon in District Court Ruling

Tom Wheeler, chairman of the FCC, suggested the fight wasn't over yet. 

"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," Wheeler said in a statement.

"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," Wheeler concluded.

Commissioner Ajit Pai announced that he was resigned to accept the court's decision.

"For the second time in four years, the D.C. Circuit has ruled that the FCC exceeded its authority in attempting to regulate the Internet. It is time for the Commission to take no for an answer," Pai said in a statement.

"Unless Congress acts, we should stay our hand and refrain from any further attempt to micromanage how broadband providers run their networks," he continued. "We should focus on removing regulatory barriers to broadband deployment, not imposing unnecessary rules that chill infrastructure investment."

The net neutrality argument recently re-entered the popular dialogue with AT&T's Jan. 6 introduction of Sponsored Data, an offer that lets businesses pay for consumers' data usage in specified instances. Public Knowledge, the Free Press and other groups were quick to call the offer a violation of net neutrality.

Matt Wood, policy director of the Free Press, called Sponsored Data "discriminatory" and "not how the Internet is supposed to work."

The American Enterprise Institute (AEI), a nonprofit organization said to focus on "expanding liberty" and "strengthening free enterprise" hosted a discussion Jan. 13, in anticipation of the court's response, during which its panelists largely defended Sponsored Data and suggested that it was in line with many other industry offers.

"There haven't been too many good days for free marketeers over the past five years, but today was one of them," columnist James Pethokoukis wrote on the AEI site Jan. 14.

Pethokoukis added that the ruling "will help enable the global computer network's continued evolution free of government meddling."

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