Net neutrality court ruling: States can set own rules

A federal court upholds the FCC's repeal of Obama-era rules, but slams the agency for preempting state net neutrality laws.

Marguerite Reardon Former senior reporter
Marguerite Reardon started as a CNET News reporter in 2004, covering cellphone services, broadband, citywide Wi-Fi, the Net neutrality debate and the consolidation of the phone companies.
Marguerite Reardon
8 min read
Protestors Rally At FCC Against Repeal Of Net Neutrality Rules

The net neutrality issue has dragged on for years, but even with the court's recent decent decision, the case is far from over. 

Chip Somodevilla / Getty Images

A federal appeals court on Tuesday issued a mixed ruling on the Federal Communications Commission repeal of Obama-era net neutrality rules. The court upheld the FCC's repeal of the rules, but struck down a key provision that blocked states from passing their own net neutrality protections.

The DC Circuit Court of Appeals also remanded another piece of the order back to the FCC and told the agency to take into consideration other issues, like the effect that the repeal of protections will have on public safety. (See below for the full text of the court's decision in the case, Mozilla v. Federal Communications Commission.)

The Republican-led FCC voted in 2017 to roll back the popular rules, which prohibited broadband companies from blocking or slowing access to the internet in a 3-2 vote along party lines. The rules also barred internet providers from charging companies to deliver their content faster. 

FCC Chairman Ajit Pai applauded the decision as not only a win for the agency but also a "victory for consumers, broadband deployment, and the free and open Internet." He said the court not only upheld its repeal of the rules, but it also upheld the agency's so-called "transparency rule," which requires broadband providers to disclose when they're making any changes to their service. 

"Since we adopted the Restoring Internet Freedom Order, consumers have seen 40% faster speeds and millions more Americans have gained access to the Internet," he said in a statement. "A free and open Internet is what we have today and what we'll continue to have moving forward." 

As for the parts of the decision that didn't go in the FCC's favor, Pai added, "We look forward to addressing on remand the narrow issues that the court identified."

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The fight for rules

The case pitted Mozilla and several other internet companies, such as Etsy and Reddit, as well as 22 state attorneys general, against the Republican-led FCC. They argued that the FCC hadn't provided sufficient reason for repealing the rules

The decision is the latest chapter in the decade-long fight to protect the internet from excessive control by big broadband companies and how the internet should be regulated. The court largely agreed with the Republican-led FCC that the agency had the discretion to decide how to classify broadband. The Obama-era rules had reclassified broadband as a so-called common carrier service, which treated broadband like a public utility, subject to many of the same regulations as traditional phone service.  The 2017 repeal reinstated the less regulated classification of broadband, providing what Chairman Pai and other Republicans have called a "light touch" regulatory approach. 

"Regulation of broadband internet has been the subject of protracted litigation, with broadband providers subjected to and then released from common-carrier regulation over the previous decade," the DC Circuit said in its opinion. "We decline to yet again flick the on-off switch of common-carrier regulation under these circumstances."

The regulations didn't officially come off the books until June of last year. The backlash among supporters was immediate, with Democrats in Congress promising to bring the rules back and a slew of states, like California and New York, proposing their own laws to protect consumers.

On this point, the court sided with net neutrality supporters ruling the FCC had overstepped its authority when it barred states from passing their own net neutrality protections. That piece of the decision is seen as the silver-lining in the decision for net neutrality supporters. 

Following the ruling, Mozilla said it's still considering its next steps. But the company, best known for its Firefox browser, has vowed to continue fighting for net neutrality protections. It's encouraged by the court's decision to throw-out the FCC's blanket preemption of state net neutrality laws. This will "free states to enact net neutrality rules to protect consumers," Amy Keating, chief legal officer for Mozilla, said in a statement. 

Other net neutrality supporters are also focusing on the state preemption issue. Gigi Sohn, an adviser to former FCC Chairman Tom Wheeler, who helped write the 2015 net neutrality rules, said this gives states an opportunity to protect consumers. 

"The DC Circuit Court has spoken very clearly --  the states are now free to do what the FCC will not -- assert authority over the broadband market and protect an open Internet," she said. "Broadband providers will inevitably complain about having to comply with a so-called 'patchwork' of different state laws, but that is of their own making."

But a senior FCC official said on a call with reporters that the agency believes it still has the right to sue states to block regulations on a case by case basis. 

FCC Commissioner Jessica Rosenworcel, one of two Democrats on the FCC, said that it's significant as well that the court told the FCC that it didn't adequately address public safety concerns. The court remanded that portion of the order back to the agency. Rosenworcel said the FCC "got it wrong on the law." 

"The court took the agency to task for disregarding its duty to consider how its decision threatens public safety, Lifeline service, and broadband infrastructure," she added.

What is net neutrality?

