Telecommunications giant, CenturyLink filed a lawsuit in the U.S. Court of Appeals for the D.C. Circuit on Friday, April 17th, joining AT&T and 5 other companies and trade groups fighting the February change of Federal Communications Commission (FCC) rules on net neutrality. The new rules, which were officially published last week into the Federal Register, prompted the AT&T suit which was filed on Tuesday, April 14th. The most significant change reclassifies broadband providers under Title II of Communications Act, essentially transforming the industry from a lightly-regulated information service provider to that of a common carrier, similar to landline phone companies. The two internet providers, in addition to Alamo Broadband, join 4 major industry groups in suing the FCC over the changes. These groups include: CTIA, the U.S. Telecom Association, the National Cable and Telecommunications Association (NCTA), and the American Cable Association. The FCC’s common carrier regulations have remained relatively unchanged since the 1930’s. In a prepared statement, NCTA chair Michael Powell said, “This appeal is not about net neutrality but the FCC’s unnecessary action to apply outdated utility style regulation to the most innovative network in our history.” All seven appeals, and possibly more add-ons, will be consolidated into a single case to either be tried in the D.C. Appeals court, or in a venue decided by lottery if appeals are filed within 10 days from a different jurisdiction.
Some were surprised by the ISP’s joining the wave of lawsuits, assuming that they would defer to the legal motions put in place by the trade groups. AT&T’s challenge is especially noteworthy, because they are in the midst of an FCC review of their proposed $49 billion acquisition of DirecTV. For their part, AT&T and the 4 trade groups all support net neutrality, but oppose the Title II reclassification. CenturyLink, the nation’s 3rd largest internet service provider, also stated when the rules were passed that they would, “work with Congress to pass net neutrality legislation that protects consumers and doesn’t smother the growth engine of our economy with obsolete regulations.” The 7 plaintiffs do have some allies in Congress, as several Republican lawmakers plan to draft a “Resolution of Disapproval,” a motion that if passed, can reverse regulatory actions within a 60-day window, pending signature by the President or a veto-override.
The FCC’s rule changes prevents broadband providers from intentionally blocking or slowing down online services as well as preventing them from creating “fast lanes,” that require additional fees. The latter regulation is geared especially for companies like NetFlix and other streaming services, who are required to pay extra for their increased use of bandwidth. In addition, the reclassification gives the FCC greater authority in the realms of pricing, new product and service rollout, and in general, allows the regulator a more central role in directing the future of the internet. Not surprisingly, the plaintiffs as well as much of the industry strongly oppose giving more control to the FCC, especially under such antiquated regulations. They argue that the reclassification gives the FCC the ability to add taxes and tariffs meaning higher prices for consumers, as well as reducing the financial incentive to build new networks or repair existing ones. In its statement, CenturyLink states, “These regulations not only have no place in the 21st century economy, but will chill innovation and investment. We are challenging the FCC’s misguided net neutrality order for these reasons and because we believe it could lead to higher prices and fewer choices for consumers.”
The FCC has lost two major attempts to pass net neutrality regulations, first in a 2010 lawsuit filed by Comcast, and later in a similar 2011 suit by Verizon. The FCC believes the main reason they lost these fights was the failure to reclassify the broadband industry as it currently has. Although representatives for the plaintiffs believe that the rules will once again be overturned, FCC Chair, Tom Wheeler, believes this version of the rules will withstand a court challenge, writing the regulations under the assumption that they would be immediately appealed.
CNET – Marguerite Reardon
Fierce Telecom – Sean Buckley
PCWorld – Grant Gross
Wall Street Journal – Ryan Knutson