Federal court rejects FCC's 'net neutrality' rules for Internet providers

Washington PostJanuary 14, 2014 

— A federal appeals court has struck down the U.S. government’s rationale for regulating broadband Internet providers, opening the door for telecom companies to exert more control over what consumers see online.

The ruling took aim at the so-called “Net neutrality” rule that required broadband companies to treat all Internet content equally. But now, a company such as TimeWarner Cable could speed up access to Disney websites for a fee, essentially creating a system that would offer the fastest service to the highest bidder.

Ultimately, critics warn, the big, moneyed firms would be favored over the small. Starting up a rival to Netflix, for instance, would be even harder if that company could pay for preferential treatment. Web companies also complained Tuesday that control over the Internet would be concentrated in the hands of a few giant telecom providers.

The “decision is alarming for all Internet users,” said Harvey Anderson, senior vice president of legal affairs for Mozilla. “Essential protections for user choice and online innovation are gone. … Mozilla strongly encourages the FCC and Congress to act in all haste to correct this error.”

The Net neutrality rule had invited a firestorm of protest by telecom firms and lawmakers who say broadband providers should be given more flexibility with their business models to help fuel the industry.

Critics say the rule was struck down by a three-judge panel at the U.S. District Court of Appeals for the District of Columbia because of a technicality. In the court’s 63-page opinion, the judges said the Federal Communications Commission overstepped its authority when it passed its Net neutrality rule in 2010. The court said the agency has the power to regulate utilities such as telephone service. But because the FCC categorized the Internet as an information service, its authority to pass regulations for the Internet is limited.

FCC can still regulate

FCC Chairman Tom Wheeler, who was sworn in late last year, said in a statement that he is considering “all available options, including those for appeal.”

He noted that the court did not completely vacate the FCC’s overall authority to regulate broadband providers. “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.

Before coming to the FCC, Wheeler had been the head of lobbying giants for the cable and wireless industries.

He recently had indicated some support for allowing wireless firms to offer priority service to companies for a fee. Under the FCC’s Net neutrality rule, broadband companies could not speed up traffic for preferred websites. But there was more flexibility given to wireless carriers, who were only banned from outright blocking sites.

Sponsored data plans

AT&T last month announced it will begin sponsored data plans that would allow a company such as Twitter to pick up a consumer’s data costs when using its social network. That arrangement could spur more use by Twitter’s customers but could also make it harder for small firms that want to compete with Twitter to get discovered.

Verizon lawyer Helgi Walker argued to the court that the broadband giant would explore similar business models.

But in a statement, the firm on Monday said it won’t substantially change the experience of its Internet service customers.

“One thing is for sure: Today’s decision will not change consumers’ ability to access and use the Internet as they do now,” said Randal Milch, Verizon’s executive vice president of public policy.”

“Verizon has been and remains committed to the open Internet which provides consumers with competitive choices and unblocked access to lawful websites and content when, where, and how they want. This will not change in light of the court’s decision,” he said.

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