FCC loses neutrality battle as court strikes down rules

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Verizon (NYSE: VZ) and a number large cable operators won a large victory on the regulatory front as an appeals court ruled that the FCC can't impose its net neutrality rules that require ISPs to treat all traffic equally.

The court said in its ruling that the FCC did not have the legal authority to implement the regulations it proposed in 2011, which were challenged in a lawsuit filed by Verizon Communications.

"Even though the Commission has general authority to regulate in this arena, it may not impose requirements that contravene express statutory mandates," the court ruled. "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."

A big beneficiary of this ruling is Verizon, which argued in a lawsuit it filed in 2011 that the FCC doesn't have the authority to regulate how it handles broadband traffic. However, the commission argued that net neutrality rules were needed to protect new over the top (OTT) service providers.

The 81-page ruling has big implications on the future of the Internet and a host of OTT video players like Netflix (Nasdaq: NFLX), whose customers use broadband lines from Verizon and cable operators such as Comcast (Nasdaq: CMCSA) to get access to their service.

Michael Copps, special adviser to Common Cause's Media and Democracy Initiative and a former FCC commissioner, said the decision will only create barriers for Internet users. "The Court's decision today is poised to end the free, open, and uncensored Internet that we have come to rely on."

Copps added that "without prompt corrective action by the Commission to reclassify broadband, this awful ruling will serve as a sorry memorial to the corporate abrogation of free speech." 

According to various reports, the FCC hasn't yet issued a response to the ruling. 

For more:
- see the ruling
- see this GigaOM article
- Reuters has this article

Editor's Corner: Any Telecom Act makeover should be done with care

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Federal appeals court strikes down FCC's net neutrality rules
AT&T: 'Sponsored Data' toll-free data plans don't clash with net neutrality rules

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