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FCC and Net Neutrality After the Verizon Case: A Cautious Path Forward

FCC in the Verizon v. Federal Communications Commission caseIn January, 2014, the Federal Court of Appeals for the District of Columbia struck down the “anti-discrimination” and “no blocking” regulations previously adopted by the FCC in the Verizon v. Federal Communications Commission case. The case was a blow to the proponents of net neutrality, which refers to a free and open internet in which the internet service providers (ISP’s) are not permitted to chose which internet content providers receive the best access to internet users. The victory by the broadband ISP Verizon leaves those interested in net neutrality waiting for the next move by the FCC to respond to the recent loss in court.

Although the court struck down the FCC’s open internet order regulations, the court did offer clear guidance for the FCC to follow if it wished to adopt rules to take the place of those which were voided. Under the Telecommunications Act of 1996, the agency is able to classify ISP’s as “basic service” providers or “information services” providers. The broadband ISP’s, including Verizon, were classified as information services providers. The court said that the FCC’s own classification of the broadband ISP’s as information services providers precluded the use of the anti-discrimination and no blocking rules against them. Nevertheless, the court explicitly said the FCC could adopt similar rules to regulate the broadband internet service providers if it reclassified them as basic service providers.

The broadband internet service providers were initially classified as basic service providers soon after the 1996 Telecommunications Act became law. During the Bush administration years in which the FCC commissioners were appointed by President Bush, the more industry friendly commissioners bowed to broadband ISP pressure and reclassified them as information services providers. After being reclassified, the broadband ISP’s challenged the ability of the FCC to regulate via anti-discrimination and no blocking rules.

The court in the Verizon case was very clear in stating the FCC had rule making authority over the broadband ISP’s if they were reclassified, yet a February 19, 2014 public statement issued by FCC head Tom Wheeler appears to indicate a willingness to walk down the same failed path once again. In another apparent bow to industry pressure, Mr. Wheeler stated that the agency would once again “consider” how to adopt anti-discrimination and no blocking rules with sufficient legal authority. The statement said that the Federal Communications Commission would keep open its option to reclassify the broadband ISP’s, but the clear intent is to regulate without resorting to reclassification.

The message to broadband internet service providers from the FCC appears to be that watered down anti-discrimination and no blocking rules will likely be adopted. The agency is telling these ISP’s to “play nice” in the less regulated environment or the FCC will move to reclassify the broadband ISP’s as basic service providers clearly subject to stronger regulation. The FCC does not wish to drop the hammer of reclassification of the broadband providers unless these ISP’s act in a way that forces it do so. While internet commentary stating that net neutrality is gone appears to be overly alarmist, the regulatory environment moving forward will be friendlier to the broadband ISP’s unless they completely ignore FCC wishes.

By William Costolo


FCC Statement; Verizon v. FCC (Federal Court of Appeals); Washington Post

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