Net neutrality is the principle that all traffic on the internet should be treated equally, regardless of whether you're checking Facebook, posting pictures to Instagram or streaming movies from Netflix or Amazon. It also means companies like AT&T, which bought Time Warner, or Comcast, which owns NBC Universal, can't favor their own content over a competitor's.

In 2015 the FCC adopted net neutrality regulation based on this principle that prohibited broadband providers from blocking or slowing traffic and banned them from offering so-called fast lanes to companies willing to pay extra to reach consumers more quickly than competitors. 

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In order to make sure the rules could stand up to court challenges, the FCC did something else. It also gave the agency broader authority to regulate the internet by reclassifying broadband under statute as a so-called Title II service. This change allowed the agency to treat broadband like the traditional telephone network, giving the FCC legal authority for its rules.

This change in classification, which gave the FCC more power to regulate, has been at the heart of the net neutrality debate. Net neutrality supporters say reclassifying broadband was necessary to ensure the FCC had the legal authority to enforce its rules. And without the rules, they fear that competition will be stifled and consumers will ultimately pay higher prices and have fewer choices in online content. 

Meanwhile, those opposed to FCC Title II authority say the regulations were heavy-handed and give the FCC too much power to regulate the internet. They fear the agency could try to set rates. As a consequence, they say, broadband companies would be much less likely to invest in building new networks. 

The case

Net neutrality supporters sued the FCC in 2018, saying that the agency's repeal were "arbitrary" and "capricious," especially when it came to changing its mind on how to classify broadband. 

Mozilla argued in its court filing that the FCC "fundamentally mischaracterizes how internet access works." It also argued that the FCC's order to repeal the net neutrality rules was illegal because it "completely renounces its enforcement ability" and "tries to delegate" its authority for regulating telecommunications services to the FTC. 

The FCC has defended itself against these claims, saying that its enhanced transparency rule (which requires internet providers to explain how they manage their networks), antitrust law and the FTC's regulations on anticompetitive behavior are sufficient in protecting the internet. The court upheld this rule in its decision. 

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Attorneys general in 22 states and the District of Columbia joined pro-net neutrality consumer groups and internet companies in suing the FCC in federal court to reverse the FCC's move. The states argued that the FCC overstepped its authority when it preempted states from passing their own net neutrality regulations to protect consumers in their states. 

Several states including, California and Washington, are considering or have passed legislation . The Trump Justice Department has challenged the California law in federal court, but the lawsuit has been on hold, pending the outcome of this federal case. 

Public safety officials also argued that the FCC didn't adequately consider how the repeal would affect them, something that by law the agency must consider. Firefighters from Santa Clara, California, joined the lawsuit against the FCC after Verizon throttled their service in the summer of 2018, at the height of the wildfires in California, saying that the throttling jeopardized the lives of first responders and members of the public.

The Santa Clara firefighters have conceded that Verizon likely didn't violate net neutrality principles, because the carrier mistakenly implemented a commercial service agreement between the company and the fire department. But the firefighters argued that since the FCC's repeal, there has been no "cop on the beat" to hear their concerns. This is because as part of its order to repeal, the FCC abdicated its authority to police broadband providers to the Federal Trade Commission.

The fight isn't over 

Since the repeal in 2017, Democrats in Congress have vowed to continue the fight for net neutrality. But so far their impact has been limited. 

In 2018, Congress tried but failed to undo the repeal through the Congressional Review Act. Though the measure passed the Senate, it failed in the House.

Once Democrats regained control of the US House of Representatives, they passed the Save the Internet Act in the spring of 2019. This bill essentially restores the Obama-era net neutrality protections that were repealed in 2017. But Republican Senate Majority leader Mitch McConnell, a Republican from Kentucky, has refused to bring the bill for a vote in the Senate.

While Republicans in both the House and Senate say they'd like legislation to settle this issue once and for all, they don't support the Save the Internet Act, because it would restore the FCC's authority. Meanwhile, Republican proposals that lack strong FCC authority are a no-go among Democrats.

It's unclear if Tuesday's court decision will move this legislation in either direction or if politicians on Capitol Hill will wait for results in the 2020 presidential election before their next move.  

Several polls over the past year suggest an overwhelming majority of Americans, regardless of political affiliation, say they support the principle of net neutrality and that internet service providers shouldn't block or slow access to content on the Web. But it's unclear how important the issue will be to voters next fall during the presidential election. Several candidates for the Democratic nomination for US president, including Bernie Sanders, Elizabeth Warren and Pete Buttigieg, say that if elected they will only nominate commissioners who support net neutrality rules. 

One thing is certain: The issue is far from over. 

Originally published Oct. 1 at 8:20 a.m. PT.
Update 9:47 a.m. PT: Added comments from Mozilla, FCC Commissioner Jessica Rosenworcel and others.