DC Circuit Overturns FCC Net Neutrality Rules, Analysis and Reactions (Updated)

DC Circuit Overturns FCC Net Neutrality Rules

For the second time in four years, we are confronted with a Federal Communications Commission effort to compel broadband providers to treat all Internet traffic the same regardless of source—or to require, as it is popularly known, “net neutrality.” In Comcast Corp. v. FCC, 600 F.3d 642 (D.C. Cir. 2010), we held that the Commission had failed to cite any statutory authority that would justify its order compelling a broadband provider to adhere to open network management practices

Thus begins, D.C. Circuit Judge Tatel’s opinion reversing the Open Internet Order.  After the Comcast ruling, the FCC all but acknowledged that it would be necessary to “reclassify broadband Internet access services as telecommunications services and apply the full suite of provisions established in Title II of the Communications Act”  ror at least pursue some “Third Way” alternative under which “the provisions of Title II would apply solely to the transmission component of broadband access service, while the information component would be subject to, at most, whatever ancillary jurisdiction may exist under Title I “.  Instead, the FCC relied  on its more general authority under Section 706 of the Telecommunications Act of 1996 to:

encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans (including, in particular, elementary and secondary schools and classrooms) by utilizing, in a manner consistent with the public interest, convenience, and necessity, price cap regulation, regulatory forbearance, measures that promote competition in the local telecommunications market, or other regulating methods that remove barriers to infrastructure investment.

In reversing the Federal Communications Commission’s Open Internet Order,  D.C. Circuit Judge Tatel stressed

Before beginning  our analysis, we think it is important to emphasize that although the question of net neutrality l but acknowledge implicates serious policy questions, which have engaged lawmakers, regulators, businesses, and other members of the public for years, our inquiry here is relatively limited.  . . [which is] not to assess the wisdom of the Open Internet Order regulations, but rather to determine whether the Commission has demonstrated that the regulations fall within the scope of its statutory grant of authority.

He then went on to hold that while Section 706 gave the FCC regulatory over the internet, they could not regulate broadband providers like common carriers absent a reclassification of broadband access service as discussed above.

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.

Below are the reactions of a number of actors and commentators in the net neutrality debate, followed by a copy of the opinion.

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President Barack Obama

The new commissioner of the FCC, Tom Wheeler, who I appointed, I know is a strong supporter of net neutrality. We live under a system in which when a court rules we have to respect that ruling initially, but the FCC is looking at all the options at their disposal, potential appeals, potential rulemaking, a variety of tools that they may have in order to continue to vindicate the notion of a free and open Internet, and I think you can feel confident that this administration will continue to support that. There are going to be a lot of technical issues about how best we can get to that. And I know that they’re still evaluating the court opinion.

The one good piece of news coming out of this court opinion was that the court did confirm that the FCC can regulate this space. They have authority, and the question now is how do they use that authority, if the old systems and rulings that they had in place were not effective in preserving net neutrality do they have other tools that would stand up to court scrutiny that accomplish the same goals.

You can expect that even though the FCC is independent, once I make the appointment I can’t meddle in the decision making there, based on my conversations with Tom Wheeler before he was appointed I’m pretty confident, and they’ve said already that they’re going to be exploring how they can continue to uphold what makes the Internet so special.

Office of the President of the United States

President Obama remains committed to an open internet, where consumers are free to choose the websites they want to visit and the online services they want to use, and where online innovators are allowed to compete on a level playing field based on the quality of their product

Thomas Wheeler, FCC Chairman

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.’ 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.”

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Craig Aaron, President & CEO – Free Press

We could pay dearly for the previous FCC’s weak political will and wishy-washy approach. But today’s ruling leaves the door wide open to a better approach. It’s not too late for the FCC to reverse its terrible decisions and repair its doomed strategy. That’s right. The FCC could make all this go away by simply reading the law correctly and reclaiming the authority it already has to protect Internet users for good. The agency had clear authority before the Bush administration abdicated it and the Obama administration failed to fix the mistake.

New FCC Chairman Tom Wheeler recently stated that the FCC must be able to protect broadband users and preserve the Internet’s fundamental open architecture. Now he has no other choice but to restore and reassert the FCC’s clear authority over our nation’s communications infrastructure.

