Regulatory Reform

Court Strikes Down Net Neutrality

Earlier today a federal appeals court in Washington, DC struck down a set of controversial telecommunications rules known as “net neutrality.” The U.S. Court of Appeals for the D.C. Circuit held that the Federal Communications Commission (FCC) exceeded its authority when, in 2010, it issued a set of rules that restricted several aspects of the network management practices of Internet service providers (ISPs).

The court found that because the FCC has classified Internet access as an “information service” rather than a “telecommunications service” – the classification used for traditional telephone services – the agency cannot legally impose “anti-discrimination” and “anti-blocking” rules on ISPs. Under the Communications Act, information services are subject to lighter regulations than telecommunications services which are subject to common carrier obligations.

There has been a great deal of debate about net neutrality for the past several years. Public interest groups have argued that the rules are necessary to prospectively maintain the Internet as it is today and to protect Internet users from abuse. Conversely, free market groups have argued that the rules are unnecessary to maintain a free and open Internet, and are part of a negatively disruptive effort by the government to regulate the dynamic Internet like the old “Ma Bell” telephone system. Negative disruptions could mean the curtailing or the loss of new Internet products and services developed by firms. As Jim Harper at the Cato Institute explains:

“Companies that experiment with network management, pricing, internal subsidy, and so on can find the configurations that serve widely varying consumers and their differing Internet needs the best. If government believes in fast lanes and slow lanes surely Internet service providers could optimize service for movie delivery, video calling, and such, while email arrives a little less speedily.”

Although the net neutrality rules have been struck down, this is not the end of the discussion about the underlying issue. In fact, the court appeared to leave a door open for the FCC to develop new ways to regulate broadband network management practices. The court said that the FCC has authority “to promulgate rules governing broadband providers treatment of Internet traffic.”

As the FCC and other parties weigh their next steps on net neutrality, it’s important for policymakers and advocates to consider what policies have begotten the Internet we have today and what consumers are demanding going forward.


In Depth: Regulatory Reform

In his first inaugural address, Thomas Jefferson said that “the sum of good government” was one “which shall restrain men from injuring one another” and “shall leave them otherwise free to regulate their own pursuits of industry.” Sadly, governments – both federal and state – have ignored this axiom and …

+ Regulatory Reform In Depth