Does the Federal Communications Commission (FCC) have the authority to enforce rules designed to keep the Internet as an open and neutral platform?  The question regarding network neutrality is in front of a federal appeals court today in Verizon v. FCC.  The outcome of this case could have profound implications in how Internet service providers (ISPs) are able to operate in the future, which will inevitably affect anyone who uses the Internet, from consumers to startups and tech giants who have built billion dollar businesses online.

Net neutrality is the principle that Internet service providers and governments should treat all data on the Internet equally.  Since the early 2000’s, advocates of net neutrality have raised concerns about the ability of broadband providers to use their “last mile” infrastructure to block Internet content, and to block out competitors.  Accordingly, proponents of net neutrality argue that service providers should not be able to discriminate or charge differently by platform, site, application, content, or user.  This priniciple was captured in the FCC’s 2010 Open Internet Order, which aims to prevent ISPs such as AT&T, Comcast, Verizon, and Time Warner from discriminating Internet traffic, or favoring their own services over others.  That order essentially required ISPs to be transparent in how they handle traffic control or network congestion, and prohibited ISPs from blocking or “unreasonably” discriminating lawful Internet content.  

Verizon argues that the FCC’s Open Internet Order should be struck down, because it is arbitrary and capricious, and aims to prevent activities which are not taking place.  Moreover, Verizon argues that the FCC “fails to identify any statutory authority for the rules,” and that the order is so broad it would give the commission the power to regulate all sectors of the Internet economy without limit.  

The FCC argues that the Order was necessary, because of “significant threats to openness, and thus to the engine that has driven investment in broadband facilities.”  In the past, several broadband access providers had blocked or degraded service, the most notable being Comcast which was punished by the FCC in 2008 for blocking access to file sharing services including BitTorrent.  The FCC claims that other providers have the economic incentives to engage in similar acts, and with the majority of Americans having only two wireline broadband choices (many have only one), market discipline alone cannot continue to guarantee openess.

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