. . . We need strong protections and sensible policies to ensure the Internet continues to thrive and prosper. But to make that happen the millions of people who have fought for Net Neutrality — and the millions more who have rallied against Web-censorship bills like SOPA/PIPA and outrages like the NSA’s unchecked spying and surveillance — rise up like never before.

Together we can fight back against these greedy Internet service providers. We can save the Internet we love. But we have to act now.

. . .  The FCC needs to assert its authority to pass real rules (that won’t get overturned in court) protecting Internet users. We need to pressure new FCC Chair Tom Wheeler to be bold and to assert that authority.

American Library Association

This ruling, if it stands, will adversely affect the daily lives of Americans and fundamentally change the open nature of the Internet, where uncensored access to information has been a hallmark of the communication medium since its inception.

Marvin Ammori

Even though the Internet touches every part of our lives, one person is to blame for potentially destroying its potential for innovation and freedom of expression: former FCC Chairman Julius Genachowski.

The court loss was even more emphatic and disastrous than anyone expected. But this defeat comes with a silver lining: It may force the new FCC chairman to act.

Even though he and his general counsel promised to reclassify Internet service, Genachowski essentially caved as the cable and phone companies unsurprisingly continued to oppose network neutrality. . . . . Those of us who had been involved with the net neutrality debate knew that, without reclassification, the flawed FCC order would never stand. But there were 100 ways it could have fallen. I thought that the court’s decision would be a baby-splitting half-lossthat could enable the FCC to wipe its hands of network neutrality and pretend everything was A-OK.

I was wrong on that point. The loss was so definitive, the powers granted to cable and phone companies so outrageous, that the FCC has a live grenade in its lap. . . . The FCC has all the power it needs to clean up the mess, simply by doing what Genachowski—who, it must be said, is a very nice guy—knew he had to do but lacked the spine for.

The bigger question is what the FCC—and advocates of network neutrality—will do.  . . . The only people who remain completely committed to network neutrality and energized to defend it are consumer groups and average Americans who love the Internet. . . . Now, they need to rebuild the coalition with tech companies serving millions of network neutrality supporters and organize the public for a fight—something that’s possible so long as Verizon and AT&T don’t exercise their newfound right to block any website they choose.

Harvey Anderson – Mozilla Foundation

The D.C. Circuit’s decision is alarming for all Internet users.  Essential protections for user choice and online innovation are gone.

Rep. Marsha Blackburn – (R-TN)

This ruling is a historic victory for America’s innovators and the free market. I have been fighting these socialistic regulations since former FCC Chairman Genachowski first proposed them. At that time, I cautioned that these egregious rules would be overturned. Instead of putting in place more rules that restrict our freedom, this administration should be working with Congress to enact solutions that encourage more innovation and job creation.” –

Art Brodsky

The idea that those companies that run big telecommunications networks shouldn’t be able to play favorites is dead, at age 80. First enacted in the 1934 Communications Act, the principle was very simple. Telephone companies shouldn’t be able to discriminate among the traffic they carry. The U.S. Appeals Court for the D.C. Circuit ruling killed it.

That was one of the guiding forces when there was a telephone monopoly with the old Bell System and AT&T. It is no less necessary now. In fact, some might say it’s more necessary because the big telephone, cable and wireless networks have so many more ways to play games than they did before.

. . . It’s for those reasons that Net Neutrality isn’t coming back. No one to whom Congress listens will defend it. Congress most listens to big companies, and there haven’t been any big opposing AT&T and Verizon (with sidekick Comcast and the rest of cable) since AT&T and Verizon bought up the “old” AT&T and MCI.

Unfortunately, you can’t count on the online industry.

Michael Copps – Former FCC Commissioner

Without prompt corrective action by the commission to reclassify broadband, this awful ruling will serve as a sorry memorial to the corporate abrogation of free speech.

Dan Gillmoor

The promise, and for several decades the reality, of the internet was decentralization: a network of networks where innovation would take place largely at the edges, not in the center. It was the antithesis of the centralized systems of the communications and media systems that prevailed in the 20th Century.

We are on the verge of losing the internet that held such promise, at least for the near and medium term. Today’s federal appeals court rulingin a suit by Verizon against the Federal Communications Commission’s already feeble network neutrality rules is only the latest evidence. Th ecourt ruling (pdf) will embolden America’s rapacious telecom companies, which assert the right to decide what bits of information get to internet users’ computers in what order and at what speed, or even if they get to our computers at all.

