The Internet has been abuzz this week over the recent US Court of Appeals decision to strike down the FCC’s Net Neutrality Rules over Internet providers.1 With this news, many online blogs and news sites have taken to sensationalism, proclaiming that “Net Neutrality is [d]ead,” and that the court’s decision could “kill the Internet.”2 However, this is far from the end of the Internet. In reality, net neutrality supporters don’t have very much to worry about as long as the FCC can maneuver past the political pressure from ISP lobbyists and once and for all redesignate Internet providers as “common carriers” rather than their current designation as “information services.” While the decision in this case is incredibly complicated in its reasoning—by virtue of the fact that it deals with a complicated issue—this short article will try to clear up some confusion about this issue by explaining what powers the FCC has to regulate telecommunication services and the court’s reasoning as to why those powers cannot apply to Internet Service Providers by the FCC’s own rules.
I. Net Neutrality
For the uninitiated, Net Neutrality refers to the principle of regulating Internet Service Providers to ensure that sites and services on the web are treated equally and no one service is given preferential treatment—by being given higher speeds or some other advantage over other websites. The principle is meant to ensure that corporations with much more money to pay ISPs for higher speeds, or services the ISPs themselves have a vested interest in succeeding, can’t create products or services that smaller, poorer companies can’t compete with. For instance, a cable company such as Time Warner, which sells broadband internet, television, and phone services may have a vested interest in slowing down the speeds of sites like Netflix or Hulu as they are direct competitors for the ISP’s own television services. In another case, the ISP could charge websites to carry their traffic, leading to Internet plans that come in “package” deals much like cable, where a customer would have to pick which websites they want to be able to visit while being excluded from the rest. Both of these situations taint the free-market nature of the Internet wherein any person can start a website which, if popular enough, can become immensely successful and amass large profits. However, if ISPs are given the authority to determine the winners and losers in this market by manipulating the already scarce resource of bandwidth based on their own interests or the profit they can gain by charging websites for preferential treatment, then the web becomes a place where new content is not as abundant as it is today.
II. Telecommunications Act of 1966
First, let’s take a quick look at Telecommunications Act of 1966 (an amendment to the Communications Act of 1934) which empowers the FCC to regulate ISPs and other types of communications companies. Under the Title II of the Communications Act, the FCC has a wide range of powers to regulate what are known as “common carriers.” Title II sets out that it is “unlawful for any common carrier to make any unjust or unreasonable discrimination in charges, practices, classifications, regulations, facilities, or services for or in connection with like communication service.”3 Therefore, the FCC can force “common carriers” to provide services to customers at uniform rates without discrimination. This is exactly what the FCC sought to enforce on broadband providers with their Net Neutrality Rules.
III. The Open Internet Order
The FCC set out their Net Neutrality Rules in their Open Internet Order which lays out rules designed to “incorporate longstanding openness principles that are generally in line with current practices.”4 The Order address two different types of Internet providers: “fixed” broadband providers—which provide access to stationary users such as those in residential buildings—and “mobile” providers.5 The Order sets out three very important rules.
First, the Order requires that both types of providers are transparent in the “information regarding the network management practices, performance, and commercial terms of [their] broadband Internet access services.”6
Second, it prohibits both “fixed” and “mobile” providers from blocking otherwise legal online content or services.7 It also specifically limits “mobile” providers from blocking any services that compete with the “provider’s voice or video telephony services, subject to reasonable network management,” meaning that a mobile network such as, say, Verizon couldn’t block a protocol such as Apple’s FaceTime or iMessages just because they draw users away from using Verizon’s standard voice or text-messaging network.8
Third, and of greatest importance to the current fears over Net Neutrality, the Order prevents “Fixed broadband providers” from “unreasonably discriminat[ing] in transmitting lawful network traffic.”9 This would prevent an ISP from throttling certain websites—ones that may not have paid that ISP for higher speeds to its customers—while granting others preferential speeds. The FCC adopts this rule in the hopes that both large and small companies will have equal footing when it comes to their success on the Internet and will not be threatened with failure due to their inability to pay ISPs with large subscriber bases extra money for preferential speeds to their customers. This rule forms the major basis for what we refer to today as Net Neutrality.10
IV. DC Circuit Court of Appeals Ruling
All of the above-mentioned rules that the FCC lays out in their Open Internet Order are perfectly valid and enforceable based on the powers granted to the FCC. However, they are only enforceable against companies that the FCC deems to be “common carriers” which Verizon, the petitioner in this case, is not. Instead the FCC deems Verizon and other Internet companies “information services,” not telecommunication providers. So, because the Telecommunications Act states that only telecommunications providers can be “common carriers,” these rules cannot legally apply to Internet providers as long as they are deemed “information services” by the FCC. Thus, the court had no option but to strike down the Net Neutrality regulations, stating:
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.11
So, while the decision in this case does hamper the FCC’s Net Neutrality rules for the time being, this is by no means a groundbreaking or permanent issue that threatens the future of the Internet. In fact, Judge Tatel, who authored the majority opinion, openly agrees in the principles behind Net Neutrality, and stating 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.”12 It does, however, bring up an issue that will surely bring about a fierce debate on the part of Internet providers and the FCC over whether the ISPs should be reclassified as telecommunications services so that the FCC can impose common carrier requirements on them. The cable industry, on behalf of companies such as Comcast, Verizon, and AT&T, has lobbied against this measure for years and, under the previous head of the FCC, was able to successfully avoid the designation. It will be up to the FCC, and its new head, Tom Wheeler, to decide whether or not they can overcome the political battle ahead in an effort to properly regulate these Internet providers.
- Edward Wyatt, Rebuffing F.C.C. in ‘Net Neutrality’ Case, Court Allows Streaming Deals, NY Times Technology Blog (NY Times Jan 14, 2014), online at http://perma.cc/PU7W-LM67 (visited Jan 15, 2014). [↩]
- Craig Aaron, Net Neutrality Is Dead — Here’s How to Get It Back, Huff Post Tech Blog (Huffington Post Jan 14, 2014), online at http://perma.cc/K7VF-8LYF (visited Jan 15, 2014); Nilay Patel, The Wrong Words: How the FCC Lost Net Neutrality and Could Kill the Internet, The Verge (The Verge Jan 15, 2014), online at http://perma.cc/SR6T-FX7G (visited Jan 15, 2014). [↩]
- 47 USC § 201(a). [↩]
- 25 FCCR at 17907 ¶ 4. [↩]
- Id at 17934 ¶ 49 [↩]
- Id at 17937 ¶ 54; Id 17959 ¶ 98. [↩]
- Id at 17942 ¶ 63 [↩]
- 25 FCCR at at 17959 ¶ 99. [↩]
- Id at 17942 ¶ 63. [↩]
- Note that this rule does not exist for “mobile” providers. The FCC claims that this is because of mobile networks’ increased competitiveness, lower speeds, and lower penetration when compared to broadband networks. [↩]
- Verizon v FCC, No 11-1355 (DC Cir Jan 14, 2014) [↩]
- Id. [↩]