Net Neutrality in the United States
The First Net Neutrality Decision
In January 14, 2014, in the case “Verizon v. FCC”, the U.S. Court of Appeals for the D.C. Circuit vacated key portions of the Federal Communications Commissionโs โOpen Internet Orderโ โ aka the net neutralityโ rule.
The majority opinion was written by Judge Tatel, joined by Judge Rogers. Here is the introduction summarizing the courtโs holding:
“For the second time in four years, we are confronted with a Federal Communications
Commission effort to compel broadband providers to treat all Internet traffic the same regardless of sourceโor to require, as it is popularly known, โnet neutrality.โ In Comcast Corp. v. FCC, 600 F.3d 642 (D.C. Cir. 2010), we held that the Commission had failed to cite any statutory authority that would justify its order compelling a broadband provider to adhere to open network management practices. After Comcast, the Commission issued the order challenged hereโIn re Preserving the Open Internet, 25 F.C.C.R. 17905 (2010) (โthe Open Internet Orderโ)โwhich imposes disclosure, anti-blocking, and anti-discrimination requirements on broadband providers. As we explain in this opinion, the Commission has established that section 706 of the Telecommunications Act of 1996 vests it with affirmative authority to enact measures encouraging the deployment of broadband infrastructure. The Commission, we further hold, has reasonably interpreted section 706 to empower it to promulgate rules governing broadband providersโ treatment of Internet traffic, and its justification for the specific rules at issue hereโthat they will preserve and facilitate the โvirtuous circleโ of innovation that has driven the explosive growth of the Internetโis reasonable and supported by substantial evidence. That said, even though the Commission has general authority to regulate in this arena, it may not impose requirements that contravene express statutory mandates. 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.”
Here is what Judge Silbermann said in dissent about the interpretation of section 706โs authority, in January 2014:
“[The FCC] claims it must regulate broadly, so as to โprotect[] consumer choice, free expression, end-user control, and the ability to innovate without permission,โ 25 F.C.C.R. at 17949 ยถ 78, which certainly indicates a Commission objective that exceeds the statutory authority granted in ยง 706.
The majority takes the statutory language even further; it states that the Commissionโs authority to promulgate regulations that promote broadband deployment encompasses the power to regulate broadband providersโ economic relationships with edge providers if, in fact, the nature of those relationships influences the rate and extent to which broadband providers develop and expand services for end users.
Majority Op. at 33. So much for the terms [in section 706] โpromote competition in the local telecommunications marketโ or โremove barriers to infrastructure investment.โ Presto, we have a new statute granting the FCC virtually unlimited power to regulate the Internet. This reading of ยง 706, as we said in Comcast Corp. v. FCC, โwould virtually free the Commission from its congressional tether.โ 600 F.3d 642, 655 (D.C. Cir. 2010). The limiting principles the majority relies on are illusory.”
He ends as follows:
“This regulation [the FCCโs rule] essentially provides an economic preference to a politically powerful constituency, a constituency that, as is true of typical rent seekers, wishes protection against market forces. The Commission does not have authority to grant such a favor.”
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