. . . . Really, though, you and I are the chief losers, because we will pay more and get less than we would have in a more competitive world where we, not the central authorities, make the key decisions about the services and media we want. We won’t know what innovation doesn’t happen, because it won’t be around.

The one positive impact of today’s ruling, I hope, is that it will reinvigorate a public debate about our online future. And maybe Congress and the FCC will recognize that we need a course correction.

 Stacey Higginbotham

In discarding out a huge chunk of the network neutrality rules that the Federal Communications Commission put into place in December, 2010, the U.S. Court of Appeals in Washington has thrown the way the internet works into turmoil: Instead of treating all traffic flowing over their broadband pipes equally, internet service providers can now start making deals that could prioritize some content over other traffic. And based on the options facing the FCC and the FCC Chairman Tom Wheeler’s previous statements, I think there is a credible threat that a double-sided market for bandwidth will emerge.

Matthew Ingram

This decision — if it remains unchallenged — raises the possibility that large internet service providers could charge certain companies extra for delivering their content to subscribers, and give preference to the content coming from those who are willing pay them a fee, or have cut some other kind of deal. In effect, the democratized nature of the internet would be replaced by a feudal system in which the ability to reach a consumer would be auctioned off to the highest bidder.

Betsy Isaacson

Here are some of the ways experts said the Internet may change without net neutrality. This is the Internet of the future — Web 3.0, you could say, the next evolution of the Internet from its founding and the interactive Web 2.0 of today.

Be warned: It’s not pretty.

1. Rich companies will pay big money to see their content delivered quickly. Poor companies will have a harder time accessing their customers.

2. Rich customers and poor customers will see two very different Webs.

3. The big companies of today will be the big companies of tomorrow. The net sans neutrality will smother innovation.

4. ISPs will curate your Internet like cable does your TV channels.

Tim Karr – Free Press

The FCC made a grave mistake when it failed to ground its open Internet rules on solid legal footing.

Blair Levin, Chair – GigU
(former FCC Chief of Staff)

The court gave the FCC an opportunity to try again. So now the question facing the FCC is whether it tries in the context of a new proceeding … or whether they want to wait for someone to start blocking and then take the case, and use that to establish a precedent.

Senator Ed Markey (D-MA)

The Internet has become the world’s greatest platform for innovation, job-creation and economic growth because of its nondiscriminatory and open nature. We must ensure that as the Internet continues to evolve, it remains a level playing field guided by the principles of openness and competition

As one of the primary authors of the Telecom Act of 1996, I know the Communications Act gives the FCC clear authority to oversee the operation of broadband networks, and has the power to intervene in its effort to preserve competition and safeguard consumers.

I plan to introduce legislation in the coming days that makes this crystal clear, and look forward to working with the Commission to ensure consumers are protected.

Michael Masnick – CEO, Tech Dirt

I’ve seen a bunch of reports overreacting to this today, from people saying that it’s “the death of the internet.” It’s not. There are problems on both sides here. The telcos absolutely do want to abuse things to effectively double charge both sides. And that could clearly create significant issues with the basic end-to-end nature of the internet.

However, on the flip side, we should be equally concerned about the FCC overstepping its bounds and mandate in regulating the internet. Because that opens up the opportunity for the FCC to regulate all sorts of aspects of the internet in dangerous ways. So, this ruling is both good and bad. It stops the FCC from overstepping its bounds… but opens up the opportunity for the telcos to sweep in and try to upset the basic concepts of the internet. It’s what happens now that becomes interesting

Sen. John McCain (R-AZ)

I have long opposed efforts that would allow the government to regulate the Internet, and today’s decision is a win for consumers and broadband innovation. This decision also sends a strong message to federal agencies that may attempt to direct by regulation that which is not authorized by Congress.

Netflix Letter to Shareholders

Unfortunately, Verizon successfully challenged the U.S. net neutrality rules. In principle, a domestic ISP
now can legally impede the video streams that members request from Netflix, degrading the experience
we jointly provide. The motivation could be to get Netflix to pay fees to stop this degradation. Were this
draconian scenario to unfold with some ISP, we would vigorously protest and encourage our members
to demand the open Internet they are paying their ISP to deliver.

