Appeals Court Strikes Down "Network Neutrality" Rules

A Federal appeals court has struck down current network neutrality rules, largely on procedural grounds.

The decision issued by the District of Columbia circuit court says that the Federal Communications Commission does not have authority to issue network neutrality rules, which essentially mandate “best effort only” retail Internet access offers, on fixed networks. The FCC rules had exempted mobile Internet access services, at least for the moment.

The DC circuit court’s decision in Verizon v. FCC means the 2010 net neutrality rules are rescinded.

To be sure, the matter is not fully settled. An appeal might be launched. And Congress has the authority to pass legislation giving the FCC authority to impose net neutrality rules.

Most might conclude it is unlikely that Congress will do so in the near term. The court did not strike all the rules. A consumer protection clause, requiring ISPs offering quality of service features to disclose that fact to end users, remains in force.

As with earlier strife over such rules, a public policy objective (Internet access should only be allowed on a “best effort” basis) reflects a mix of corresponding private interests and a healthy dose of conflict between legacy regulatory models.

At the heart of the question is the proper regulatory format for an Internet access service, with potential models arguably representing some mix of a legacy “common carrier” approach with a “content industry” framework.

And that’s the rub. Traditionally, content providers essentially have been unregulated, with data services seen in that manner. Common carrier regulation has been the rule for “telephone” services.

In between are the “broadcast and cable company” models, which involve a mix of rules, less restrictive than common carrier rules, but more restrictive than pure content company rules (newspapers, magazines).

So network neutrality is an issue not only because huge business interests are lined up on opposite sides of the argument about whether best effort access and quality-assured access can coexist, but also whether ISP access business models necessarily restrict freedom and innovation for Internet application providers.

The argument on one side is that allowing ISPs to create content delivery networks maintaining or boosting quality of experience for applications using such CDN services necessarily alters the “open” nature of Internet app development.

The opposing argument is that content delivery networks already are routinely purchased by application providers, over the Internet backbone, and nobody seems to think that is inherently anti-competitive.

The larger problem is that the Internet supports multiple media types and revenue models that make a mockery of traditional regulatory frameworks.

When voice, text communications, “print” content, video entertainment, business apps and retailing all occur over the Internet, should some revenue models be outlawed as incompatible? Or should all lawful revenue models be allowed?

As an analogy, if a customer wants to buy, and a provider wants to sell, video entertainment with varying levels of quality (less than standard definition, standard definition TV, high definition and 4K), should that be possible?

And if, to make that possible, access traffic has to be shaped, should the shaping be unlawful? As video providers routinely impose higher costs for consumers to receive content with HDTV resolution, should ISPs be able to charge for the higher costs of delivering such content?