U.S. case renews debate on ‘Open Internet’ rules


Debate is back on in Washington on “Net neutrality” regulations that bar Internet broadband providers from blocking or discriminating against services or content.

Arguments were held earlier this month in a court case brought by Verizon, one of the largest Internet service providers, challenging the “Open Internet” rule approved by the Federal Communications Commission in 2010.

The seemingly arcane rule, or changes to it, could have an important impact. Some say it may determine whether fixed broadband providers can control what services flow through their networks.

“These rules provide an important safeguard both for innovation and investment on the Internet,” said David Sohn, an attorney with the Center for Democracy and Technology, which backs the FCC rules.

If Verizon had its way, Sohn said, it and providers such as Comcast or AT&T could “play favorites” by blocking or degrading services such as YouTube or Netflix to promote their own offerings or that of their partners. “Every user, every day, benefits from this rule for the services they use, whether it’s YouTube or Twitter or something else,” Sohn said.

However, Verizon and its allies argue that the FCC lacks authority to interfere with their business, and that Congress never decided these companies were regulated utilities or “common carriers.”

“It is not up to the FCC to decide these issues on its own,” said Verizon lawyer Helgi Walker, arguing the case before the U.S. Court of Appeals in Washington. “It has no implied authority, no express authority . . . and it’s highly unlikely that Congress would have delegated authority in such a convoluted way.”

The FCC, in a 3-2 majority decision December 2010, said it imposed the rules to ensure that the Internet “has no gatekeepers limiting innovation and communication through the network.”

But participants at the appeals court hearing said two of the three judges appeared inclined to overturn the FCC rules, although the decision could stem from either jurisdictional or fundamental legal arguments.

Whatever the appeals court decides, the debate is likely to continue. Either side could appeal to the U.S. Supreme Court, and the issue could end up in Congress, which has been divided on the issue.

Amid the U.S. debate, the European Commission this month adopted a similar Net neutrality provision barring any blocking or throttling of competing or data-heavy services.

With the stakes high, Washington lobbying groups on both sides have been ramping up their efforts.

“This affects most Americans who watch a movie on Netflix or who make a phone call on Vonage,” said Pantelis Michalopoulos, a lawyer for parties arguing in support of the FCC rules.

Michalopoulos said companies such as Verizon “have the incentive and ability to discriminate” against service and could, for example, degrade Netflix to the point where viewers would see blank screens.

However, another Washington lawyer who works on technology issues, and who requested not to be cited because of clients he represents in the sector, said he did not believe service providers would try to dramatically reshape what flows through their networks.

“It would be commercially infeasible to offer an Internet service if you couldn’t get to the big sites,” the lawyer said.

More likely, the attorney said, would be deals mirroring what is taking place in the wireless space, which are not subject to the same rules, and where providers offer premium packages on an exclusive basis, such as NFL football games.