WASHINGTON – A United States appeals court upheld the Federal Communications Commission’s decision to gut Obama-era “net neutrality” rules, handing a victory to broadband providers and a loss to companies that rely on the internet to reach consumers.
The 3-0 decision by a three-judge panel in Washington ratifies the FCC’s 2017 determination to reverse internet regulations championed by the commission’s prior Democratic leadership, which required broadband providers such as Comcast Corp. and AT&T Inc. to treat all web traffic equally.
“Today’s decision is a victory for consumers, broadband deployment, and the free and open internet,” FCC Chairman Ajit Pai, who guided the agency as its Republicans erased the Obama-era rule, said in a statement. “The court affirmed the FCC’s decision to repeal 1930s utility-style regulation of the internet imposed by the prior administration.”
The court vacated the portion of the order that prevents states from coming up with their own rules, saying it exceeded the agency’s authority to do so.
Net-neutrality supporters seized on that part of the ruling.
“It is clear that the fight over net neutrality is just beginning,” Andrew Jay Schwartzman, an attorney for challengers to the FCC rule, said in an email. “The FCC can try to fix its mistakes, but the court made it clear that the commission cannot block states from passing their own net neutrality statutes and issuing executive orders.”
Tuesday’s ruling is a win for the broadband industry and a setback for companies that rely on the internet for distributing their content, including Facebook Inc., Alphabet Inc.’s Google and the likes of Netflix Inc. and EBay Inc. They had feared that internet service providers could slow their content to favor business partners.
Judges said they were loath to set the communications industry, and the nation, on a different regulatory course yet again. The rules took effect last year.
“We decline to yet again flick the on-off switch” of heavier regulation, the court said in its opinion.
Critics said the new regulatory regime adopted under Pai invited predatory behavior, while broadband providers said competition would prevent abuses. Opponents of the new rules were the web software developer Mozilla Corp., the streaming video service Vimeo and a coalition of governments including New York, California, Illinois, Massachusetts, the District of Columbia and Santa Clara County, California.
At issue was whether Pai correctly decided to treat broadband internet as a lightly-regulated information service, subject only to Federal Trade Commission consumer protection-style oversight. Two years earlier, the agency’s prior leadership declared broadband was a form of telecommunications.
The panel was comprised of Obama appointees Patricia Millett and Robert Wilkins, and Senior Judge Stephen Williams, a Ronald Reagan-nominee and the lone judge who voted to strike down “net neutrality” as part of a prior panel in 2016.
The judges issued one unified opinion, unsigned by any one of them, accompanied by three separate ones, where they elaborated on their concerns and the reasons for their conclusions.
Millett in a concurring opinion said she sided with the FCC with “substantial reservation” and was bound by a 2005 Supreme Court ruling that gave the agency discretion to classify cable modem connections.
“I am deeply concerned that the result is unhinged from the realities of modern broadband service,” Millett wrote. She and Wilkins said either the Supreme Court or Congress need to take up the issue.
Williams dissented on the part of the ruling that allows states to set policy. He said that the internet can’t be divided into state markets, and that state actions “would frustrate an agency’s authorized policy.”
The judges told the FCC to reconsider portions of its decision about implications of its rule for public safety, the regulation of attachments to telephone poles, and concerns about telecommunications subsidy programs.
Andrew Harris and Todd Shields are reporters for Bloomberg News.
