The FCC scored a major victory yesterday (June 11, 2015) when the DC Circuit Court of Appeals refused to grant a request by Internet Service Providers (ISPs) and cable companies to partially suspend the FCC’s new Open Internet rules. This means that the Open Internet or “Net Neutrality” rules are effective as of June 12, 2015.

Broadband Internet access providers are now prohibited by law from blocking, throttling or prioritizing Internet traffic. However, Petitioners had not argued for a stay of these so-called “bright line” rules and had already accepted the fact that they would become law.

More concerning to ISPs and cable companies is the fact that the areas in which they did seek a stay were rejected by the Court. Therefore for the immediate future:

1. Wireline and wireless provided broadband Internet access service is classified as a Title II telecommunications service;

2. The Commission now has the legal authority to regulate all future carrier behavior on the Internet on a case-by-case basis through its new No-Unreasonable Interference/Disadvantage Standard.

While the Court did not explain its decision to reject the partial stay request, it is clear that the ISPs and cable companies failed to meet the requirements required to support such a stay. These include: (1) making a strong showing that he or she is likely to succeed on the merits of the case; (2) demonstrating that he or she will be irreparably injured absent a stay; (3) demonstrating that a stay will not substantially injure the other parties interested in the proceeding; and (4) demonstrating that a stay meets the public interest.  

ISPs and cable companies were quick to explain that simply because it rejected the partial stay request does not necessarily mean that the Court will permanently side with the FCC and accept the Open Internet rules. However, since the first tenet of a successful stay request is demonstrating that you are likely to prevail on the merits of your case, it is clear that, at best, the final decision will be close and, at worst for Petitioners, a clear victory for the FCC.

Significantly, the Court did not accept the arguments made by the ISPs and cable companies that they would face burdensome cost increases and potential litigation under Title II. Classification as a Title II telecommunications service will require carriers to conduct costly reviews of their business practices including their “traffic exchange” agreements which govern how providers carry data over one another’s Internet networks and the handling of their customer information and marketing practices. 

These are some of the major concerns Petitioners have with Title II. If these arguments were not accepted by the Court, ISPs and cable companies are in big trouble.

It is possible that the Court believes that any damage to carriers can be undone if its final decision goes against reclassification. To that effect, the Court did agree to expedite the case and will schedule oral arguments for this winter, with a final decision expected sometime next year. This is actually a quick schedule for a federal appeals court.

Moreover, it is clear that the losing side at the DC Circuit Court will appeal the decision to the US Supreme Court, so we are far from a final decision on Net Neutrality. In addition, Republicans in Congress continue to push legislation that would forbid Title II reclassification for broadband Internet access. However, that is likely to be stymied by Democrats who are happy to let the courts proceed as long as the FCC continues to win. Republicans best bet may be winning the presidency in 2016, as that would mean a Republican majority FCC would likely overturn the current Commission’s Open Internet Rules.   

In the meantime, it is likely that consumer advocates will now challenge every price increase made by broadband Internet access providers. While the Commission claimed in its Open Internet Order that it would forbear from enforcing Internet pricing rules, advocates will use the No-Unreasonable Interference/Disadvantage Standard to make the Commission review each price increase on a case-by-case basis, tying the industry up with costly and time-consuming regulation. 

ISPs and cable cables are likely to decide that investment and innovation are not worth the effort if every attempt to serve the public is challenged at the Commission and in the courts.

The FCC portrayed the Court’s decision to let its Open Internet Order take effect as a great victory for consumers. It may soon come to regret that decision.

By Andy Regitsky, CCMI