The U.S. Court of Appeals for the District of Columbia struck down the Federal Communication Commission’s net neutrality rules on Tuesday, lifting regulations on content, service and pricing.
A 2010 FCC order established what is popularly referred to as “net neutrality,” meaning all Internet service providers (ISPs) had to meet a similar standard for content, service and price type offered to their customers in all marketable regions across the U.S.
That order mandates that ISPs “shall not block lawful content, applications, services or non-harmful devices, subject to reasonable network management,” and “shall not unreasonably discriminate in transmitting lawful traffic over a consumer’s broadband Internet access service.”
The D.C.-based court of appeals repealed the rules in favor of a case against them by Verizon, stating that consumers have a choice over ISPs, making the standards unnecessary.
“Without broadband provider market power, consumers, of course, have options,” the court writes. “They can go to another broadband provider if they want to reach particular edge providers or if their connections to particular edge providers have been degraded.”
At the time the rules were adopted the FCC expressed concerns that the ISP market in the United States was in danger of becoming content selective, increasingly monopolized and uncompetitive since the integration of broadband Internet technology, with major service providers carving out large sections of proprietary territory across the U.S. and continually raising rates without upgrading or expanding their networks.
“To be sure, some difficulty switching broadband providers is certainly a factor that might contribute to a firm’s having market power, but that itself is not market power,” the court writes. “There are many industries in which switching between competitors is not instantly achieved, but those industries may still be heavily disciplined by competitive forces because consumers will switch unless there are real barriers.”
“But there is no evidence in the record suggesting that broadband providers are carving up territory or avoiding head-to-head competition,” according to the court. “At least anecdotally, the opposite seems to be true. Google has now entered the broadband market as a direct competitor.”
Here the court is referring to Google Fiber — the company’s new high-speed Internet service, which currently services Provo, Utah, Kansas City, and Austin, Texas.
Progressive Policy Institute Fellow and former Undersecretary of Commerce under President Bill Clinton Dr. Everett Ehrlich sided with the court on its Tuesday ruling, saying that the lift on FCC regulations would actually expand the market.
“The D.C. Court of Appeals has decided that the FCC does not have the authority to tell Internet Service Providers (ISPs) how to manage their networks. That’s a good thing,” Ehrlich said. “The decision will help consumers, because it allows ISPs to bring consumers the content they want at cheaper prices in a two-sided market, just as advertisers defray the cost of newspaper to their reads. The Court’s decision affirms the view behind the Clinton Administration’s 1996 Telecommunications Act — that markets can drive the development of the broadband network that is bringing us the education, health, government services, and entrepreneurship benefits of the future.”
“The FCC will remain the cop on the beat, and will combine their efforts with anti-trust and other laws on the books to ensure that the Internet stays open and its users can get any legal content they desire. That’s always been true and always will be. But today’s decision clears the decks for creating a new regulatory framework that encourages private investment to extend our communications infrastructure and realizes these technologies’ promise,” Ehrlich said.
FCC Chairman Tom Wheeler said in a statement Tuesday the agency is deciding on how to keep the standards in place, including an appeal of Tuesday’s 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. 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,” Wheeler said.
If appealed, the decision would then go to the Supreme Court, which would have to elect to even hear it before giving a ruling, or sending it back down to a lower court. If rejected, the appellate court decision would stand unless the FCC rewrites the rules.