Federal appeals court strikes down net neutrality: What's next?

The U.S. Federal Communications Commission and its allies have several options, with most of them difficult, after a U.S. appeals court struck down most of the agency’s 2010 net-neutrality rules.

The U.S. Court of Appeals for the District of Columbia Circuit ruled Tuesday that the FCC did not have the authority to prohibit broadband and mobile-service providers from selectively blocking or slowing Web traffic and applications.

With FCC Chairman Tom Wheeler already promising to “consider all available options,” it’s clear that the net-neutrality fight in Washington, D.C., is far from over. Wheeler and Michael Weinberg, acting co-president of the digital rights group Public Knowledge, both talked about possibly appealing Tuesday’s decision.

However, the chances on appeal are mixed at best. While the court, in Tuesday’s ruling, said the FCC has some authority to regulate broadband, this is the second time the appeals court has struck down a specific FCC attempt to enforce net-neutrality rules, The same court ruled in April 2010 that the agency didn’t have the authority to order Comcast to stop throttling peer-to-peer traffic in the name of network management.

Beyond an appeal, the FCC has several other options. With the agency taking its regulatory authority from the Telecommunications Act of 1996, it could go back to Congress and ask for new authority to regulate broadband. But the Republican majority in the House of Representatives has tried multiple times to repeal the FCC’s net-neutrality rules, and any legislation giving the FCC new authority over broadband providers would have little chance with lawmakers there.

It would take major pressure from the public to force Congress to pass net-neutrality legislation, said Lynne Bradley, director of government relations for the American Library Association, which supports strong net neutrality rules. “Hope springs eternal,” she said.

Most likely alternative

The most likely course of action for the FCC is to write new rules that would pass court scrutiny. In Tuesday’s court ruling, Judge David Tatel noted that the 1996 Telecom Act gives the FCC the “affirmative authority to enact measures encouraging the deployment of broadband infrastructure.”

The FCC has “reasonably” interpreted that part of the Telecom Act to “empower it to promulgate rules governing broadband providers’ treatment of Internet traffic,” Tatel added. But in a somewhat confusing opinion, Tatel appears to suggest that the FCC is limited from regulating broadband mainly because the agency itself has classified broadband as a lightly regulated information service, which is exempted from most regulations in the 1996 Telecom Act.

Tatel noted that the FCC’s own decision to classify broadband as an information service, and not as a basic telecom service, prevents the agency from applying so-called common carrier rules to broadband.

Tatel’s decision threw the rules back to the FCC, leaving open additional action from the agency.

One simple way, at least on its face, to get around the prohibition on applying common carrier rules to broadband would be for the FCC to reclassify broadband, subject to the common carrier rules that traditional voice service is subject to. Several groups supporting net-neutrality rules have long called on the FCC to reclassify broadband and move the service to the FCC’s so-called Title II common-carrier authority.

Other options

If the FCC doesn’t appeal, it “could broadly do one of two things: change the authority to fit the rules or change the rules to fit the authority,” said Public Knowledge’s Weinberg. “The opinion makes it clear … that the FCC would be well within its rights to reclassify if it saw fit.”

But the FCC could also look to craft new rules “to fit the authority,” Weinberg added. “The court made it clear that the FCC has authority over broadband access generally. That would mean that the FCC would make new rules that address the things it cares about in Internet access in a way that does not get too close to Title II common carrier-style regulation.”

Reclassification, however, would bring the wrath of both congressional Republicans and the carriers down upon the FCC. “It would be regulatory World War III,” said Scott Cleland, operator of NetCompetition.org, an online forum representing the interests of broadband carriers.

Observers on both sides of the net-neutrality debate suggested the FCC’s best course of action, while not easy, may be to write new rules that establish basic protections for broadband customers. NetCompetition.org’s Cleland called on the FCC to work with broadband providers to establish compromise rules that everyone could live with.

If the FCC “works on new broadband information service traffic-rules-of-the-road that comport with this decision, this effectively could settle into a de-facto net-neutrality peace given that the FCC’s ‘general authority to regulate’ broadband would be unchallenged and the broadband industry’s biggest fear, common carrier regulation of broadband, would be off the table,” he said.

Tatel’s decision gives the FCC broad leeway to create new rules, agreed Pantelis Michalopoulos, a Steptoe and Johnson lawyer who argued for the net-neutrality rules at the appeals court on behalf of several digital rights groups. The agency “has wide room short of reclassification,” he said.

It’s important that the appeals court ruled that the FCC has jurisdiction over broadband and was reasonable in trying to create rules for broadband providers’ treatment of traffic, he said. The agency could, for example, establish a basic level of guaranteed service for broadband customers, or define a reasonable level of service, he said.

”There is room for the FCC to make rules that comply with the direction of the court,” he added.