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Verizon and the FCC square off for the future of net neutrality

Verizon and the FCC square off for the future of net neutrality


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Verizon FiOS router logo
Verizon FiOS router logo

Verizon is nearing the end of a legal battle that could render the FCC’s net neutrality rules a thing of the past. Today, the two groups presented oral arguments to a DC circuit court, hoping to respectively strike down or uphold the Open Internet framework —a set of rules meant to stop internet providers from making companies pay to play on their networks or shut out services they don’t like. To supporters of the Open Internet framework, net neutrality is vital to a healthy internet, a way to keep powerful telecoms from controlling what we see. To Verizon and other opponents, it’s an unnecessary and burdensome regulation, making it harder to explore new business models. Beyond these pragmatic arguments, the central issue is simple: has Congress even given the FCC power to make these rules?

"The FCC has made a stone soup of these claims to legal authority," says Berin Szoka of libertarian-leaning technology group TechFreedom. He explains the "stone soup" metaphor further, saying that the FCC is basing its defense on a series of tangential laws with nothing at their core. It’s a problem the agency has faced before, with unfavorable results. In 2010, it lost a major legal battle with Comcast, when a court said it hadn’t proved its right to stop Comcast from dramatically restricting BitTorrent traffic on its network.

An old mistake has come back to haunt the FCC

FCC supporters say that the legal landscape has changed since then. In particular, they point to City of Arlington v. FCC, a 2013 case that could give the FCC the ammunition it needs. City of Arlington essentially holds that when Congress has made an ambiguous law, the agency is allowed to make a call on its own, and courts must defer to it when it does. The ruling arguably doesn’t apply to all kinds of authority, and it’s possible it won’t be used to determine the Verizon case — but if it does, David Sohn of the pro-net neutrality Center for Democracy and Technology says it "certainly cuts in favor of the FCC."

According to reports, however, judges appeared dubious that the FCC had justified its rules. Years ago, the agency decided to put ISPs in a different category than "common carriers" like phone companies, limiting its ability to regulate them. And that, according to supporters, was its biggest mistake. "The FCC would have been on stronger footing if it had exercised its direct authority over telecommunications services," says Jennifer Yeh of Free Press. "Owing to a series of missteps beginning in 2002, the FCC has instead cobbled together a weaker case." The court may well decide that some of the FCC’s claims have merit, but even if that happens, the Open Internet rules in their current form might not survive.

A First Amendment right to shape traffic?

Though the question of authority is paramount, Verizon is making much grander claims as well. The company claims that requiring it to treat all traffic equally violates the First and Fifth Amendments. The Fifth Amendment, it says, protects against having to give other companies a "permanent easement" on its network, claiming a kind of unfair digital eminent domain. And it argues that the First Amendment says the FCC can’t force it to distribute others’ "speech" (like video or calling services) without the chance to decide how it’s transmitted.

Regardless of whether these claims would actually stand up in court, they’re unlikely to decide the case — constitutional arguments tend to get addressed only if the court can’t resolve the case based on less heady legal grounds. The fact that Verizon is making these arguments, however, worries Sohn. "It's trying to completely wall off internet services from any lawsuit," he says, and it would make regulating telecoms almost impossible. "This is basically Verizon claiming that it has a First Amendment right to block the free expression of users. To us, that turns the First Amendment on its head."

AT&T's FaceTime debacle is a Rorschach test in net neutrality debates

Besides new cases like City of Arlington, there has been one very important change since Verizon filed its 2011 lawsuit: the Open Internet rules have actually gone into effect, and there’s disagreement about how much they’ve done. Net neutrality opponents say the rules are a solution looking for a problem. In mid-2012, AT&T opened up its network to Apple’s FaceTime, but with a catch: only subscribers on certain plans could use it. Groups like Free Press saw this as a clear Open Internet violation, filing formal complaints.

But the FCC hasn’t acted so far, and AT&T backed off its original decision, slowly opening FaceTime up to more customers. To net neutrality opponents, this suggests that market forces — including outcry from customers — are more useful than regulations. "There hasn't been evidence that consumers have really been harmed by practices of the internet service providers," says Randolph May of the Free State Foundation, "and I think that's one of the more important critiques of the FCC's action — that it adopted the rules without evidence that there'd been a market failure."

Verizon's 'hard line' against FCC rules

If the FCC’s regulation is meaningless, why does Verizon care about it? For TechFreedom’s Geoffrey Manne, it’s because net neutrality is a Trojan horse. "If the FCC has authority to enact the Open Internet order under the Telecommunications Act, then they have the authority to do pretty much anything," he says. Even if enforcing net neutrality "wouldn't lead to some dramatic effects, I think opening that kind of door to the FCC probably would." Public Knowledge’s Sherwin Siy also says it’s likely a more philosophical decision than a practical one. "I think Verizon just takes a harder line when it comes to this kind of regulation," he says, compared to other ISPs.

"Internet service providers shouldn't be playing favorites."

Net neutrality proponents also take issue with the idea that Open Internet rules need to lead to dramatic changes to be effective. For them, the AT&T case is a clear example of companies shaping up after a legal threat, not the free market at work. "It was never my expectation that adopting rules like this would lead to a flood of immediate complaints, because by and large the rules are aimed to keep in place what has been the internet status quo," says Sohn. "What I do think the rules do is establish a very important baseline expectation … that internet service providers shouldn't be playing favorites or interfering with user communications."

Will that baseline stay in place? Though judges’ statements in court hint at a bad outcome for the FCC, they haven’t yet made a decision, and they may not do so for several months. For now, people on both sides have said preemptively claiming the upper hand is a fool’s errand. "It's not a slam dunk for Verizon at all," said May before the hearing. "I think if I were forced to place a bet on one side or the other, I would say it's more likely than not that Verizon will prevail. But [there’s] no court case you can entirely predict."