Court Rejects Equal Access Rules for Internet Providers

WASHINGTON — A federal appeals court on Tuesday threw out Federal Communications Commission rules that require Internet service providers to give all traffic equal access through their networks.

The decision could pave the way for Internet service providers like Verizon and AT&T to charge content companies — say ESPN or Facebook — to deliver their data to consumers at a faster speed.

Verizon and other big players that have spent billions of dollars building their networks have argued they should be able to manage their pipelines as they see fit. But the F.C.C. and consumer advocates have countered that content providers should have equal access to those networks to encourage competition, otherwise the richest companies will have an unfair advantage.

The court said that the commission overstepped its authority when it imposed anti-discrimination rules on Internet service providers, because it had previously exempted those companies from such regulation. But the court did acknowledge that the F.C.C. has some authority to regulate Internet service.

The decission  by the United States Court of Appeals for the District of Columbia Circuit, marks the second case the F.C.C. has lost before the appeals court over its authority to regulate Internet service providers.

It is unclear how the F.C.C. will respond. The commission could overcome the ruling by reclassifying Internet service as a utility, much like telephone or electric service. Consumer groups have advocated for that solution. But the commission has faced fierce opposition from Congress and heavy lobbying by broadband providers against doing so.

In addition, Tom Wheeler, the new F.C.C. chairman, has shown some signs that he wants to allow freedom for Internet companies to design new products and see how they work, rather than impose regulations that prohibit potentially innovative services before they are tested. Mr. Wheeler said in a statement that the court ruled that the F.C.C. does have authority to enact measures “encouraging the deployment of broadband infrastructure” and said the commission might appeal the ruling.

“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,” Mr. Wheeler said. “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.”

In a decision signed by two judges and joined in part by a third, the appeals court acknowledged that the F.C.C. has the authority “to promulgate rules governing broadband providers’ treatment of Internet traffic.”

But because, several years ago, the F.C.C. classified Internet service as an “information service” rather than as a “telecommunications service” – the designation given to telephone service – the commission’s so-called net neutrality rules were invalid.

“Given that the commission has chosen to classify broadband providers in a manner that exempts them from treatment as common carriers” – that is, telephone companies – “the Communications Act expressly prohibits the commission from nonetheless regulating them as such,” the court wrote.

“Because the commission has failed to establish that the anti-discrimination and anti-blocking rules do not impose per se common carrier obligations,” the decision said, “we vacate those portions of the Open Internet Order.

Posted in: Business