FCC’s Net-Neutrality Rules Upheld by Appeals Court

Industry appeals to Supreme Court are likely

ENLARGE
Federal Communications Commission Chairman Tom Wheeler at a hearing on the agency’s net-neutrality rules in Washington, D.C., in March 2015. PHOTO: ANDREW HARRER/BLOOMBERG NEWS



By JOHN D. MCKINNON and
BRENT KENDALL
Updated June 14, 2016 1:03 p.m. ET
91 COMMENTS

WASHINGTON—A panel of federal judges upheld the government’s net-neutrality rules Tuesday, handing a major victory to the Obama administration in its efforts to step up oversight of cable and telephone companies that provide broadband service.
The divided decision by the U.S. Court of Appeals for the District of Columbia Circuit represents a big win for internet companies that favor the net-neutrality rules.
The court’s majority rejected a wide range of telecommunications-industry challenges to the rules, which were put in place in 2015. The same appeals court had twice rejected earlier efforts by the Federal Communications Commission to impose net-neutrality rules on internet-service providers.
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Aimed at ensuring a level playing field for the internet, the rules require internet-access providers, such as Comcast Corp. or Verizon Communications Inc., to treat all content coming across their networks equally, without blocking or slowing competitors or speeding up the content of those who pay.
Industry appeals to the U.S. Supreme Court appear likely.
In the core decision, the D.C. circuit court ruled the FCC had sufficient basis to impose utility-style regulation on broadband service, because consumers no longer look to internet-service providers to provide the online content they are seeking.
“Over the past two decades, this content has transformed nearly every aspect of our lives, from profound actions like choosing a leader, building a career and falling in love to more quotidian ones like hailing a cab and watching a movie,” the court wrote. “The same assuredly cannot be said” for broadband providers’ own add-on applications.
The appeals court’s 2-1 ruling sided with the FCC in a dense, methodical opinion that rejected the challengers’ various arguments one by one.
The D.C. Circuit majority said its role in reviewing the net-neutrality regulations was “a limited one.” The court said its job was “to ensure that an agency has acted within the limits of Congress’s delegation of authority.” The FCC’s rules fell permissibly within those limits, the court said.
FCC Chairman Tom Wheeler said the ruling was “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.”
The 115-page majority opinion was written jointly by Judges David Tatel and Sri Srinivasan. Judge Tatel, a Clinton appointee, wrote the appeals court’s previous two opinions that went against the FCC on net-neutrality issues. Judge Srinivasan is an Obama appointee who was on the president’s short list for the Supreme Court vacancy created by the February death of Justice Antonin Scalia.
Judge Stephen Williams, a Reagan appointee, dissented, saying a core part of the FCC’s approach “fails for want of reasoned decisionmaking.” The judge said the FCC’s explanation for its new regulatory treatment of broadband providers “is watery thin and self-contradictory.”
The wireless and cable industries have fought the rules, arguing they would stifle investment in telecommunications networks and hinder the transition to the next generation of wireless service, known as 5G.
They also have worried the FCC might try to crack down on some emerging industry practices that open-internet advocates criticize as methods of skirting the net-neutrality rules. Those include imposing data caps on consumers but exempting provider-sponsored content.
CTIA, a wireless industry group, said in a Tuesday statement the industry “remains committed to preserving an open internet and will pursue judicial and congressional options.” The National Cable & Telecommunications Association said, “While this is unlikely the last step in this decadelong 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.”
Netflix Inc., which favors the rules, responded to the decision in a statement: “By upholding all parts of the FCC’s net-neutrality approach, the appeals court settled two decades of debate and legal uncertainty by ensuring the internet remains open to all.”
Tuesday’s ruling may not be the last legal word on the matter, but there is no guarantee industry challengers will succeed in obtaining further court review of the FCC rules. The Supreme Court currently is working with eight justices, who sometimes split 4-4 along conservative and liberal lines.
It remains unclear when a ninth member might join the court, given the continued political standoff between Democrats and Republicans. The high court has been accepting fewer new cases for review since Justice Scalia died, and the cases it has accepted haven’t involved blockbuster issues.
The challengers also could ask the D.C. Circuit to reconsider the case, with a larger roster of judges participating. But the appeals court doesn’t often rehear cases, and the court has a majority of judges appointed by Democratic presidents who may agree with Tuesday’s ruling.

http://www.wsj.com/articles/fcc-net-...urt-1465914663