Wheeler says net neutrality can withstand Supreme Court challenge

FCC Chairman Tom Wheeler isn't afraid of the large telcos like AT&T (NYSE: T) and CenturyLink (NYSE: CTL) challenging the commission's net neutrality rules, which were upheld by a Washington federal appeals court last week. He says they also won't fall to a Supreme Court challenge.

"As (U.S. cable and telecom giants) keep making record profits, it will get harder and harder to argue against it," Wheeler said in an interview with USA Today.

In March 2015, the FCC passed the new rules along party lines. Based on Title II of the Telecommunications Act, the Open Internet regulation passed after a previous move to enforce net neutrality was overturned by the same appeals court in 2014 via a legal challenge from Verizon (NYSE: VZ).

Wheeler said what was different this time around was that the appeals court saw the argument that broadband Internet service is a utility much like water or electric -- two services that every American can access equally for their homes or businesses.

"High-speed Internet is the most important commodity of the 21st Century...the commodity that drives our economy," he said. "It has to be fast, fair and open if we're going to realize the promise of broadband."

Regardless, it's clear that the large telcos will likely appeal -- a prospect that Wheeler does not seem afraid of.

"This was a decision written for the Supreme Court" to review, Wheeler said.

AT&T and CenturyLink both expressed their frustration with the D.C. Court's decision when it emerged last week.

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

Likewise, CenturyLink said that the rules will cause issues for telcos and stick consumers with higher prices.

"The FCC's decision to impose a heavy-handed regulatory regime on internet access does not further an open internet and instead hampers investment and consumer choice," said John Jones, SVP for public policy and government relations for CenturyLink, in a statement.

Analysts say that the FCC's net neutrality measures won't have an immediate effect, but questions remain about the implications over time.

"Near-term, we expect limited changes (both operational and economic) across the sector," said Amir Rozwadowski, a financial advisor for Barclays in a research note. "However, longer-term strategic paths that would have been available to the industry otherwise (e.g. usage-based pricing, managed networks, even zero rating -- which the FCC has not explicitly ruled on, etc.) could be called into question based on this ruling."

For more:
- USA Today has this article

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