Open Internet Order - Judges Hear Arguments on Rules for Internet

- By EDWARD WYATT - September 9, 2013 - The New York Times

WASHINGTON — In a momentous battle over whether the Web should remain free and open, members of a federal appeals court expressed doubt over a government requirement that Internet service providers treat all traffic equally.

On Monday, the Federal Communications Commission and Verizon, one of the largest Internet service providers, squared off in a two-hour session of oral arguments — three times as long as was scheduled. As Verizon pushed for the authority to manage its own pipes, the government argued that creators of legal content should have equal access to Internet users, lest big players gain an unfair advantage.

But two judges appeared deeply skeptical that the F.C.C. had the authority to regulate the Internet in that manner.

The two jurists, Judge Laurence H. Silberman and Judge David S. Tatel, said that the agency’s anti-discrimination rule — which requires an Internet service provider to give all traffic that travels through its pipes the same priority — illegally imposed rules meant for telephones on the infrastructure of the Web. The F.C.C. itself disallowed the telephone-type regulation a decade ago.

The third judge, Judith W. Rogers, did not ask as many questions but appeared to accept much of the F.C.C.’s position.

Consumers could experience a significant change in the Internet if the United States Court of Appeals for the District of Columbia Circuit strikes down the F.C.C.’s requirement, called the Open Internet Order.

Currently, companies that offer goods or services online do not have to pay anything to get their content to consumers. If Internet service providers started charging fees to reach customers more quickly, large, wealthy companies like Google and Facebook would have an edge, the F.C.C. says. The government argued that such a tiered service could cause small, start-up companies with little money to pay for their access — the next Google or Facebook, perhaps — to wither on the vine.

In any case, the added costs would be likely to be passed on to consumers.

The case, which is expected to be decided late this year or early next year, has attracted enormous interest. On Monday, telecommunications lawyers began lining up to get into the courtroom two and a half hours before the session was scheduled to start. The session was standing room only, with many others left to listen in an adjacent overflow room.

The judges were not entirely hostile to the F.C.C.’s arguments. Judge Tatel, who many telecommunications analysts expect to be the swing vote on the case, pushed lawyers on both sides to concede that the part of the F.C.C. rule that prohibits outright blocking of online content or applications could be allowed.

Judge Tatel also queried each side on whether the two main provisions of the Open Internet Order — no blocking and no discrimination — had to be taken as a whole or could be separated, with the no-blocking rule being upheld.

An opinion that voided one provision yet upheld the other would be more likely to be appealed to the Supreme Court, telecommunications lawyers said, because neither side would be completely happy with the decision.

Helgi C. Walker of the law firm Wiley Rein, who argued the case on behalf of Verizon, said the rules had to be struck down as a whole. Congress never intended the F.C.C. to have authority to regulate the Internet, she said.

Sean A. Lev, who argued the case for the agency, told the judges that the F.C.C. did have the authority to govern the Internet under numerous parts of the Telecommunications Act, including one that gives the commission the duty to work to expand broadband access. Companies that have equal access to consumers are encouraged to innovate, Mr. Lev said, adding that it would result in more vibrant start-ups and a growth in demand for Internet service.

The judges themselves seemed intent on viewing the case from as many sides as possible. Each side was scheduled 20 minutes to present its case and answer questions from the justices. But after spending 30 minutes on Verizon’s presentation, the judges proceeded to grill the F.C.C.’s lawyer for a full hour.

The remainder of the two-hour session was spent hearing from a lawyer representing public-interest groups, who joined the lawsuit on the F.C.C.’s side, and a rebuttal from Verizon.

The F.C.C.’s uphill battle, in part, reflects politics and past decisions by the agency. In 2002, its chairman at the time, Michael K. Powell, a Republican, got the majority of the commission to agree that the Internet was not a telecommunications service like the telephone system. Instead, it classified the Web as an information service, making it subject to much lighter regulation.