The third time's the charm for the FCC's net neutrality rules.
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An appeals court today rejected a challenge to the agency's open Internet order, finding that the commission was within its right to reclassify broadband as a telecom service in order to regulate ISPs.
The news comes after the FCC lost two previous battles—against Comcast in 2010 and Verizon in 2014—in its bid to hand down net neutrality rules. In an effort to make those rules stick, the FCC took the controversial step of classifying broadband as a telecom service rather than an information service, a move that prompted a flurry of lawsuits from various ISPs and trade groups last year.
That included USTelecom, wireless industry trade association CTIA, cable group NCTA, the American Cable Association (ACA), and Wireless Internet Service Providers Association (WISPA), AT&T, and CenturyLink.
Today, however, the D.C. Court of Appeals ruled in favor of the FCC.
"Today's ruling is a victory for consumers and innovators who deserve unfettered access to the entire web, and it ensures the internet remains a platform for unparalleled innovation, free expression and economic growth," FCC Chairman Tom Wheeler said in a statement. "After a decade of debate and legal battles, today's ruling affirms the Commission's ability to enforce the strongest possible internet protections—both on fixed and mobile networks—that will ensure the internet remains open, now and in the future."
The National Cable and Telecommunications Association (NCTA) said it was disappointed in the ruling overall, but was "gratified" by the judges who dissented on certain points.
"While this is unlikely the last step in this decade-long debate over Internet regulation, we urge bipartisan leaders in Congress to renew their efforts to craft meaningful legislation that can end ongoing uncertainty, promote network investment, and protect consumers," NCTA said.
Similarly, USTelecom said the majority on the court "failed to recognize the significant legal failings of the Federal Communications Commission's decision to regulate the Internet as a public utility, leaving in place regulation we believe will replace a consumer-driver Internet with a government-run Internet, threatening investment and innovation in years to come.
"Our industry strongly supports open Internet principles and the FCC's order is wholly unnecessary to keeping the Internet open. We will continue to work toward policies that facilitate America's broadband leadership, are reviewing the court's decision, and will be evaluating all of our legal options," USTelecom concluded.
Details of the Case The appeals court considered several arguments made by US Telecom and others: whether the FCC's move to classify broadband as a telecom service was unreasonable; that the FCC did not adequately explain why it made the move; whether the rules might hurt the broadband industry; and whether or not interconnection deals and mobile service should be a part of the rules.
"US Telecom makes several arguments in support of its contrary position that broadband is unambiguously an information service. None persuades us," the court ruled.
USTelecom argued that its members provide information services like email—when Comcast gives you an Xfinity email address, for example—as well as Internet service, so it should be classifed as an information service and not be subject to FCC regulation.
"For its part, the Commission agreed that broadband providers offer email and other services, but simply concluded that 'broadband Internet access service is today sufficiently independent of these information services that it is a separate offering,'" the ruling said. "US Telecom nowhere challenges that conclusion, and for good reason: the record contains extensive evidence that consumers perceive a standalone offering of transmission, separate from the offering of information services like email and cloud storage."
Translation: Most people rely on their ISPs to access the Web, but then largely use third-party services—like Gmail, Netflix, Spotify—rather than those provided by the likes of AT&T, Verizon, or Comcast. So at their core, these ISPs are providing a telecom service, not an information one.
As for whether the FCC adequately explained why it wanted to reclassify? The court found that the FCC's "it will help us win" argument was good enough.
The ruling also dismissed the idea that net neutrality rules would hurt broadband investment. US Telecom "never challenges reclassification on the ground that the rules will harm broadband investment. As we have said before, '[i]t is not enough merely to mention a possible argument in the most skeletal way, leaving the court to do counsel's work,'" the court concluded.
The court also sided with the FCC in its decision to include mobile service in its rules and address interconnection deals on a case-by-case basis.
"We reject mobile petitioners' arguments and find that the Commission's reclassification of mobile broadband as a commercial mobile service is reasonable and supported by the record," the court said.
"The wireless industry remains committed to preserving an open Internet and will pursue judicial and congressional options to ensure a regulatory framework that provides certainty for consumers, investors and innovators," wireless industry association CTIA said in response. "For the U.S. to remain the global mobile leader, we need rules that help promote consumer access to 5G and the Internet of Things without subjecting the wireless industry to investment-chilling public utility regulation. In the interim, we urge the FCC to support innovative new services, like free data, that benefit consumers and reflect the highly competitive mobile market."