Net neutrality rules upheld by D.C. Circuit, setting Supreme Court showdown with telcos

The D.C. Circuit court upheld the FCC's net neutrality rules 2-1, a decision that will usher in challenges from incumbent telcos like AT&T (NYSE: T) and Verizon (NYSE: VZ) at the Supreme Court.

AT&T, for one, wasted no time in saying that it plans to make its voice heard in the next challenge to the rules. It's likely that fellow telcos CenturyLink (NYSE: CTL) and Verizon will follow suit.

One of the chief concerns cited by AT&T, Verizon, and CenturyLink when the net neutrality order was approved last year was that reclassifying service providers under Title II regulation would stifle innovation and drive up costs for consumers.

"We have always expected this issue to be decided by the Supreme Court, and we look forward to participating in that appeal," said David McAtee, senior EVP and general counsel for AT&T, in a statement.

US Telecom, an organization that represents AT&T and other large telcos, said that the D.C. Court's decision will hamper ISPs' ability to enhance their networks with technology innovations.

"Two judges on the court have unfortunately failed to recognize the significant legal failings of the Federal Communications Commission's decision to regulate the internet as a public utility, leaving in place regulation we believe will replace a consumer-driven internet with a government-run internet, threatening investment and innovation in years to come," said Walter McCormick, president of USTelecom, in a statement. "Our industry strongly supports open internet principles and the FCC's order is wholly unnecessary to keeping the internet open."

Regardless of these telcos' protests, the decision is a victory for FCC Chairman Tom Wheeler and the broader community of net neutrality advocates in the near-term.

"Today's ruling is a victory for consumers and innovators who deserve unfettered access to the entire web, and it ensures the internet remains a platform for unparalleled innovation, free expression and economic growth," said Wheeler in a statement. "After a decade of debate and legal battles, today's ruling affirms the Commission's ability to enforce the strongest possible internet protections -- both on fixed and mobile networks -- that will ensure the internet remains open, now and in the future."

Service providers in their suit challenged the rules, asking whether the FCC had the authority to group wired and wireless services under the same rules. 

This is a different turn of events for the FCC. Previous decisions made by the D.C. appeals court ruled against the FCC's earlier net neutrality proposals that did not leverage Title II classification. A 2010 lawsuit filed by Verizon helped overturn the FCC's earlier net neutrality order.

In a 115-page majority opinion that was jointly written jointly by Judges David Tatel and Sri Srinivasan, the D.C. circuit court ruled that the FCC had sufficient basis to impose utility-style regulation on broadband service, since consumers no longer look to ISPs to provide the online content they are looking to access.

"Over the past two decades, this content has transformed nearly every aspect of our lives, from profound actions like choosing a leader, building a career and falling in love to more quotidian ones like hailing a cab and watching a movie," the court said in its ruling. "The same assuredly cannot be said" for broadband providers' own add-on applications."

For more:
- WSJ has this article
- Politico has this article

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