WASHINGTON, Jan 14 (Reuters) - A U.S. appeals court on
Tuesday rejected federal rules that required Internet providers
to treat all web traffic equally, a decision that could allow
mobile carriers and other broadband providers to charge content
providers for faster access to websites and services.
The Federal Communications Commission's open Internet rules,
also known as net neutrality, required Internet service
providers to give consumers equal access to all lawful content
without restrictions or tiered charges.
But the U.S. Court of Appeals for the District of Columbia
Circuit struck down the rules, which were passed in late 2010
and have been challenged by Verizon Communications Inc.
Two judges, with partial support from a third, said the
commission has the authority to regulate broadband access but
had failed to show that it has a mandate to impose the
anti-discrimination rules on broadband providers.
The ruling is a victory for Verizon and other broadband
providers, who saw the FCC rules as government overreach into
how they operate their networks.
The largest providers on Tuesday pledged that they would not
restrict customers on the web, but consumer advocacy groups
worry that Internet network owners may begin charging content
providers such as Netflix Inc, Facebook Inc or
sports broadcaster ESPN for faster Internet speeds.
President Barack Obama, whose 2008 campaign platform
included net neutrality, will continue to work with the FCC,
Congress and the private sector "to preserve a free and open
Internet," the White House said on Tuesday.
"The President remains committed to an open Internet, where
consumers are free to choose the websites they want to visit and
the online services they want to use, and where online
innovators are allowed to compete on a level playing field based
on the quality of their products," the statement said.
POTENTIAL NEXT STEPS
This was the second time the court struck down the FCC's net
neutrality rules. The FCC had classified broadband providers as
information service providers as opposed to telecommunications
service providers, and that distinction created a legal hurdle
for the FCC's authority.
The FCC could appeal the ruling to the full appeals court or
to the U.S. Supreme Court, something FCC Chairman Tom Wheeler
said he is considering as among "all available options" to
ensure Internet networks remained free and open.
The FCC could also reclassify broadband providers to
establish clear authority over them. Public interest groups have
urged the FCC to do so, but the move would face opposition from
Republicans and broadband providers.
"Unless Congress acts, we should stay our hand and refrain
from any further attempt to micromanage how broadband providers
run their networks," Republican FCC Commissioner Ajit Pai said.
Democratic leaders in Congress on Tuesday urged the FCC to
take advantage of the oversight power the court did recognize
the FCC has over broadband and offered support in rewriting the
rules. Republicans urged the FCC to stay hands-off.
Wheeler, who took helm at the FCC in November, recently has
also suggested he could use existing FCC power to go after
particular Internet service providers who violate the open
Internet principles on a case-by-case basis.
PLEDGE TO OPEN INTERNET
Supporters of the FCC rules worry that now Internet
providers such as Verizon or Comcast Corp would begin
to charge content providers for faster access or slow down or
even block access to particular sites.
"That's just not the way the Internet has worked until now,"
Matt Wood, policy director at public interest group Free Press,
Video-streaming is by far the heaviest bandwidth hog on the
Internet. Netflix and Google Inc's YouTube alone are
estimated to account for more than half of all downstream
Internet traffic at peak hours.
The debate is expected to intensify as American viewers
increasingly take to the Internet for bandwidth-intensive media
consumption, through services such as Pandora, Amazon Instant
Video or Hulu.
Some worry that giving Internet providers more power to
charge for heavy use of their networks could penalize startups
and other less cash-flush companies, who might be unable to get
their product in front of users, thwarting competition.
But opponents of the FCC's open Internet rules also argue
the regulations inhibit investments and are not necessary to
ensure unrestricted access to Internet content.
"Today's decision will not change consumers' ability to
access and use the Internet as they do now," Randal Milch,
Verizon's general counsel and executive vice president for
public policy, said in a statement.
"Verizon has been and remains committed to the open Internet
which provides consumers with competitive choices and unblocked
access to lawful websites and content when, where, and how they
want. This will not change in light of the court's decision,"
In the case against the FCC, Verizon had argued the open
Internet order violated the company's right to free speech and
stripped control of what its networks transmit and how.
Prominent Internet providers Comcast and Time Warner Cable
Inc also issued reassurances of their commitment to open
Internet principles on Tuesday, as did the Broadband for America
coalition representing various Internet service providers and
CTIA, the wireless industry association.
But content providers remained uneasy.
"Trust but verify," said Michael Beckerman, president and
CEO of the Internet Association that represents content
providers including Netflix, Google, Facebook and Amazon.com Inc
"With the Internet and our member companies growing and
changing and startups constantly popping up, protections do need
to be placed for consumers."