Net neutrality ruling unlikely to immediately impact broadband market

U.S. Court of Appeals for District of Columbia Circuit finds that FCC overstepped authority in net neutrality rule against ISPs

Internet cyber security

Despite a big win in a federal appeals court, Internet service providers are unlikely to make dramatic changes in the network access given to content providers such as ESPN, Facebook and Netflix, experts say.

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The U.S. Court of Appeals for the District of Columbia Circuit ruled Tuesday that the Federal Communications Commission overstepped its authority when it imposed so-called "net neutrality" rules on ISPs, such as Verizon and AT&T. The ruling stemmed from a lawsuit filed by Verizon.

Net neutrality is a term defined as having all Internet traffic treated the same, as opposed to having ISPs charge large, deep pocket content providers more for faster delivery of services. Proponents argue that such a scenario, which the FCC tried to prevent, would tilt the Internet playing field in favor of large companies.

ISPs are unlikely to move toward tiered pricing for content providers anytime soon to avoid antagonizing the FCC, experts say. While reining in the commission, the court acknowledged that the FCC has the authority "to promulgate rules governing broadband providers' treatment of Internet traffic."

"We will see all the companies continue to toe the line, so not to prompt the FCC to intervene," Roger Entner, telecom analyst for Recon Analytics, said.

Under the ruling, the FCC could impose rules to prevent ISPs from taking actions that would damage competition on the Internet, according to Entner. In general, more competition is seen as beneficial to the consumer.

Brent Skorup, research fellow at the Mercatus Center at George Mason University, agreed that the decision would have no effect on consumers in the short term.

"ISPs largely favor open Internet principles, but resented and disagreed with the FCCs claim that it could regulate ISPs business judgments," he said.

The FCC is keeping its options open, including an 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," FCC Chairman Tom Wheeler said in a statement. "We will consider all available options, including those for appeal, to ensure that these networks on which the Internet depends continue to provide a free and open platform for innovation and expression, and operate in the interest of all Americans."

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One option would be to reclassify Internet service as a utility, such as a telephone service, which would reinstate the authority the court said the FCC lost when it classified ISPs as providing an "information service." However, such a move would likely be meet with fierce opposition from Congress and intense lobbying from broadband providers.

"Some advocates want that to occur, but that is a very politically costly and time-consuming route to take," Skorup said.

The FCC could quietly accept the court decision in order to pursue other pressing matters, including major spectrum auctions. If that was to happen, the Federal Trade Commission could decide to take a stronger role in policing broadband markets.

Jim Harper, director of information policy studies for The Cato Institute, said Google, Netflix and other content providers have good reasons to worry about being charged for use of ISP networks, which have cost billions of dollars to build.

However, if content providers pay ISPs, then consumers could find their rates lowered.

"If the broadband marketplace reorganizes itself, so that broadband access is cheaper to the consumer, I don't see why that should be a problem," Harper said.

Copyright © 2014 IDG Communications, Inc.

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