Net Neutrality rules tossed by court
In a landmark case on net neutrality, a federal court has ruled in favor of Verizon who was challenging new rules by the FCC on how broadband internet providers do business.
In essence, companies like Verizon want to charge more to deliver speedier service. Companies that deliver a lot of streaming content would pay more than others, for example. FCC net neutrality rules had kept a "free and open internet" so that a company like Netflix, which streams a lot of content, wouldn't pay anymore than anyone else.
A federal appeals court on Tuesday struck down regulations that require Internet providers to treat all traffic the same, dealing a potentially fatal blow to President Obama's push for "net neutrality."
Opponents of the rules, led by plaintiff Verizon, hailed the decision from the D.C. Circuit Court of Appeals as a victory over government meddling in the marketplace.
"The court's decision will allow more room for innovation, and consumers will have more choices to determine for themselves how they access and experience the Internet," said Randal Milch, Verizon's executive vice president of public policy.
Rep. Marsha Blackburn (R-Tenn.), one of the biggest opponents of the Federal Communications Commission (FCC) rules in Congress, applauded the court for striking down "socialistic regulations."
The powerful D.C. court overturned provisions that keep Internet providers from blocking or slowing down access to certain websites. With the rules no longer in place, telecom companies will be free to charge popular sites like Google, Facebook and Netflix for different speeds.
With one stroke, the court erased the central achievement of former FCC Chairman Julius Genachowski, who labored through Obama's first term to fulfill a 2008 campaign pledge.
The White House said the president "remains committed to an open Internet" that allows companies "to compete on a level playing field."
"We remain committed to working with the Federal Communications Commission, Congress, and the private sector to preserve a free and open Internet," the White House said.
The ruling leaves the FCC at a crossroads, and presents new leader Tom Wheeler with a wrenching decision.
While the court affirmed the agency's power to regulate the Internet, proposing new net neutrality rules could usher in a bruising, protracted fight with telecom companies that could crowd out the rest of his agenda.
Wheeler vowed to "consider all available options, including those for appeal."
"I am committed to maintaining our networks as engines for economic growth, test beds for innovative services and products, and channels for all forms of speech protected by the First Amendment," Wheeler said.
The D.C. Circuit Court of Appeals ruling had a silver lining for the FCC, as the court did not accept Verizon's main argument against the regulations - namely, that the FCC does not have authority to regulate Internet providers.
Instead, the court found that the FCC did not adequately justify its authority to regulate in this area.
There has been a lot of confusion about the issue of net neutrality and whether ordinary internet users like you and me should be concerned. You may have seen scare headlines from net neutrality supporters like "Say Goodbye to the Internet We've Known" or other equally biased statements not based on fact, but on speculation of what might be the worst case scenario.
Here's a pretty fair look at both sides from CNET's Marguerite Reardon:
The first thing you need to keep in mind is that nothing will change for consumers right away. As with most major court decisions, there won't be any immediate fallout from this decision that consumers will notice right away.
But what this court decision does do is pave the way for changes in Internet service business models in the future. And that could have a huge effect on the services that consumers use.
For instance, the ruling opens the door for broadband and backbone Internet providers to develop new lines of business, such as charging Internet content companies, like Netflix, Amazon, or Google, access fees to their networks. Companies like Verizon, AT&T, Time Warner Cable, Comcast, and others could offer priority access over their networks to ensure streaming services from a Netflix or Amazon don't buffer when they hit network congestion, providing a better experience for end users.
Wireless providers like AT&T have already proposed a plan in which app developers and other Internet services could pay for the data consumers use to access their services. Again, AT&T argues this service is a win for consumers since it saves them money by not requiring them to use the any of the data they pay for monthly.
Broadband-service providers claim that these new services and business models will benefit consumers by offering better service quality or defraying costs. Broadband providers also claim having this freedom to establish new lines of revenue will enable them to invest more in their networks, which ultimately benefits consumers.
But supporters of Net neutrality caution this is a very slippery slope. And they argue that these new business models will likely increase costs for companies operating on the Internet, and that eventually those costs will be passed onto consumers. What's more, erecting priority status for services online will result in bigger players being able to afford to pay the fees, while smaller upstarts will be blocked from competing because they won't be able to afford the fees that a Verizon or Time Warner Cable might impose.
Harvey Anderson, senior vice president of business and legal affairs for Mozilla, said the court's decision is alarming for Internet users because it will also provide broadband operators the legal ability to block any service they choose, which will undermine the once "free and unbiased Internet."
Michael Beckerman, president and CEO of the Internet Association, a political lobbying organization formed by members of the Internet industry, including Google, Facebook, and Amazon, argues that without any rules in place to protect the openness of the Internet, innovation on the Internet will be in jeopardy. He says that the reason why companies like Google, Facebook, and Amazon have been able to thrive is because of the Internet's "innovation without permission" ecosystem, which provides a low barrier of entry to anyone with an idea. He cautions that the success of the Internet to date should not be taken for granted.
"The Internet Association supports enforceable rules that ensure an open Internet, free from government control or discriminatory, anticompetitive actions by gatekeepers," he said in a statement.
The truth probably lies somewhere in between. Eventually, ISP's may offer far more choices to consumers about how they use the internet. Don't stream much video? You will probably be able to pay less. Want unlimited access? You will probably pay more.
Who's right about innovation? If you believe new ideas and new processes come mostly from large corporations, there won't be a problem. But the supporters of net neutrality probably have a good point that internet start ups will have more difficulty given a staggered fee structure for access.
At present, the problem of internet congestion is not of paramount importance. But in the future, it will almost certainly be a much bigger issue. By allowing the marketplace to determine the speed and ease of access to the web, it should make for a better internet experience for consumers in the long run.