Net Neutrality Takes a Big Hit in Court

| Tue Jan. 14, 2014 9:37 AM PST

The long, grinding fight over net neutrality—the principle that everyone should have equal access to the internet—hit another speed bump today. But first, some background. Net neutrality was the de facto status quo until several years ago, when the Bush-era FCC decided to classify internet provision as an information service (IS) rather than a telecom service (TS). This mattered because telecom services had always been regulated as common carriers, which effectively required internet providers to treat everyone equally. Under the IS regime, the old common carrier requirements were replaced by four net neutrality "principles" that were considerably less stringent.

The Obama FCC went on to impose tighter net neutrality rules, but left alone the classification of internet services as IS. Today, a federal judge decided that the FCC's rules exceeded its authority because it had failed to classify broadband Internet as a common-carrier service:

The ruling opens the door for Verizon and other Internet service providers to offer managed services or other arrangements where content providers could pay to increase the speed to their content. Verizon has indicated it would pursue such an arrangement if it was permitted to do so.

Former FCC Chairman Julius Genachowski elected not to reclassify broadband as a common carrier service, the designation that applies to traditional phone lines. But he left the docket open on the subject before departing the commission last year. New Chairman Tom Wheeler has stated his support for net neutrality, but he has also voiced his opposition to regulating the Internet.

The court's decision means reclassification is likely the only option for the commission to impose net neutrality rules, though Mr. Wheeler recently argued he has the power to police Internet service providers on an individual basis if their behavior is anticompetitive or prevents consumers from accessing the Web.

The next step might be an appeal to the Supreme Court or it might be an FCC decision to reclassify the internet as a common carrier. But that's what it's come down to. If the Supreme Court upholds this decision (or refuses to hear an appeal), net neutrality is dead unless the FCC or Congress decide to reclassify broadband internet as a telecom service regulated as a common carrier. If they don't, it will up-end the internet as we know it, with carriers free to provide, say, Amazon or Google with preferred service in return for higher access fees. That could be a big problem for startups—or anyone the telecom providers consider a competitor—who would have to contend with slower service as they tried to build their businesses. The big telecom companies say that's not what they have in mind, and maybe they don't right now. But they will. It's only a matter of time.

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