DC Federal Court Upholds FCC Net Neutrality Rules

The FCC and consumer advocates for Net Neutrality won a critical legal victory this week when a federal appellate court upheld regulations which require Internet Service Providers (ISPs) treat all internet traffic equally.  The court ruling comes as a win for the Obama Administration which has championed net neutrality throughout the legal process, and opens the door for the FCC to aggressively regulate the manner in which online content is conveyed to consumers.

FCC Internet Regulations Challenged in Federal Court

As part of an ongoing initiative by President Obama’s administration to impose net neutrality on large ISP companies, the Federal Communications Commission (FCC) recently passed a series of regulations marketed as consumer protection actions.  The FCC rules issued outright bans on blocking or slowing down internet websites for any reason, and also forbids ISPs playing favorites with sites they have a contract or professional relationship with.  These set or rules, which can be enforced by FCC investigation, are designed to prevent ISPs from charging consumers based on bandwidth usage (which most notably would affect online video streaming services such as Netflix or Hulu), or forcing customers to pay extra for access to certain websites which the ISP does not have a relationship with.

The FCC’s rules, which will ensure that for the foreseeable future the transmission of internet content will be treated equally regardless of what website or service provides the content, are contingent on the agency classifying ISPs as telecommunications providers, which allows the government to treat them with the same regulatory authority as telephone companies.  Previously ISPs had been classified as broadband providers under a statute which offered them more protection from federal regulation, effectively keeping the FCC from instituting sweeping rules.   Unlike broadband providers, telecommunications providers can be aggressively regulated by the federal government, and the FCC’s reclassification has granted the agency the necessary authority to impose net neutrality rules.

Several ISPs, including AT&T, Verizon, and Comcast, filed a lawsuit challenging the FCC by alleging the agency overstepped its constitutional authority by reclassifying the service, and asked the court to overturn the regulations. 

DC Federal Court Supports FCC’s Net Neutrality Rules

In a divided, and lengthy, 3 – 2 opinion (available here), the DC Court of Appeals upheld the FCC’s regulations by finding the agency had the discretion to reclassify ISPs at it saw fit.  The opinion, which is the third over the past seven years on the issue of net neutrality, finally gives the FCC the net neutrality victory it has been seeking in federal court during the Obama Administration.  Prior court rulings had vacated FCC attempts to treat broadband providers like telecommunications providers, leading the agency to reclassify ISPs before enacting regulations which prevent providers from altering price structures and services based on the type or source of internet content.

ISPs argued that the FCC did not sufficiently justify its decision to reclassify them as telecommunications providers, but the majority opinion disagreed and stated that the agency had demonstrated sufficient legal argument to earn judicial deference to its decision making.  With the majority finding adequate reason to defer to the FCC on the matter of reclassification, it found that the agency acted within its constitutional authority in passing the net neutrality rules. As an alternative argument, the ISP legal team argued that the net neutrality regulations violated the First Amendment right to free speech by restricting how the companies transmitted information.  The court rejected this argument, writing that the ISPs themselves were not “speakers” because they simply provide information with very little efforts to shape or curate it.

AT & T has already promised to appeal the decision to the Supreme Court, meaning the legal battle is far from over, but the immediate effect of the net neutrality decision means that ISPs cannot institute pricing schemes which discriminate across different types of internet content.

The Future of Internet after Net Neutrality

Experts on internet and technology are split on whether the net neutrality ruling represents a positive or negative for consumers.  Proponents of net neutrality have argued the regulations protect consumers from ISP collusion and price gouging which will result in higher Internet costs and worse service.  While the immediate future will certainly look good for consumers, some investment experts have expressed concerns about allowing the federal government a greater degree of regulatory authority.  Opponents of net neutrality rules have argued that greater government intervention may prevent disadvantageous price fixing, but the benefits could come at the cost of investment into broadband services.  The potential loss of unfettered innovation could, according to some experts, ultimately hurt consumers in the long run.

Like the ultimate outcome in the net neutrality legal challenge, the net effect on internet consumers remains to be seen, but for now supporters of net neutrality and consumer advocate groups have cause to celebrate a significant victory for the FCC.  With the agency now permitted to fully regulate the ISP industry, future federal involvement will undoubtedly shape the growth of internet connectivity and transmission in the coming years.

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