A federal appeals court on Thursday dealt a blow to President Biden's Federal Communications Commission, striking down the agency's hard-fought and long-debated rules for the open internet.
The FCC had sought to reinstate a sweeping policy put in place under President Obama that aimed to treat internet services as an essential public service, similar to a water or electric utility.
The so-called net neutrality rules would have subjected internet service providers to greater regulation. A Republican-led commission repealed the rules in 2017 during President-elect Donald Trump's first term.
Early last year, the FCC – then back under Democratic control – voted to formalize a national standard for internet services to prevent blocking or slowing down information transmitted over broadband internet lines. The basic principle of the open Internet meant that Internet service providers were not allowed to differentiate between content providers.
The order would also have given the FCC more control over requiring internet providers to respond to service outages or security breaches involving consumer data. Citing national security, the FCC said increased oversight was necessary for the commission to effectively crack down on foreign-owned companies deemed a security threat.
But on Thursday, the Cincinnati-based 6th U.S. Circuit Court of Appeals ruled that the five-member commission did not have the authority to reclassify broadband Internet as a telecommunications service. The decision dismantles one of Biden's biggest technology initiatives.
In its ruling, the 6th Circuit called the FCC's net neutrality order a “heavy-handed regulatory regime.”
The court said a recent U.S. Supreme Court ruling eliminated a legal framework that allows courts to interpret rules in light of the federal agency that created them. The 6th Circuit said the FCC does not have the statutory authority to change the classification of broadband Internet as a telecommunications service. That role lies with Congress.
The case was brought by the Ohio Telecom Assn. filed, a trade organization that represents Internet service providers.
FCC Chairwoman Jessica Rosenworcel, a long-time advocate for net neutrality rules, urged lawmakers after the court decision to take responsibility. She pushed the move to reinstate her during her tenure as head of the agency, leading the party's 3-2 vote last year Restoration of net neutrality rules.
“Consumers across the country have told us time and time again that they want a fast, open and fair internet,” Rosenworcel said in a statement. “With this decision, it is clear that Congress must now heed his call to embrace net neutrality and incorporate open Internet principles into federal law.”
FCC Chairwoman Jessica Rosenworcel speaks during a Senate committee hearing on the agency's 2020 audit.
(Jonathan Newton / Pool photo)
The regulatory climate has changed dramatically in recent years and is expected to change again after Trump returns to the White House. Trump's nominee for FCC chairman, Brendan Carr, wrote a chapter about the FCC in the conservative policy blueprint “Project 2025.” Businesses expect the commission will be more business-friendly under Carr.
“President Biden's entire plan relied on Chicken Little tactics to convince Americans that the Internet would collapse without these so-called 'net neutrality' regulations,” Carr said in a statement. “The American people have now seen through this ruse.”
The dispute over net neutrality hinged on the extent to which the FCC could regulate broadband Internet service providers under the authority the commission received from Congress in the landmark Communications Act of 1934 and the Telecommunications Act of 1996.
“We believe that broadband Internet service providers provide only an 'information service' … and therefore the FCC lacks statutory authority to enforce its desired net neutrality policies through the 'telecommunications service' provision of the Communications Act,” the 6 district judges wrote in their 26-page judgment.
Consumer groups that have advocated for net neutrality regulations for more than a decade deplored the decision.
“Today’s decision represents a major setback for consumers, competition and the open Internet,” John Bergmayer, legal director at Public Knowledge, said in a statement.
“In denying the FCC’s authority to classify broadband as a telecommunications service, the Court ignored decades of precedent and fundamentally misunderstood both the technical reality of how broadband works and the clear intent of Congress in the Communications Act.”
Net neutrality has been a seesaw battle for more than 15 years.
In the early days of broadband penetration, large companies took the opposite side. Google, Netflix and other tech companies joined consumer groups calling for net neutrality rules to level the playing field with internet service providers such as AT&T, Verizon, Comcast Corp. or Charter Communications.
Net neutrality advocates wanted these providers to be regulated under Title II of the landmark communications law, which would have given the FCC a greater enforcement role.
“Remember that the market’s initial concern over Title II reclassification never had anything to do with net neutrality,” cable analyst Craig Moffett wrote in a note to investors. Instead, investors in telecommunications stocks feared that such a reclassification would open a door “to regulation of broadband prices,” Moffett wrote.
But that didn't happen.
“This risk is now eliminated,” Moffett wrote.