fcc_newAn appeals court today vacated two of three Net Neutrality guidelines put in place by the FCC in 2010 in its Open Internet Order, potentially paving the way for broadband providers to offer premium classes of service that prioritize certain types of traffic. The court did not totally reject the guidelines, however, arguing instead that the FCC failed to demonstrate that it was appropriate for the commission to impose those guidelines.

The ruling was made in response to a challenge to the Open Internet Order filed by Verizon and in large part it is a victory for broadband providers including telcos and cable companies.

The Open Internet Order had three main provisions:

  • Fixed and mobile operators were required to disclose information about network management policies to consumers, content providers and device manufacturers
  • Traffic blocking was prohibited with stricter guidelines for wired broadband providers than for wireless service providers
  • “Unreasonable” traffic discrimination such as paid prioritization was prohibited

In today’s order, the court upheld the disclosure requirement but rejected (at least temporarily) the anti-discrimination and anti-blocking rules.

The court argued that the commission failed to establish that the two rules do not impose “common carrier” obligations, building on previous rulings that have established the notion that broadband Internet traffic is not a common carrier service to be regulated like traditional voice services. The court essentially said that if anti-blocking and anti-traffic discrimination requirements were common carrier obligations, the FCC does not have the authority to impose them – and that the FCC failed to prove that anti-blocking and anti-traffic discrimination requirements were not common carrier requirements.

In a victory for the FCC, however, the court rejected Verizon’s argument that the commission did not have the authority to oversee broadband service. The FCC claimed this authority under Section 706 of the 1996 telecommunications act, which stated that the commission “shall encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans.” Today’s decision argues that “the commission has reasonably interpreted Section 706 to empower it to promulgate rules governing broadband providers’ treatment of Internet traffic.”

In a statement FCC Chairman Tom Wheeler emphasized that aspect of today’s ruling. “The D.C. Circuit has correctly held that ‘Section 706 . . . vests [the Commission] with affirmative authority to enact measures encouraging the deployment of broadband infrastructure’ and therefore may ‘promulgate rules governing broadband providers’ treatment of Internet traffic,’” said Wheeler.

Wheeler added that the commission would consider appealing the decision and that he is “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.”

In another partial victory for the FCC, the court ruled that the commission had provided evidence that the specific rules at issue would “preserve and facilitate the ‘virtuous circle’ of innovation that has driven the explosive growth of the Internet.”

The court’s decision won’t impact consumers’ ability to access and use the Internet, said Randal Milch, Verizon’s executive vice president of public policy and general counsel in a statement.

“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,” said Milch. “Verizon has been and remains committed to the open Internet, which 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.”

Our thanks to Giga Om for sharing today’s Open Internet Order ruling on Scribd.