Court Ruling Delivers A Huge Blow to the Internet and Net Neutrality

Oh no.  An appeals court in Washington just ruled that the FCC’s “net neutrality” rules, which prevent companies like Verizon and Comcast from favoring some type of Internet traffic over others, are invalid. In an opening passage of the court’s ruling, they write (emphasis added is our own):

That said, 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.

Further reading of the court’s decision reveal some interesting “problems” with the FCC’s “net neutrality” rules.  The main issue is whether or not these broadband providers (e.g. Verizon and Comcast) are common carriers when it comes to offering Internet access. According to the court they are not, which means the FCC cannot regulate them in the same way they do for telecommunications (even though it’s the same company offering multiple services).

This has huge implications for content providers, ISPs, and Internet.

The ruling could open the door for ISP’s to cut deals with large content providers like Disney or Netflix — to ensure that their web content is delivered faster and more reliably than other sites.  Needless to say doing that could not only restrict consumers choice but also provide a threat to smaller websites who do not have the resources (money) to pay for the “super speedy lanes” that the broadband providers create.

Despite the ruling by the court, it did acknowledge that it could see an ISP limiting access to an independent news site in favor of increasing web traffic to its own news site (or any number of other tactics to squeeze more money out of content providers and customers).

Furthermore, the Commission established that the threat that broadband providers would utilize their gatekeeper ability to restrict edge-provider traffic is not, as the Commission put it, “merely theoretical.”

In order to support its claim the FCC pointed to four prior instances in which ISPs had done just that. These involved a mobile broadband provider blocking online payment services after entering into a contract with a competing service; a mobile broadband provider restricting the availability of competing VoIP and streaming video services; a fixed broadband provider blocking VoIP applications; and, of course, Comcast’s impairment of peer-to-peer file sharing that was the subject of the Comcast Order.

And those things happened even with the “net neutrality” rules in place.  The real problem here (and one I think the court realizes as well) is with the way the law is currently written–not that the FCC’s “net neutrality” rules aren’t a good idea for consumers and the Internet at large.

We’ll see how the FCC responds to the ruling and whether they will try to appeal it or take some other measures.

Update: FCC Chairman Thomas Wheeler issued a statement and a blog post on the ruling where he says, “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.”

Let’s hope they find success with that.