A federal court appears ready to side with Verizon and strike down at least part of the Federal Communications Commission's (FCC) net neutrality regulations.
At an oral argument on Monday, two of the three judges on a panel of the D.C. Circuit Court of Appeals indicated that they believe the FCC lacks the authority to prohibit Internet service providers from discriminating against websites.
A separate provision of the rules, however, that bars Internet providers from blocking websites outright appears more likely to survive.
A ruling striking down the anti-discrimination rule would be a blow to the Obama administration, as well as to companies like Google, Facebook and Netflix, who could begin having to pay Internet providers for priority access to users.
Helgi Walker, the attorney representing Verizon, told the judges that Verizon will consider charging certain Web companies for faster service if the rules are overturned. The decision could result in a multi-tiered Internet where users are able to access certain sites at faster speeds than others.
Supporters of the rules argue that they are necessary to protect a free and open Internet, and that all websites should be treated equally. They worry that discrimination by providers could prevent the next Google from even getting off the ground.
But Republicans have long argued that the rules, which were adopted in late 2010, unnecessarily restrict the business choices of Internet providers and amount to government control of the Internet.
Walker told the panel that Congress never granted the FCC the authority to regulate broadband Internet service.
Sean Lev, the FCC's general counsel, claimed that the FCC has the authority for net neutrality rules under a provision that allows the agency to promote investment in broadband. He argued that an open Internet encourages the creation of new Web services, which in turn encourages construction of broadband networks.
The panel appeared willing to side with the FCC on the issue, with Judge David Tatel saying there is a "tremendous amount of evidence" to support the agency's reasoning.
But the judges were more sympathetic to Verizon's argument that the rules treat Internet providers as "common carriers." Because the FCC has chosen to classify broadband Internet as an "information service" it is barred from regulating broadband providers as common carriers.
Judge Laurence Silberman appeared ready to throw out the net neutrality rules all together, but Tatel repeatedly asked the attorneys to consider the consequences of upholding the anti-blocking rule while nullifying the anti-discrimination requirements.
Silberman indicated support for Verizon's argument that the rules violate its free speech rights, but the other judges did not address the company's constitutional arguments.
Judge Judith Rogers spoke less than the other judges and seemed less skeptical of the regulations.
Public interest advocates bemoaned the fact that the FCC chose to classify broadband as an "information service" instead of a "telecommunications service," which the agency has broad authority to regulate, including as a common carrier.
"That's why we have always said that these should be common carrier services," Matt Wood, the policy director for Free Press, said in an interview. "That's why you had the FCC up there doing gymnastics for an hour because they refuse to make that determination."
If the FCC reclassified broadband as a "telecommunications service," it would put the rules on firmer legal ground, but it would spark a massive political battle with congressional Republicans, who fear the agency would have expansive authority to impose burdensome regulations on the Internet.
If the court does strike down part of the rules, it will likely be up to Tom Wheeler, President Obama's nominee for FCC chairman, to decide how to respond.