Court overturns FCC's Open Internet Order

A federal appeals court struck down FCC rules that restricted the way broadband providers could handle Internet content. The rules had set up anti-blocking and anti-discrimination provisions for Internet Service Providers (ISPs) to follow. The court's decision Tuesday could change the way companies like YouTube and Netflix (Nasdaq: NFLX) do business with ISPs, people following the case said.

The Federal Appeals Court for the D.C. Circuit struck down the bulk of the FCC's Open Internet Order, saying the commission's rules went against explicit mandates from Congress.  With the Open Internet Order, also referred to as the "net neutrality rules" overturned, ISPs will be able to create new business models such as charging users of online video higher rates, or charging online video providers themselves for access to the network.  Those changes, if they occur, could affect different online video providers in different ways, depending on their size, said George Foote, a partner with the Dorsey & Whitney law firm.

"If I am YouTube or Netflix, I may not be too upset about this because I will get a volume discount," he said. "If I am a very small provider I might be concerned that I'll be put into one of the slow lanes and not get good service."

Net neutrality advocates are concerned that ISPs--especially cable operators that offer video products that compete with online video--will insert themselves into the relationship between online content providers and viewers. "The most obvious way is to either create a slow lane or fast lane for video and say 'If you want the video to work, you have to pay to get into the fast lane or give us a cut of your company,'" said Michael Weinberg, a vice president with the advocacy group Public Knowledge. "I'd start worrying about what various ISPs think about your business."

"The cable industry embraces the principles of an open Internet, and that won't change because of the court's decision," Michael Powell, a former FCC chairman and CEO of the National Cable and Telecommunications Association said. "Consumers have always been entitled to enjoy the legal web content of their choosing and they will continue to do so. An open Internet is good for our customers and good for our business."

FCC Chairman Tom Wheeler praised part of the court's opinion for finding the FCC has authority to put forward governing broadband providers. "I am committed to maintaining our networks as engines for economic growth, test beds for innovative services and products and for all forms of speech protected by the First Amendment," he said. The FCC is considering all available options, including an appeal, to uphold that commitment, he said.

For more:
- Read the D.C. Circuit's opinion here 
- Read NCTA's press release here

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