Is Net Neutrality Dead? DC District Court Of Appeals Tells FCC No More ‘Open Internet Order’

The Court of Appeals for the District of Columbia Circuit ruled Tuesday that the Open Internet Rules set forth by the Federal Communications Commission (FCC) have no legal grounds and thus are unenforceable. “We’re disappointed that the court came to this conclusion. Its ruling means that Internet users will be pitted against the biggest phone and cable companies,” said Craig Aaron, president of CEO of Free Press, an advocate for affordable and accessible Internet. The ruling will potentially allow for Internet service providers to throttle Web traffic and charge tiered pricing for bandwidth- heavy services like video streaming or gaming.

But while some were running for the hills crying foul, the FCC Chairman Tom Wheeler responded to the judgment saying that the FCC will “consider all available options, including those for appeal, to ensure that these networks on which the Internet depends continue to provide a free and open platform for innovation and expression, and operate in the interest of all Americans.”

The court’s decision hinged on the legal framework that the FCC used to establish the Open Internet Rules. “The FCC -- under the leadership of former Chairman Julius Genachowski -- made a grave mistake when it failed to ground its open Internet rules on solid legal footing,” Aaron said. If appealing the decision does not work, considering that the Supreme Court only hears about 100 of the more than 10,000 cases that are submitted, the next step, according to the Free Press, would be to “make Net Neutrality rules that aren’t riddled with loopholes. With the authority resolved, new rules would be enforceable.”

The court positively upheld the FCC’s authority to regulate broadband, stated consumer advocacy group Public Knowledge. “To exercise that authority, the FCC must craft open Internet protection that are not full-fledged common carrier rules,” said Harold Feld, its senior vice president. “Alternatively, if the FCC needs broader authority it can classify broadband as a title 2 common carrier service. Both of these are viable options. In fact, Public Knowledge has long held that both broadband is a telecommunications service, and that the modest protections offered by the Open Internet rules fall well short of full common carrier regulations.”

While this decision may have terrible implications for the public, companies like Netflix will also suffer. “The biggest broadband providers will race to turn the open and vibrant Web into something that looks like cable TV,” speculated Free Press’ Aaron. “They’ll establish fast lanes for the few giant companies that can afford to pay exorbitant tolls and reserve the slow lanes for everyone else.” That means companies like Netflix will either have to pony up extra cash for faster service or deal with restricted access. Since Netflix posts average net gains (Netflix netted $17.15 million in 2012), any additional charges would most likely be passed down to the customer, which is bad for Netflix too. Netflix had no comment about the court’s decision at the time of writing.

However, services like Hulu, owned in part by Comcast, will not have to compete for faster service considering one of its parent companies is the largest ISP in the country. This is why net neutrality rules exist. Coincidentally, AT&T announced last week a new program called “Sponsored Data,” which allows companies to pay for the in-app mobile data its customers use. The plan is being criticized for promoting a financial divide for developers, thus picking winners and losers, eliminating competition.