Verizon Communications Inc. v. Federal Communications Commission, 740 F.3d 623 (D.C. Cir., 2014), was a ruling by the U.S. Court of Appeals for the D.C. Circuit vacating portions of the FCC Open Internet Order of 2010, which the court determined could only be applied to common carriers and not to Internet service providers. The case was initiated by Verizon, which would have been subjected to the proposed FCC rules, though they had not yet gone into effect. The case has been regarded as an important precedent on whether the FCC can regulate network neutrality.
Background Back in 2007, the Federal Communications Commission (FCC) censured Comcast for violating the Commission's network neutrality principles when it interfered with its users' access to peer-to-peer networking applications. This resulted in the court challenge Comcast Corp. v. FCC in 2010, in which the U.S. Court of Appeals for the District of Columbia held that the FCC did not have ancillary jurisdiction over the content delivery choices of Internet service providers under the language of the Communications Act of 1934. In the Comcast ruling, the Circuit Court hinted that it would accept separate jurisdictional arguments under other provisions of the 1934 Communications Act or the 1996 Telecommunications Act. This prompted the FCC to establish new rules regarding non-discriminatory delivery of Internet content in late 2010. Because of the ruling in the Comcast case, those new rules were presented in reference to other provisions of the statutes, mostly Section 706 of the 1996 Act, as well as other types of ancillary authority via Titles II and VI of that Act. The updated rules were released in December as the FCC Open Internet Order of 2010. These rules would forbid cable broadband and DSL Internet service providers from blocking or slowing online services or applications. It would also prohibit mobile carriers from blocking VoIP applications such as Skype or blocking websites in their entirely, though those mobile restrictions were fewer than those imposed on cable and DSL. The industry was unhappy with those new rules as well, with Verizon taking the lead in another court challenge just one month later. Verizon requested judicial review of the 2010 Open Internet Order, again at the Circuit Court for the District of Columbia, with a charge that the FCC had again surpassed its regulatory authority.
Circuit court ruling The matter of FCC jurisdiction over the content delivery choices of Internet service providers rests on the classification process outlined in the Communications Act of 1934. The Commission determines if a company or product within its jurisdiction qualifies as a "telecommunications service" that must follow common carrier rules under Title II of the Act, most notably a requirement to never discriminate against particular content or users; or as an "information service" that must follow much more lenient rules under Title I of the Act. (There are other classifications that are not relevant for the network neutrality dispute.) The court noted that the FCC had already classified cable broadband Internet, and later wireless Internet, as "information services" per this process as far back as 2002. As noted by the court, its task was "not to assess the wisdom of the Open Internet Order regulations, but rather to determine whether the Commission has demonstrated that the regulations fall within the scope of its statutory grant of authority." The court then deconstructed the FCC Open Internet Order of 2010 into its constituent parts. The court vacated two parts of the order, determining that the FCC did not have the authority to impose network neutrality restrictions without classifying network providers as telecommunications service akin to common carriers. Since the Commission had previously classified broadband providers as "information services" and not as "telecommunications services," such companies could not be ordered to avoid discrimination against certain websites or applications under Title II of the Communications Act of 1934. A different part of the order, in which the FCC ordered all Internet service providers to provide transparent information on their network blocking policies, was upheld by the court because it was not contingent upon operators being classified as common carriers. Additionally, the court found that Section 706 of the Telecommunications Act of 1996 "vests the FCC with affirmative authority to enact measures encouraging the deployment of broadband infrastructure." The court also agreed with the FCC that broadband providers represent a threat to Internet openness and could hinder future development without rules similar to those in the Open Internet Order. Thus, the court hinted that the FCC could require Internet service providers to exercise network neutrality by reclassifying them as "telecommunications services" that were in turn required to act as common carriers. As a result of this ruling, most of the FCC Open Internet Order of 2010 was invalidated and vacated as a violation of the Commission's authority under the 1934 and 1996 Acts. The exception was the transparency provision.
Concurring/dissenting opinion Judge Laurence H. Silberman wrote his own opinion, concurring in part and dissenting in part. Silberman was in general agreement with the majority that the FCC Open Internet Order of 2010 "impermissibly subjects broadband providers to treatment as common carriers." Of significance is Silberman's statement that the FCC has the authority to take "measures that promote competition in the local telecommunications market or other regulating methods that remove barriers to infrastructure investment." This has been interpreted to mean that the FCC has the authority to challenge state laws restricting municipal broadband, which became controversial in the following years.
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