Federal Appeals Court Throws Out FCC’s 2010 Net Neutrality Order

Guess what? It’s legal now for Internet service providers to play favorites and give a wider berth to some content suppliers over others with impunity.

A federal appeals court in Washington ruled Tuesday that communication giants Verizon (VZ), Comcast (CMCSA), Time Warner (TWX), Cox and others can give special web access to certain content providers, offering favored streaming capabilities to their corporate buddies and parsing it out to their rivals without reservation.

At the core of Verizon v. Federal Communications Commission (FCC) was whether Internet service is akin to necessary utilities such as telephone service or electricity and, as a result, requires regulating. The appeals court’s answer is no. Its ruling effectively threw out the FCC’s 2010 Open Internet Order that prevented wealthy corporations from buying preferential treatment on the Internet—the so-called "net neutrality" clause.

Net neutrality mandated that fixed providers could not block legal content, applications, services or non-harmful devices, and mobile providers could not block legal websites or competitive voice and video services; fixed broadband providers could not discriminate against legal traffic; and, all providers must disclose information regarding their practices and performance.

Tuesday’s ruling effectively blunts the first two stipulations but upholds the third, so if some content is streaming slower than others, the provider must disclose the reason why. Essentially, the appeals court bought Verizon’s argument questioning the FCC’s right to regulate the Internet and its claim that the FCC is trying to regulate a non-problem—apparently the FCC has only documented four instances of providers playing favorites.

In its wake, the ruling left hardened positions on both sides, as detailed in a New York Times report.

“It leaves consumers at the mercy of a handful of cable and phone providers that can give preferential treatment to the content they profit from,” said Delara Derakhshani, Consumers Union policy counsel, to the Times.

For its part, Verizon reiterated its right to run its network as it wants. “Verizon has been and remains committed to the open Internet, which provides consumers with competitive choices and unblocked access to lawful websites and content when, where and how they want,” the company said in an issued statement. “This will not change in light of the court’s decision.”

Inasmuch as content is at the heart of monetizing any Web endeavor, it would not be surprising to see a new wave of paid-access deals between ISPs and content creators, said Michael Weinberg, acting co-president of the consumer advocacy group Public Knowledge.