Although the Federal Communications Commission (FCC) has been defeated by the courts twice before in very public fashion over the issue of net neutrality; new rules proposed by the FCC in February quietly went into effect on Friday, June 12th. This comes as a three-judge panel from the D.C. Circuit Appeals Court denied a motion to stop the rules on Thursday; however, the petition was only one of several legal efforts to stop major changes in the FCC’s policies. The fight over net neutrality has been waged in the public consciousness over the right for internet service providers (ISPs) to speed up and slow down internet speeds as well as to charge more for faster internet. ISPs argue that the emergence of streaming services like Netflix has led to an increased consumption of bandwidth and that they have the right to alter the speeds due to the excessive use. In the new rules, the FCC set strict guidelines banning the practice of blocking, slowing down, or speeding up internet service based on payment. The lesser cited, but perhaps more contentious aspect of the rule changes is the reclassification of broadband and wireless providers under Title II of the Communications Act from being a lightly-regulated information services provider to that of a common carrier like landline phone companies or other telecommunications providers.
While the appeals ruling appears to mark a new era in internet history, at least seven legal challenges and three petitions are still circulating in the courts. Among the lawsuits, include actions by CenturyLink, AT&T, and smaller provider, Alamo Broadband, as well as suits filed by four major industry trade associations. These actions and the new rules also come during an unprecedented wave of consolidation within the industry, including the high-profile cross-platform mergers like T-Mobile’s and Dish Network, as well as Charter’s purchase of Time Warner Cable, and AT&T’s acquisition of DirecTV. Prior to the Charter-Time Warner deal, regulators threatened to hinder a planned purchase of Time-Warner by industry leader, Verizon due to the combined company’s 40 percent stranglehold on the total broadband market. The affected companies have argued that the Title II change is essentially a government takeover of the internet industry, and that the increased oversight will have a chilling effect on investment and innovation. FCC Chairman, Tom Wheeler, supported by President Obama, believes that the additional oversight is necessary given the lack of choice among broadband providers, especially given the wave of consolidation.
The rules had been stricken down in the court system twice before, most notably in January, 2014 in a challenge brought by Verizon, in which the court believed that the FCC was overstepping its bounds without having classified the industry under Title II as a common carrier. The decision to reclassify was based on this decision. February’s 3-2 FCC vote on the rule changes was in itself contentious, and some have argued, overly political. While Wheeler and key Democrats in congress have supported the rule changes, the most vocal dissenting panelist, Ajit Pai, is a Republican nominated by Obama at the request of Senate Majority Leader, Mitch McConnell (R-KY). The other commissioner to vote no was fellow Republican, Michael O’Rielly, who emphatically protested the rule changes, saying, “unless eradicated they will ultimately harm the foundations of the Internet, and limit its possibilities. In the meantime, I will be vigilant in resisting any attempts by the agency to act as a referee enforcing rules known to none of the players and made up along the way.” Pai also commented on how the decision will chill investment and growth in the industry following February’s vote, but was encouraged by the fact that D.C. Circuit, while denying the motion to stay on Thursday, has agreed to expedite the case on the court’s docket.
Wall Street Journal – Gautham Nagesh
Washington Examiner – Jimmi Soni