On January 14, 2014, a three-judge panel of the US Court of Appeals for the DC Circuit largely struck down the December 2010 Open Internet Order of the Federal Communications Commission (FCC) that would require the owners of the nation’s broadband infrastructure — companies like Comcast and Verizon — to administer their networks in a manner that does not hinder consumers’ choice of Internet content. This concept is also known as “net neutrality.” The opinion is available here (Verizon v. FCC, No. 11-1355).
The Court held that the FCC has authority to impose net neutrality requirements on regulated telecommunications companies, but that the bulk of the Open Internet Order exceeds the bounds of that authority. That is, the FCC has not classified broadband providers as regulated telecommunications companies — “common carriers” — and thus cannot impose net neutrality rules on them.
The Court reviewed the Open Internet Order in three parts:
- A “transparency” rule that requires broadband providers to disclose clearly to consumers the way in which their facilities are managed and what type of service performance the consumer can expect.
- An “anti-blocking” rule that would prevent broadband providers from blocking consumer access to lawful Internet content absent some need to protect the network.
- An “anti-discrimination” rule that would prevent broadband providers from favoring their own content, or content that they somehow prefer, over the content that consumers attempt to access from third parties, again absent some need to protect the network.
The DC Circuit struck down the latter two rules.
The panel’s decision turned on its answer to this question: Are broadband providers “common carriers” that can be regulated in the way that they operate networks? The Court reviewed the FCC’s historical treatment of cable modems and Digital Subscriber Line service in which it found that they are not “common carrier” services subject to telecommunications regulation. The FCC did not change this conclusion in the Open Internet Order. Instead, it stated that the new rules are not “common carrier” requirements. The Court rejected that idea, explaining that the anti-blocking and anti-discrimination rules are classic common carrier regulations similar to rules that apply to telephone networks. The transparency rule, by contrast, simply regards consumer disclosure and, according to the DC Circuit, lawfully may be imposed on broadband providers.
FCC Chairman Wheeler has reacted to the decision by stating that the agency “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.”
The Court’s decision means that the FCC cannot adopt net neutrality rules without changing the regulatory classification of broadband providers and treating them as common carriers. The partial dissent of one panel member, Judge Silberman, would seem to discourage that course, arguing that the Commission must find not only that the providers are common carriers but also that they have monopoly control over the broadband network. We await the FCC’s decision whether to appeal this decision to the US Supreme Court, open a new proceeding, or do nothing in hopes that the promised new 2015 legislation solves the net neutrality issue for once and all.