U.S. FCC Chairman Tom Wheeler testifies before the House Communications and Technology panel on Capitol Hill in Washington December 12, 2013.
Open Internet advocates suffered a stinging defeat on Tuesday when a federal court struck down rules designed to prevent the nation’s largest broadband service providers from charging content companies for access to Internet “fast lanes.” The ruling, which was expected, is a blow to the Federal Communications Commission’s ability to enforce “net neutrality,” the principle that Comcast, Verizon, and AT&T shouldn’t be able to favor certain Internet services at the expense of rivals. As a practical matter, the ruling by the United States Court of Appeals for the District of Columbia means that the broadband giants are now permitted to charge Netflix, Amazon and other streaming services for access to faster broadband speeds.
The principle of net neutrality was enshrined in the FCC’s 2010 Open Internet order, which boils down to three rules. First, Internet service providers (ISPs) must be transparent about how they handle network congestion; second, the ISPs are prohibited from blocking traffic such as Skype or Netflix on wired networks; third, the ISPs can’t discriminate against such services by putting them into an Internet “slow lane” in order to benefit their own competing services. In its 81-page ruling, the court upheld the transparency rule but struck down the anti-blocking and anti-discrimination rules. The verdict is a blow for President Obama’s tech policy agenda, and presents the FCC with politically difficult choices about how to proceed.
The groundwork for Tuesday’s defeat was established in 2002, when the FCC made the fateful decision to classify broadband as an “information service” not a “telecommunications service,” which would have allowed the agency to impose “common carrier” regulations prohibiting discrimination by the broadband companies. That decision meant that when the FCC established its Open Internet Rules in 2010, the agency was on shaky legal ground, as numerous experts warned at the time. “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,” wrote U.S. Circuit Judge David Tatel.
New FCC Chairman Tom Wheeler and his colleagues now face difficult decisions. The agency could choose to appeal the court’s ruling. Or the agency could decide to reclassify broadband as a telecommunications service, something that many net neutrality advocates believe the agency should have done in the first place. That, however, would trigger a major showdown between the FCC and broadband giants like AT&T and Verizon, which are extremely powerful on Capitol Hill and oppose such reclassification. Since 1998, AT&T and Verizon have spent more than $340 million lobbying members of Congress, according to the Center for Responsive Politics.
For nearly a decade, net neutrality has been the subject of an intense series of battles among broadband companies, Internet giants, consumer groups, policy experts, and the FCC itself. At present, the Internet largely adheres to net neutrality, which means that all Internet users have open access to the Internet, just like all Americans have the right to travel anywhere in the 50 states without a passport. Without this open access, which most Internet users take for granted, startups like Google, Twitter and Facebook might never have flourished, according to net neutrality advocates. Skype is a text-book example of a startup that was able to build a disruptive new communications service thanks to the net neutrality principle.