Appeals court goes four rounds over net neutrality rules

Appeals court goes four rounds over net neutrality rules
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A trio of appeals court judges grilled lawyers for a marathon three hours on Friday in a case that will decide the fate of the strongest U.S. Internet regulations ever written. 

Questions from the panel, during four rounds of arguments, gave hints to which way each judge is leaning in a case that challenges the Federal Communications Commission's (FCC) net neutrality rules, which reclassified Internet service as a common carrier in order ensure that providers treat all Web traffic equally. 

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The rules and the case's eventual outcome early next year are expected to have a large effect on the Internet landscape and could be appealed to the Supreme Court. 

Judge David Tatel, who has written opinions overturning a pair of prior net neutrality cases, was most closely watched on the court. Many expect him to write the decision. 

Early in the arguments, he suggested the court should take its lead from a prior Supreme Court case — known as Brand X — that found the FCC had discretion to choose the classification of Internet service.

"Doesn't that have to be our starting point?" he asked lawyers who are challenging the FCC's rules. 

That could be a sign of hope for the FCC, which reads the Brand X case as giving it the authority to make its own decision — and to change its mind — because the underlying law is ambiguous. 

However, Internet service providers such as AT&T and trade groups representing the industry say the FCC's rules are broader than the facts in the Brand X case. They say Internet service in not analogous to other common carriers, such as voice service, because Internet providers do not only provide the pipes that transmit data, they also provide storage and processing capabilities that allow people to search the Web. 

"Aren't they just buying access to the Internet?" Tatel asked, arguing that the most important point is how customers perceive the service. 

In a controversial vote, the FCC approved net neutrality rules in February meant to ensure Internet service providers, such as AT&T and Comcast, treat all Web traffic equally. To give itself authority to do that, the FCC reclassified Internet service as a “telecommunications service” under Title II of the Communications Act, rather than a less regulated “information service.”

That stricter classification brought with it common carrier regulations, which the FCC believes gives it authority to enforce rules to prevent Internet service providers from blocking, throttling, creating high-priced fast lanes or generally discriminating against Web traffic from any website or app. 

The crux of the case is meant to answer the questions: Did Congress give deference to the FCC to choose how Internet service should be classified, and is the FCC’s decision to change course now justified?

Many interpreted Tatel's opinion last year that struck down previous rules as a roadmap for writing pared back rules without reclassifying. Tatel at one point asked the FCC the "reason for abandoning that approach." Critics have pointed to pressure from the Obama administration. 

"I couldn't find it in the order," Tatel said. 

Judge Sri Srinivasan, an Obama appointee, said at a certain "level of generality" it seems like the FCC was following the Supreme Court's lead, but he agreed that the agency took one extra step. He said that extra step to reclassify access to the entire Web will be key. 

Stephen Williams, a Reagan appointee, seemed most resistant the FCC's argument. At one point he got into a long back and forth with the FCC over paid prioritization, one of the bright-line rules that the commission prohibited. The FCC barred Internet service providers from creating fast lanes for their own web content or for content of other sites willing to pay extra. 

Williams said he found that some of those agreements could be "utterly reasonable" and said the commission could have narrowed the rule to gets its desired effect. 

He specifically pointed to traffic that is "time sensitive" such as a video live stream, which could be reasonably prioritized. He used the analogy of a railroad charging extra money for a railcar that also includes refrigeration. 

The court addressed a slate of other secondary issues, including whether the FCC was right to apply the net neutrality rules to mobile broadband. Another topic was the FCC's regulation of deals at the point of interconnection — where a backbone Internet provider routes traffic to a company such as Comcast, which in turn sends the traffic down the last mile to customers. 

The mobile broadband section of the argument focused most heavily on the FCC procedures and notice given to stakeholders. Critics argue that stakeholders were not in the loop about the definitional changes the FCC made ahead of time, in violation of the Administrative Procedures Act. 

On Friday, the FCC shot back that it is not required to provide the granular type of notice meant "for a second grader."

The judges also did not seem convinced by a short series of First Amendment arguments made against the rules.