The long-running litigation by Verizon against the FCC regarding the regulator’s rules on Net Neutrality has finally come down to an Appeals Court decision, finding in favor of Verizon.
The ruling, which has been posted in full this morning, strikes down two of the FCC’s key rules on Net Neutrality as mandated by previous head Julius Genachowski beginning in 2010, which stipulated that all ISPs whether wired or wireless were required to allow all traffic to travel freely without additional stipulations on access or content. The FCC was also found to not have sufficient authority to regulate broadband providers after years of disputes on the matter in the decision.
Verizon filed litigation in 2010 against the the FCC shortly after the rules went into effect, arguing that the net neutrality rules as enforced were an example of excessive regulation and also argued against the rules that governed its 700Mhz C-block spectrum that it currently operates on, all under the argument that wireless networks needed to be free from the common carrier rules to actively manage access in order to provide adequate service. Below, the key statement from the appeals court decision:
“Even though the Commission has general authority to regulate in this arena, it may not impose requirements that contravene express statutory mandates. 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.”
With the ruling, this means that internet service providers would now be free to prioritize traffic to any products or services of the providers choice instead of allowing all equal access, which could have an even greater impact on services such as third-party VoIP services and applications, messaging apps and content streaming portals regardless of network type.
The court’s argument for striking down the anti-discrimination and anti-blocking rules also centered around upstart providers such as Google Fiber providing enough marketplace competition to keep entrenched providers from discriminating against competing products and services.
However, in the interest of not impeding innovation with the above decision in regards to the anti-blocking and anti-discrimination rules, the court may have made things worse for smaller scale operations that may not have the resources to enter into arrangements with ISPs for priority network access, as it risks creating a tiered system of access reserved for the largest companies at the expense of smaller competitors, as the upstart ISPs do not have the footprint necessary to ensure the competition perceived by the court.
The next few months following this decision will be key in determining what the FCC and ISPs decide to do to address the decision. The FCC has yet to release an official statement on the decision.
Update: Newly installed FCC Chief Tom Wheeler has released the following statement and has confirmed that the agency is looking at all options, including an appeal which would be sent to the Supreme Court:
“I am committed to maintaining our networks as engines for economic growth, test beds for innovative services and products, and channels for all forms of speech protected by the First Amendment. We 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”
All is not lost for Net Neutrality either, as the appeals court left enough latitude in its decision to allow the FCC to rewrite the rules completely, as well as the possibility of Congress granting the FCC the power to directly regulate broadband providers by writing new laws, though today is just the first step in what will prove to be a long, drawn out process to determine the state of Net Neutrality in the US.
Update 2: Verizon has released its own statement on the outcome of the case, posted below.
Earlier today, the D.C. Circuit issued its much-anticipated decision in Verizon v. FCC. The court rejected Verizon’s position that Congress did not give the FCC jurisdiction over broadband access. At the same time, the court found that the FCC could not impose last century’s common carriage requirements on the Internet, and struck down rules that limited the ability of broadband providers to offer new and innovative services to their customers. The Court upheld the Commission’s disclosure rules.
One thing is for sure: today’s decision will not change consumers’ ability to access and use the Internet as they do now. The court’s decision will allow more room for innovation, and consumers will have more choices to determine for themselves how they access and experience the Internet. Verizon has been and remains committed to the open Internet that provides consumers with competitive choices and unblocked access to lawful websites and content when, where, and how they want. This will not change in light of the court’s decision.
We look forward to working with the FCC and Congress to keep the Internet a hub of innovation without the need for unnecessary new regulations that seek to manage the explosive dynamism of the Internet.
It should be noted that the statement openly contradicts its intentions, as now Verizon is free to prioritize its own services over those of its many competitors without any repercussions. Time will tell whether Verizon will actually live up to its statement or become yet another example of lipservice by a telecom provider.