A federal appeals court on Thursday dealt a blow to President Biden's Federal Communications Commission, striking down the agency's hotly contested and long-debated open internet rules.
The FCC had sought to reinstate a sweeping policy established during Obama's presidency that was designed to treat Internet service as an essential public utility, similar to a water or energy company.
Under the so-called net neutrality rules, Internet service providers would have been subject to greater regulation. A Republican-led commission repealed the rules in 2017 during President-elect Donald Trump's first term.
Early last year, the FCC, then again under Democratic control, voted to formalize a national standard for Internet service to prevent blocking or slowing down information delivered over broadband Internet lines. The basic principle of an open Internet meant that Internet service providers could not discriminate between content providers.
The order would also have given the FCC greater oversight to require Internet providers to respond to service outages or security breaches involving consumer data. The FCC cited national security and said greater oversight was necessary so the commission could effectively crack down on foreign-owned companies that were considered security threats.
But on Thursday, the Cincinnati-based 6th U.S. Circuit Court of Appeals ruled that the five-member commission lacked authority to reclassify broadband Internet as a telecommunications service. The decision dismantles one of Biden's major technology initiatives.
In its ruling, the Sixth Circuit referred to the FCC's net neutrality order as a “heavy-handed regulatory regime.”
The court said a recent ruling by the U.S. Supreme Court had eliminated a judicial framework that allowed courts to interpret rules with deference to the federal agency that created them. The Sixth Circuit said the FCC did not have the legal authority to change the classification of broadband Internet to a telecommunications service. That role falls to Congress.
The case was brought by the Ohio Telecom Assn., a trade organization that represents Internet service providers.
FCC Chairwoman Jessica Rosenworcel, who has long defended net neutrality rules, called on lawmakers to take responsibility in the wake of the court decision. She had led the effort to restore them during her tenure leading the agency and led the party's 3-2 vote last year to restore net neutrality rules.
“Consumers across the country have told us time and time again that they want an Internet that is fast, open and fair,” Rosenworcel said in a statement. “With this decision, it is clear that Congress must now heed its call, take responsibility for net neutrality, and incorporate open Internet principles into federal law.”
FCC Chairwoman Jessica Rosenworcel speaks during a Senate committee hearing to examine the agency in 2020.
(Jonathan Newton / Pool Photo)
The regulatory climate has changed dramatically in recent years and is expected to change again after Trump returns to the White House. Trump's pick for FCC chairman, Brendan Carr, wrote a chapter on the FCC in the conservative policy blueprint Project 2025. Businesses hope the commission under Carr will be more business-friendly.
“President Biden's entire plan was based on the Chicken Little tactic of persuading Americans that the Internet would fail in the absence of these so-called 'net neutrality' regulations,” Carr said in a statement. “The American people have now seen through that ruse.”
The dispute over net neutrality hinged on the extent to which the FCC could regulate broadband Internet service providers under the authority the commission received from Congress in the landmark Communications Act of 1934 and the Telecommunications Act of 1996.
“We maintain that broadband Internet service providers offer only an 'information service'… and therefore, the FCC lacks the legal authority to enforce its desired net neutrality policies through the provision of 'telecommunications service' of the Communications Act,” Sixth Circuit Judge Richard Allan Griffin wrote in the 26-page ruling.
Consumer groups, which have lobbied for net neutrality regulations for more than a decade, lamented the decision.
“Today's decision represents a significant setback for consumers, competition, and the open Internet,” John Bergmayer, chief legal officer at Public Knowledge, said in a statement.
“By rejecting the FCC's authority to classify broadband as a telecommunications service, the court has ignored decades of precedent and fundamentally misinterpreted both the technical realities of how broadband works and the clear intent of Congress in the Communications”.
Net neutrality has been a back-and-forth battle for more than 15 years.
In the early days of broadband penetration, major companies lined up on opposing sides. Google, Netflix and other technology companies joined consumer groups calling for net neutrality rules to level the playing field with Internet service providers such as AT&T, Verizon, Comcast Corp. or Charter Communications.
Net neutrality supporters wanted those providers to be regulated by Title II of the landmark communications law, which would have given the FCC a greater law enforcement role.
“Let's remember that the market's initial concern about the Title II reclassification never had anything to do with net neutrality,” cable analyst Craig Moffett wrote in a note to investors. Instead, investors in telecom stocks were concerned that such a reclassification would open a door “to the regulation of broadband prices,” Moffett wrote.
But that didn't happen.
“That risk is now ruled out,” Moffett wrote.
