On Jan. 14, the U.S. Court of Appeals for the District of Columbia Circuit overturned two of the three net-neutrality rules initially passed by the Federal Communications Commission as part of its 2010 Open Internet Order.
Despite what some have said, this ruling does not give carte blanche for ISPs to run roughshod over their customers. That’s because the overturn overshadowed perhaps the more important aspect of this decision: The court found that the FCC now has clear authority, under Section 706 of “the Communications Act,” to regulate broadband providers’ treatment of Internet traffic. The question of the FCC’s authority to regulate ISPs dominated the case at hand, and while the end of net-neutrality rules appears on its face to have a major impact on consumers, the court’s finding on authority lessens the blow immensely.
In its decision, the court vacated the Open Internet Order’s two most restrictive prohibitions: an anti-discrimination rule and a no-blocking rule. Still standing was the requirement that ISPs must be transparent about their network management practices.
The anti-discrimination rule requires that ISPs “shall not unreasonably discriminate in transmitting lawful network traffic over a consumer’s broadband Internet access service,” while the no-blocking rule prevents ISPs from “block[ing] lawful content, applications, services or non-harmful devices.”
The court struck down the rules because they found that they subjected ISPs to “common-carriage” regulations. Broadband service has been classified by the FCC as an “information service” — as opposed to a “telecommunications service” — and information services may not be subject common carrier regulations under the Communications Act.
The court found both the anti-discrimination and no-blocking rules amounted to common-carriage regulations because they forced ISPs to offer carry-all traffic from edge providers like YouTube, Google and Netflix on their networks “indiscriminately and on general terms.”
In the process of striking down the two rules, however, the court laid out ways in which the FCC could pass similar rules that did not rise to the level of common carriage.
Because the court has now given the FCC clear authority to regulate broadband providers, such new rules would be safe from a court challenge if formulated properly. The court deemed the anti-discrimination rule too restrictive, for example, but said a similar rule allowing for reasonable bargaining flexibility between ISPs and edge providers could withstand legal scrutiny. In short, a rule that prevented ISPs from degrading the service of any edge provider would stand as long as it allowed for some flexibility to allow edge providers to pay for prioritized service.
Similarly, the court said that the FCC could prevent ISPs from blocking access to edge-provider content as long as the no-blocking rules left “sufficient room for individualized bargaining and discrimination in terms.”
Going forward, the FCC could pass a new version of the net-neutrality rules, but they would have to allow for some business arrangements to transpire between ISPs and edge providers. This is essentially the situation we’re already facing in the wireless world, as the anti-discrimination rule never applied to wireless broadband in the first place. There, we’ve already seen creative deals; certain edge provider content that doesn’t count against data caps, for example.
It is entirely possible that the average broadband customer’s online experience won’t change much following this decision. Even without net-neutrality rules in place, the benefits for ISPs to discriminate against or block content are outweighed by the consumer backlash that would inevitably follow if they were to do so. And eventually, the FCC will use its court-approved authority to pass some new rules. As long as the new rules help keep small edge providers competitive with those who can afford prioritized content, the Internet will remain relatively neutral. For now, we’ll just have to wait and see how this situation unfolds and hope it all goes smoothly.