Nilay Patel

The process resulted in the Open Internet Order, which enshrined transparency and non-discrimination but was still built on the wrong words. Critics like Susan Crawford referred to the plan as “once more, with feeling.” Comcast was happy, but Verizon wasn’t; it took the FCC to court once again.  And as we saw yesterday, Genachowski’s Open Internet Order didn’t stand up any better. No matter how the FCC defends its rules, net neutrality regulations for information services look a whole lot like common carrier rules for telecommunications providers — and all Verizon had to do was point that out.

That’s it. That’s the whole mistake. The wrong words. The entire American internet experience is now at risk of turning into a walled garden of corporate control because the FCC chickened out and picked the wrong words in 2002, and the court called them on it twice over. You used the wrong words. The court even agreed with the FCC’s policy goals — after a bitterly fought lawsuit and thousands of pages of high-priced arguments from Verizon and its supporters, Judge Tatel was convinced that “broadband providers represent a threat to internet openness and could act in ways that would ultimately inhibit the speed and extent of future broadband deployment.”  Too bad you used the wrong fucking words.

What happens now is entirely dependent on whether the FCC’s new chairman, Tom Wheeler, has the courage to stand up and finally say the right words — that broadband access is a telecommunications service that should be regulated just like landline phones. He need only convince two additional FCC commissioners to agree with him, and the argument is simple: consumers already perceive internet service as a utility, and it’s advertised only on the commodity basis of speed and price. But the political cost will be incredible.  National Cable and Telecommunications Association CEO Michael Powell — the former FCC chairman who issued the 2005 open internet rules — has said that any attempts to reclassify broadband as a common carrier telecommunications service will be “World War III.

Brent Skorup

First, reclassification would absolutely poison relationships with Congressional Republicans, some important Democrats, and the broadband industry. This is a large reason why Chairman Genachowski did not seriously pursue reclassification in 2010. If anything, the political climate is worse for reclassification. Republicans and ISPs oppose reclassification more than Democrats and advocates support it.

Second, the content companies–like Google, Hulu, and Netflix–who would ostensibly benefit from net neutrality seem to have cooled to the idea.  . . . Third, reclassification is a time-consuming and legally fraught process. Even the most principled net neutrality proponents don’t want ISPs subjected to every applicable Title II obligation. But “forbearance” of Title II regulations means several regulatory proceedings, each one potentially subject to litigation.

Finally, Chairman Tom Wheeler, fortunately, does not appear to be an ideologue willing to spend most of his tenure as chairman re-fighting this bitter fight. His comments last month were telling:

I think we’re also going to see a two-sided market where Netflix might say, ‘well, I’ll pay in order to make sure that . . . my subscriber receives, the best possible transmission of this movie.’ I think we want to let those kinds of things evolve.

Berin Szoka

The FCC may have lost today’s battle, but it just won the war over regulating the Internet,  Because the court recognized the FCC’s statutory authority … and left room for the FCC to try again by writing new rules that do not impose common carriage, the FCC can try again by writing a more antitrust-like rule. It’s hard to imagine why Wheeler wouldn’t immediately start a rulemaking to do just that.

Wheeler would have to dedicate his entire chairmanship [to any attempt at reclassifying internet access as a Title II service subject to common carrier obligations].  The issue would preoccupy not only Wheeler’s chairmanship but probably the entire agency for the next decade.

Cale Guthrie Weissman

The free and open Internet was dealt a huge blow today. . . . Net neutrality is dead. Bow to Comcast and Verizon, your overlords

Tim Wu

They blew it on the legal strategy. It’s a big fail. It’s like, FEMA-level fail. Every legal expert told the FCC they’re going to lose this case, and they did… Think of it this way: The FCC is like a battleship, and it has these enormous guns. But it decided to use a water pistol for this particular issue.

Jennifer Yeh

In recounting the history of the regulatory regime that has governed broadband services, the court observed that when the 1996 Telecommunications Act was passed, the FCC had already been subjecting broadband providers to common-carrier regulations, and that “one might have thought, as the Commission originally concluded, that Congress clearly contemplated that the Commission would continue regulating Internet providers in the manner it had previously.”

Notably, the judges didn’t question the merits of the Open Internet Order — only the soundness of the FCC’s judgments about the way to accomplish those goals. The only issue here is whether the FCC had the authority to issue its rules under the legal framework it had adopted.

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