Why stakes are high for court's decision on FCC's net neutrality rules

In a decade-long battle to ensure consumers get equal access to the Internet, the Federal Communications Communication (FCC) once again headed to court on Friday to argue that the Internet should be regulated like phone service and other public utilities.

The regulator has twice gone unsuccessfully before the DC Circuit Court of Appeals in cases brought by Comcast and Verizon, who argued the commission lacked the authority to regulate their provision of high-speed Internet service.

But the debate this time may promise to be different, coming in the wake of the commission’s adoption in February of rules on "net neutrality," which say carriers can’t block or slow down certain websites in favor of others.

During more than three hours of often-technical arguments, two judges on the three-judge panel appeared to be sympathetic to the FCC’s case that it had the authority to enforce net neutrality regulations, sometimes questioning lawyers for a number of telecommunications companies who oppose the FCC’s actions.

With net neutrality increasingly becoming a political issue and a cause célèbre — it was endorsed by President Obama and opposed by the FCC’s two Republican commissioners, while the comedian John Oliver delegated a segment on his show “Last Week Tonight” to explaining the debate — observers say it's difficult to tell how the court will rule. But the issue Mr. Oliver memorably described as “boring even by C-SPAN standards” could have a large impact.

"What’s potentially at stake is the FCC’s more than decade-long effort to put nondiscrimination rules on the Internet," says James Speta, a professor at Northwestern University’s School of Law. "The court could strike them down, or rule against the FCC in a way that forces them to rethink the rules... It’s possible that we won’t have a full win or a full loss for nondiscrimination rules on the Internet."

Net neutrality has long-term political consequences, advocates argue. Opponents, by contrast, say the FCC’s efforts could discourage innovation and hamper their ability — especially for smaller companies — to do business with their customers.

"The threat that [Internet providers] could suppress political speech and organizing is not merely speculative... In reality, an [Internet service provider] need not even ban a service or message entirely – simply slowing down disfavored websites and favoring others could have enough of an effect on user behavior to chill discourse," wrote Sascha Meinrath, a communications professor at Pennsylvania State University, and Zephyr Teachout, a law professor at Fordham University, in a friend-of-the-court brief.

Despite having a history that dates back to the era of dial-up modems and online chat rooms, the issue of how and even whether the Internet should be regulated wasn’t always an explicitly political issue, says James Grimmelmann, a professor at the University of Maryland’s School of Law.

During the Bush administration, FCC Commissioner Michael Powell, a Republican who now serves as president of an influential telecommunications lobbying group, made an early effort at net neutrality in 2004 by releasing a set of four freedoms for the Internet. But since the election of President Obama, ongoing debates about the influence of corporations on business practices in other industries have bled over to concerns about the influence of such companies online, he says.

"Network neutrality has always been about people’s fears about what might happen more than what is happening – that’s true for both supporters and opponents," he says. But now, "it’s almost defining for progressive Democrats to be for net neutrality and for Republicans to be against it."

Mr. Speta of Northwestern says net neutrality has become wrapped up with the larger political debate over support for government regulation in other areas.

"I have always supported the concept of ‘net neutrality’ because what is good for the Internet is good for my business... What I do not support is the government telling me how to run my business," wrote Joe Portman, the founder of Alamo Broadband, a small Texas broadband company, which has joined cable giants such as Comcast to argue against the FCC’s authority to fully regulate Internet providers, in an opinion in USA Today.

While it remains to be seen just how the appeals court will handle the challenge to the FCC’s authority, its ruling last year opened a key legal avenue for the commission to pursue its goal of ensuring net neutrality. In that case, which was brought by Verizon, the court said the FCC lacked the authority to regulate broadband services because they were classified as "information services," — where the regulator has less oversight — rather than "telecommunications services" such as landline phones, where it has full authority.

In creating its rules on net neutrality last winter, the FCC took up this challenge, voting 3-2 to expand its authority to regulate broadband as a public utility under Title II of the Communications Act.

"The court doesn’t say we will uphold it if you do that, but there was a suggestion of examining and reclassifying the service," says Speta, the Northwestern professor, noting that Judge David Tatel, who wrote that decision, is also on the panel this year.

The court’s ruling could have impacts on policy issues currently being debated by mobile phone carriers and content providers, such as a practice known as zero rating, which allows mobile companies to offer services that don’t count against their data limits. It’s often hailed as a win for consumers – T-Mobile is offering one such service that provides unlimited streaming video. 

But some advocates wonder if it could be a violation of net neutrality by encouraging favoritism among Internet providers. So far, the FCC has offered mixed messages on the issue, say Grimmelmann and Speta, the law professors.

The court may have offered some indication of their thinking during Friday’s hearing, at times questioning the arguments of the telecom companies’ lawyers.

At one point, Judge Sri Srinivasan asked Peter Keisler, a lawyer representing the companies, why he felt Internet services were different from phone-based information services – like the showtimes hotline Moviefone – that used computer databases to provide information to consumers.

He drew laughs in the courtroom by quickly recalling the phone number of a particular sports information hotline from memory.

"You could call that number and get up-to-date sports information, which is similar to what’s happening with the Web," Judge Srinivasan said. "And undoubtedly there was information processing going on in the background... Isn’t that similar to what’s going on now in the background that you say has to be deemed an ‘information service’?"