Verizon Communications Inc. won an appeals court challenge to equal treatment rules for the Internet that could leave companies such as Netflix Inc. and Amazon.com Inc. facing higher charges for the fastest service.
The U.S. Court of Appeals in Washington on Tuesday sent the rules governing what’s known as net neutrality back to the Federal Communications Commission, saying the agency overreached in barring broadband providers from slowing or blocking selected Web traffic. The FCC rules, which the agency may attempt to rewrite, required high-speed Internet providers over wires to treat all traffic equally and disclose their network practices.
U.S. Circuit Judge David Tatel, writing for a three-judge panel, said that while the FCC has the power to regulate Verizon and other broadband companies, it chose the wrong legal framework for its open-Internet regulations.
“Given that the commission has chosen to classify broadband providers in a manner that exempts them from treatment as common carriers, the Communications Act expressly prohibits the commission from nonetheless regulating them as such,” Tatel wrote.
The FCC will consider appealing the decision, Chairman Tom Wheeler said in an emailed statement.
The agency will ensure “that these networks on which the Internet depends continue to provide a free and open platform for innovation and expression,” Wheeler, a Democrat, said.
The court rejected Verizon’s position that the FCC doesn’t have jurisdiction over broadband access, and at the same time the judges found the agency “could not impose last century’s common carriage requirements on the Internet,” Randal Milch, Verizon’s executive vice president, said in an emailed statement.
“Today’s decision will not change consumers’ ability to access and use the Internet as they do now,” Milch said. “The court’s decision will allow more room for innovation.”
The FCC rule, approved on a Democratic-led, 3-2 vote in 2010, left more freedom for wireless providers.
The rule attracted criticism from the left and right ends of the political spectrum. Open-Internet advocates said it didn’t go far enough, and cited the lighter regulation of increasingly popular mobile services. Republicans, including members of Congress, called the rule an unjustified power grab.
The FCC passed the rule after the appeals court in April 2010 decided the agency lacked authority to censure Comcast Corp. for interfering with subscribers’ Internet traffic. That sent the FCC on a search for a legal justification, and the agency concluded it could rely on its broad power over communications.
Whether that foundation was adequate was a primary question in the case decided Tuesday by a three-judge panel that included Circuit Judges Laurence Silberman and Judith Rogers.
Proponents, including Web companies, say regulations are needed to keep Internet service providers from interfering with rival video and other services. Those companies don’t pay today for what’s known as last-mile Web content delivery.
They say that without rules, Internet providers could favor wealthier, established players at the expense of startups, squelching innovation.
Craig Aaron, president of Free Press, a policy group based in Washington and Northampton, Mass., that advocates affordable universal Internet access, said the ruling enables broadband providers to “establish fast lanes for the few giant companies that can afford to pay exorbitant tolls and reserve the slow lanes for everyone else.”