In a major blow to proponents of net neutrality, a federal appeals court on Tuesday struck down part of the Federal Communications Commission's rules that require internet service providers to treat all web traffic equally.
By a 2-1 ruling, a panel of the U.S. Court of Appeals for the District of Columbia Circuit said the FCC had overstepped its authority in trying to prevent ISPs from discriminating against content — by, say, charging different rates for different speeds, or by blocking content outright. Specifically, the panel said the FCC had erred in the way it had chosen to classify ISPs.
The distinction hinges on something known as "common carrier" regulations, which apply to private companies that provide infrastructure services in low-competition fields. They're essentially a check against infrastructure monopolies.
Telecom companies had long been subject to common carrier regulations. But with the rapid evolution in the industry over the past few decades, the FCC, with newfound authority via the 1996 Telecommunications Act, essentially reclassified ISPs as "information services" — which are exempt from common carrier regulations — as opposed to "telecommunications services," which are not. It's a minor distinction, but an important one that formed the backbone of Tuesday's ruling.
Here's the relevant passage:
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. Because the Commission has failed to establish that the anti-discrimination and anti-blocking rules do not impose per se common carrier obligations, we vacate those portions of the Open Internet Order. [PDF]
In other words, it's not that the FCC can't impose anti-discrimination regulations on ISPs; it's that they can't do so unless they classify ISPs as "telecommunications services," which would then subject them to common carrier regulations.
The court's ruling is exactly what some net neutrality advocates feared when the FCC announced its Open Internet Order in 2010.
Courts have held that the FCC has the power to classify ISPs as it sees fit. But under pressure from skeptics on Capitol Hill and the powerful telecom industry, the FCC controversially tried to split the difference with the 2010 order: It chose not to reclassify content providers as common carriers, but argued it could still regulate them as such.
Hence, the Media Access Project bemoaned that it could not "support the watered-down, loophole-ridden option that the FCC appears to have chosen." Some 80 net neutrality advocates signed a joint letter to the FCC warning that the agency had taken an "unnecessary risk" by going halfway and basing its rules on untested legal ground.
So where does net neutrality go from here?
The FCC could appeal the decision — which it says it may do. Then it would be up to the Supreme Court to decide whether, absent reclassifying ISPs as common carriers, the agency can still subject them to anti-discrimination regulation.
Since the appeals court reaffirmed the FCC's general authority to regulate ISPs, the FCC could also rewrite its rules to ensure they hold legal muster. Or the agency could just do what many reformers suggested in the first place and classify broadband as a common carrier.
Here's Gigaom's Jeff John Roberts on that point:
Going into the case the FCC's ability to regulate broadband providers was not clear cut and some speculated the court would reject the Open Internet Order, which defined the FCC's network neutrality rules entirely. Instead, the court decided the case on technical grounds, ruling the agency had to go back and implement formal common carrier standards if it wanted to make ISPs act like common carriers — meaning the rules are dead for now but could return in the future. [Gigaom]
New FCC Chairman Tom Wheeler has sent mixed signals on the issue, so its unclear exactly how his agency will respond. Either way, net neutrality lives to fight another day.