A federal appeals court struck down key parts of the Federal Communications Commission’s Open Internet Order in a Jan. 14 decision, ruling that the FCC’s “net neutrality” rules improperly regulate broadband providers like “common carriers” — such as providers of traditional telephone service — even though the FCC has classified broadband providers as not subject to common-carrier obligations. Importantly, however, the court held that the FCC has direct authority to impose restrictions on broadband providers as long as such rules do not amount to common carrier regulation.
The FCC’s 2010 Open Internet Order generally prohibited both “fixed” and mobile broadband providers from blocking users’ access to lawful online content and services, with fixed providers — such as cable companies — subject to tighter restrictions than mobile operators. In addition, the rules barred fixed broadband providers from “unreasonably” discriminating between different kinds of Internet traffic.
The FCC’s asserted goal was to prevent service providers from using their control of consumers’ broadband connections to prevent or discourage subscribers from using online voice, video, or other services that compete with the broadband provider’s own offerings. The Commission concluded that such efforts would impair the spread of broadband, and the FCC found preventing such impairment was one of the mandates of the 1996 Telecommunications Act. Verizon challenged the FCC’s rules as unnecessary, lacking in a statutory basis, and contrary to the Communications Act requirement that only traditional telephone companies can be subject to common carrier regulation.
In Tuesday’s decision, the U.S. Court of Appeals for the D.C. Circuit upheld the FCC’s judgments on a number of points, including that the rules were a rational policy tool to promote broadband and that the rules had a statutory basis in Section 706 of the 1996 Act, which heretofore had been characterized by the FCC as simply hortatory. However, the court concluded that the anti-blocking and anti-discrimination rules violated statutory prohibitions on imposing common carrier rules on non-carriers. The court upheld a separate rule requiring broadband providers to disclose their network management practices. Continue Reading