US regulator loses court battle on 'net neutrality' rules

Out-Law News | 16 Jan 2014 | 1:02 pm | 2 min. read

Internet service providers (ISPs) in the US will no longer be subject to rules on how they distribute content to customers following a court ruling in the country.

An appeals court in the US revoked rules on 'net neutrality' after ruling that the Federal Communications Commission (FCC) could not compel ISPs to comply with them, according to media reports. The FCC has said it may appeal the decision.

The FCC had previously decided that broadband providers should not be treated the same as other "common carriers" so the court ruled it was therefore wrong of the regulator to make them subject to rules that other telecoms providers face.

"Given that the Commission has chosen to classify broadband providers in a manner that exempts them from treatment as common carriers, the Communications Act expressly prohibits the commission from nonetheless regulating them as such," judge David Tatel said in the ruling, according to a report by the Wall Street Journal.

Verizon had challenged the net neutrality rules, which broadly prevent ISPs from giving preference to certain content over others when facilitating customers' access to the internet. The company said that the ruling would "not change consumers’ ability to access and use the internet as they do now," according to a report by the Guardian.

"The court’s decision will allow more room for innovation, and consumers will have more choices to determine for themselves how they access and experience the internet," Verizon said. "Verizon has been and remains committed to the open internet which provides consumers with competitive choices and unblocked access to lawful websites and content when, where, and how they want. This will not change in light of the court’s decision."

'Net neutrality' is the principle that an ISP will deliver all content requested by a customer equally, not allowing content producers to have preferential access to subscribers.

Last year the European Commission outlined plans to enshrine 'net neutrality' into EU laws. The proposals, which form part of a package of wider telecoms market reforms, would, however, permit ISPs to enter into agreements with content providers regarding the quality of service to be delivered to internet subscribers.

According to the draft rules, ISPs would be obliged to deliver "the continued availability of non-discriminatory internet access services at levels of quality that reflect advances in technology and that are not impaired by specialised services". 

The rules provide freedom for ISPs to agree on the precise data volumes and speeds of service they will provide to consumers but they prohibit ISPs from "blocking, slowing down, degrading or discriminating against specific content, applications or services, or specific classes thereof" unless it is "necessary to apply reasonable traffic management measures". 

'Reasonable traffic management measures' are defined under the plans and permit ISPs to take action to "minimise the effects of temporary or exceptional network congestion provided that equivalent types of traffic are treated equally". ISPs' traffic management must be "transparent, non-discriminatory, proportionate and necessary" in each case, according to the draft plans. 

The Commission's plans allow consumers and ISPs or content providers to form agreements that will see specific content delivered "with an enhanced quality of service" via "specialised services". In order to facilitate this arrangement, ISPs and content providers can legitimately agree on the nature of the enhanced quality of service to be provided, subject to conditions. Such specialised services could not be delivered if it resulted in "the general quality of internet access services" being impaired "in a recurring or continuous manner".

Regulators would be responsible for monitoring compliance with the regime and will have powers to set minimum quality of service requirements that ISPs would have to adhere to "if this is necessary to prevent general impairment/degradation of the quality of service of internet access services". 

The Commission's net neutrality proposals have drawn criticism from the European Data Protection Supervisor. In November, the privacy watchdog said that the plans give ISPs too much scope to monitor their subscribers' online activity.