Verizon wins partial victory in net-neutrality case

Posted: January 16, 2014

Verizon Communications Inc. won a partial victory Tuesday from a federal appeals court in the long-running fight over how the government regulates broadband Internet providers.

But the battle - which could affect consumers' access to a wide variety of websites and services - is far from done, according to telecommunications experts and advocates on both sides of the issue.

Verizon, a leading provider of landline and wireless phone service as well as Internet access, accused the Federal Communications Commission of overreaching in its 2010 "Open Internet" order, which barred broadband providers from discriminating against or blocking any data distributed over their networks - a goal of those advocating a concept also known as network neutrality.

Verizon was joined in its fight by conservative and business groups that oppose neutrality rules, such as the Competitive Enterprise Institute. A coalition of Internet companies such as, eBay, and Facebook intervened in support of the FCC, and the widely watched case drew eight friend-of-the-court briefs.

A three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit agreed with Verizon, largely because of an FCC decision eight years earlier that classified broadband as an "information service" rather than a "common-carrier" telecommunications service.

Verizon said Tuesday that the ruling would not prompt changes in how it manages its broadband networks, which include its FiOS fiber-optic system and DSL service provided over its older copper-wire phone network.

"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," it said.

Philadelphia-based Comcast Corp., which had promised to follow the open-Internet rules for seven years in order to win the FCC's 2011 approval for its takeover of NBCUniversal, offered similar assurances.

"We remain comfortable with that commitment because we have not - and will not - block our customers' ability to access lawful Internet content, applications, or services," David L. Cohen, Comcast's executive vice president, said in a statement. "Comcast's customers want an open and vibrant Internet, and we are absolutely committed to deliver that experience."

Consumer advocates have long pushed for net-neutrality rules. They argue that without such requirements, broadband providers could give preferential treatment to their own services or those of their affiliates - or could favor data from companies willing to pay more to get their data treated preferentially.

For instance, a company such as Comcast could favor NBCUniversal's TV shows or movies while degrading similar content streaming from Netflix, or could demand that Netflix pay extra fees.

David Tatel, a judge on the appeals court, acknowledged such risks, writing that "a broadband provider like Comcast might limit its end-user subscribers' ability to access the New York Times website if it wanted to spike traffic to its own news website, or it might degrade the quality of the connection to a search website like Bing if a competitor like Google paid for prioritized access."

But Tatel said the FCC could not impose common-carrier-style regulation on the providers after previously deciding to classify them as more loosely regulated "information services."

While holding open the possibility that the FCC might appeal Tuesday's ruling, agency Chairman Tom Wheeler hailed its conclusion that the FCC has broad authority to write rules "governing broadband providers' treatment of Internet traffic," and suggested there might be other ways to make them stick.

Could the agency simply declare that broadband providers are subject to common-carrier regulation?

"Under administrative law, an agency can't just arbitrarily change its viewpoint," said Kevin Werbach, a telecommunications expert and professor of legal studies and business ethics at the University of Pennsylvania's Wharton School. "I'm skeptical that the FCC would be able to claim that the marketplace has changed in some dramatic way since 2010."

But Werbach, who served at the FCC during the 1990s and advised the Obama administration during its transition, said the appeals court's ruling made it clear that other approaches might be acceptable - such as a finding that certain practices threaten harm to broadband investment.

"This decision did not end the net-neutrality fight," Werbach said.

215-854-2776 @jeffgelles

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