Court Says F-C-C-Ya! To Net Neutrality

A federal appeals court has issued a definitive smackdown to the Federal Communications Commission's plans to regulate Internet service providers. At issue was the agency's decision to censure Comcast for degrading Internet service to users of the BitTorrent file-sharing utility in 2007.  But not only did the court rule that the FCC was wrong to go after Comcast for bandwidth throttling, it found that the agency does not have regulatory authority to tell Internet service providers how to manage Web traffic on the networks they control. As a result, it now appears likely that the FCC does not have the legal power to follow through on its proposal to regulate and enforce Net neutrality rules.

Given the court's vocal skepticism during the hearing, this isn't a huge surprise. But it's still a landmark that does significant damage to the FCC's current plans to enforce Net neutrality.

In defending its actions against Comcast, the FCC argued that existing, non-binding "statements of policy" gave it "ancillary authority" over ISP management decisions. But the court flatly rejected this argument, declaring, rather sensibly, that non-binding policy statements do not confer regulatory authority. From the decision:

The Commission acknowledges that section 230(b) and section 1 are statements of policy that themselves delegate no regulatory authority….Policy statements are just that—statements of policy. They are not delegations of regulatory authority.

So it now appears that without an explicit act of Congress, the FCC's recent Notice of Proposed Rulemaking (NPRM), in which the agency proposed to expand and codify its neutrality rules, is dead in the water. As Larry Downes writes at the Tech Liberation Front, "it is very hard to see how the NPRM can go forward—or survive even the briefest of legal challenges should the FCC simply do so—given this ruling."

It's been clear since at least last summer that FCC Chairman Julius Genachowski is highly interested in formalizing his agency's authority to regulate Net neutrality, which means the FCC is likely to go ahead with alternatives. That may mean pushing for Congress to grant the agency greater authority over the Net. But Congress already has a lot on its plate, and there's a good chance any such legislation would get bogged down in the Senate.

So instead, it might try changing how ISPs are classified under the law. Right now, ISPs are classified as information services under Title I of the 1996 Telecommunications Act. Telecommunications services, like telephone carriers, are classified under Title II, a classification which gives the FCC significantly more leeway to regulate. It's possible that, after years of classifying ISPs as information services, the FCC will now attempt to push ISPs into the second category: As Downes notes in a thorough and informative piece on the distinctions between those two classifications, "FCC Chairman Julius Genachowski has refused to rule out the possibility of reclassification when it has come up regarding the Comcast-BitTorrent case. And during a hearing over the Comcast-NBC Universal merger on Thursday, he gave a strong indication that the FCC is considering reclassification."

But that would probably trigger a serious legal backlash—what the Progress and Freedom Foundation's Adam Thierer calls "Regulatory World War III." Is the FCC ready for another drawn-out court battle—one likely to be even tougher than its suit against Comcast? We'll see. One hopes the agency simply drops its pursuit of Net neutrality regulation entirely. Given its track record, though, I wouldn't bet on it.

More from Reason on Net neutrality here, here, and here. Watch Reason.tv take on Net neutrality below: