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Open Internet Rules :: Litigation
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Verizon v. FCC, DC Cir. Jan. 14, 2014

TATEL, Circuit Judge: For the second time in four years, we are confronted with a Federal Communications Commission effort to compel broadband providers to treat all Internet traffic the same regardless of source — or to require, as 4 it is popularly known, “net neutrality.” In Comcast Corp. v. FCC , 600 F.3d 642 (D.C. Cir. 2010), we held that the Commission had failed to cite any statutory authority that would justify its order compelling a broadband provider to adhere to open network management practices. After Comcast , the Commission issued the order challenged here — In re Preserving the Open Internet , 25 F.C.C.R. 17905 (2010) ( “the Open Internet Order” ) — which imposes disclosure, anti - blocking , and anti - discrimination requirements on broadband providers . As we explain in this opinion, the Commission has established that section 706 of the Telecommunications Act of 1996 vests it with affirmative authority to enact measures encouraging the deployment of broadband infrastructure. The Commission, we further hold , has reasonably interpreted section 706 to empower it to promulgate rules governing broadband providers’ treatment of Internet traffic , and its justification for the specific rules at issue here — that they will preserve and facilitate the “virtuous circle” of innovation that has driven the explosive growth of the Internet — is reasonable and supported by substantial evidence. That said, even though the Commission has general authority to regulate in this arena, it may not impose requirements that contravene express statutory mandates. 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. Because the Commission has failed to establish that the anti - discrimination and anti - blocking rules do not impose per se common carrier obligations, we vacate those portions of the Open Internet Order.

"We nonetheless vacated the anti-blocking and antidiscrimination rules because they unlawfully subjected broadband providers to per se common carrier treatment. Id. at 655, 658–59. As we explained, the Communications Act provides that “[a] telecommunications carrier shall be treated as a common carrier . . . only to the extent that it is engaged in providing telecommunications services.” Id. at 650 (quoting 47 U.S.C. § 153(51)). The Commission, however, had classified broadband not as a telecommunications service, but rather as an information service, exempt from common carrier regulation. Id. Because the anti-blocking and antidiscrimination rules required broadband providers to offer service indiscriminately—the common law test for a per se common carrier obligation—they ran afoul of the Communications Act. See id. at 651–52, 655, 658–59. We upheld the transparency rule, however, because it imposed no per se common carrier obligations on broadband providers. Id. at 659." [USTA v. FCC Slip 19 DC Cir. 2015]

FCC Summary from 2015 OI Rules

70. Verizon subsequently challenged the Open Internet Order in the U.S. Court of Appeals for the D.C. Circuit, arguing, among other things, that the Open Internet Order exceeded the Commission’s regulatory authority and violated the Act. In January 2014, the D.C. Circuit upheld the Commission’s determination that section 706 of the Telecommunications Act of 1996 granted the Commission authority to regulate broadband Internet service providers, and that the Commission had demonstrated a sound policy justification for the Open Internet Order. Specifically, the court sustained the Commission’s findings that “absent rules such as those set forth in the Open Internet Order, broadband providers represent a threat to Internet openness and could act in ways that would ultimately inhibit the speed and extent of future broadband deployment.”

71. Despite upholding the Commission’s authority and the basic rationale supporting the Open Internet Order, the court struck down the no-blocking and antidiscrimination rules as at odds with section 3(51) of the Communications Act, holding that it prohibits the Commission from exercising its section 706 authority to impose common carrier regulation on a service not classified as a “telecommunications service,” and section 332(c)(2), which prohibits common carrier treatment of “private mobile services.” The D.C. Circuit vacated the no-blocking and antidiscrimination rules because it found that they impermissibly regulated fixed broadband providers as common carriers, which conflicted with the Commission’s prior classification of fixed broadband Internet access service as an “information service” rather than a telecommunications service. Likewise, the court found that the no-blocking rule as applied to mobile broadband conflicted with the Commission’s earlier classification of mobile broadband service as a private mobile service rather than a “commercial mobile service.” The Verizon court held that the “no unreasonable discrimination” standard adopted in the Open Internet Order was insufficiently distinguishable from the “nondiscrimination” standard applicable to common carriers. Central to the court’s rationale was its finding that, as formulated in the Open Internet Order, both rules improperly limited fixed broadband Internet access providers’ ability to engage in “individualized bargaining.”  

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