A federal appeals court made an instructive point about net neutrality Thursday by doing nothing.
Well, OK, that's not entirely accurate. The Court of Appeals for the District of Columbia Circuit issued an order denying the telephone and cable companies' motion to suspend the new net neutrality rules, which go into effect Friday. The terse order said the companies had not "satisfied the stringent requirements for a stay pending court review."
Feel free to read into the order two things. First, despite the phone and cable companies' assertions to the contrary, the lawsuit is not a slam-dunk win for their side. And second, it isn't clear that Internet service providers would be hurt more by the rules going into effect than consumers and content providers would be hurt by them not going into effect. But because the court agreed to expedite the case, the judges evidently agreed that the rules could harm ISPs in some way.
I'll elaborate on those, but first I have to point out something deliciously ironic about the dispute. The companies aren't challenging the three provisions of the rule that prohibit ISPs from blocking, throttling or charging fees to prioritize legal content, services and applications online. Instead, they're challenging the FCC's reclassification of broadband Internet access as a utility subject to strict federal regulation, a step it took mainly to provide a new legal basis for the rules against blocking, throttling and paid prioritization.
The three "bright line" restrictions are similar to the ones the commission adopted in 2010, although a bit tougher because there's no exception for mobile broadband. Yet the commission wouldn't have adopted any of the current rules if not for Verizon's successful lawsuit against the 2010 regulations. In other words, had Verizon not challenged the rules the industry now says it has no problem with, ISPs wouldn't be in the situation they're in today.
Now, back to Thursday's order. To show that they were likely to win the case if it went to trial, the companies made four main points. First, they contended that reclassifying broadband access as a utility subject to Title II of the federal Communications Act, not a lightly regulated information service, violated the text of the act, the Supreme Court's ruling in a landmark cable-modem case (National Cable and Telecommunications Assn. v Brand X Internet Service) and the FCC's previous decisions regarding broadband.
Second, they argued that reclassifying mobile broadband violated the FCC's precedents and the Communications Act. The latter explicitly forbids private mobile services from being treated as utilities. The key word there, however, is "private" -- the FCC has treated mobile broadband in the past as a private mobile service, but commission officials insist that Congress gave the commission authority to change that designation.
Third, the companies said the FCC failed to provide enough evidence to support the decision to reclassify. And fourth, they asserted that the commission didn't give the public adequate notice in advance of the move to reclassify broadband, even though that was the focus of much of the debate over the rules as they were being developed.
The companies offered some compelling arguments to support their case. Yet by denying the stay, the court said, in effect, that it wasn't ready to declare the ISPs to be the likely winner.
Even if the case were a close call, the court could have issued a stay if it found that the companies were likely to suffer irreparable injury, and that this factor wasn't outweighed by the potential harm to others and the public interest. The companies made six arguments on this issue, contending that reclassification would expose ISPs to costly regulations and, potentially, lawsuits that would raise prices for consumers and probably cause small and mid-sized ISPs to cut back their service.
Although the FCC exempted ISPs from many Title II regulations, they nevertheless exposed them for the first time to rules regarding the reasonableness of their fees, what they did with personal information collected from customers, how they accommodated the disabled, and a smattering of other issues. And it's safe to assume that ISPs will have to spend money complying with those rules.
But as noted above, the court's decision on the stay hinged on more than whether the rules could harm ISPs. The court had to compare the harm to ISPs with the harm to Internet users -- consumers and the providers of the content and services -- that could occur if the FCC's rules were blocked.
Supporters of the neutrality rules offered the same sort of dire rhetoric that the ISPs did. But while the companies warned of the damage to the pipes that connect people to the 21st century economy, supporters of the rule warned about ISPs choking off the 21st century economy.
Here, for example, is a statement that Evan Engstrom of Engine, an advocacy group for tech start-ups, issued after the court denied the stay:
"The innovators and entrepreneurs that depend on an open Internet to drive our economy won an important legal victory today," Engstrom declared. "In rejecting ISP attempts to delay the implementation of the FCC’s net neutrality rules, the DC Circuit helped ensure that the Internet will remain open during what will likely be a long period of litigation. Any departure from the non-discrimination principles at the heart of the Internet’s growth would seriously harm the startup economy and the good jobs it creates."
In other words, the question of harms feels like a pick-your-poison situation. And the court wasn't ready to decide which.
Instead, the case will move ahead on a faster-than-customary timeline, which is still likely to take months to yield a decision, which will then probably be appealed. Republican lawmakers are trying to short-circuit the process by denying the FCC the money to enforce the neutrality rules, but if they manage to pass that through Congress, don't be surprised if President Obama vetoes it.
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