FCC Open Internet Order Prompts Verizon Lawsuit

Published January 20, 2011

In the first of what many analysts predict will be several lawsuits against the Federal Communications Commission after the agency passed new regulations mandating net neutrality late this past December, Verizon Communications filed an appeal challenging the FCC’s Report and Order on network neutrality January 20 in the United States Court of Appeals for the District of Columbia Circuit.

The rules, approved 3-2 along partisan lines, grant the FCC regulatory authority over broadband services.

“Today’s filing is the result of a careful review of the FCC’s order,” said Michael E. Glover, Verizon senior vice president and deputy general counsel, in a press statement on the day of the appeal. “We are deeply concerned by the FCC’s assertion of broad authority for sweeping new regulation of broadband networks and the Internet itself. We believe this assertion of authority goes well beyond any authority provided by Congress and creates uncertainty for the communications industry, innovators, investors, and consumers.”

On January 24, wireless carrier MetroPCS filed its own appeal against the FCC’s modified wireless licensing requirements.

‘FCC Smackdown’

Verizon also filed a Panel Motion with the Appeals Court, requesting the Court assign the same panel responsible for deciding FCC v. Comcast in April 2010. In that case the Court unanimously ruled against the FCC, stating the agency must first get Congress to approve such a sweeping expansion of its regulatory power.

“This lawsuit was as easy to predict as a dip in the ratings for American Idol without Simon Cowell,” said Jim Lakely, co-director of the Center on the Digital Economy at The Heartland Institute, which publishes Infotech & Telecom News.

“The only question was which big player in the digital economy would do it. Comcast led the way the first time against an FCC overreach, and now it looks like it’s Verizon’s turn. And I expect a similar result: A smackdown of the FCC,” Lakely said.

Voters Oppose Cyberspace Rules

“The FCC has no more right to grab regulatory authority over Internet than it does to tell Comcast to sell broadband to the poor at reduced rates and provide netbooks and laptops for less than $150,” said Lakely. “Yet the FCC has done both. Meanwhile, the technology industry will spend untold amounts of intellectual and financial capital fighting this power grab that could otherwise be invested in innovating and expanding for the benefit of consumers.”

A Rasmussen poll released in late December indicated an “overwhelming” number of Republican and independent voters and more than half of all Democrats oppose any expansion of government rules over cyberspace.

“A federal court, Congress, and the public keep saying ‘no’ to the FCC’s proposals to regulate the Internet, but the commission under Chairman Julius Genachowski just can’t take ‘no’ for an answer,” said Lakely. “There seems to be a competition in Washington these days among bureaucracies: Who can be the most obstinate, arrogant, and damaging to free enterprise? The FCC, unfortunately, proves itself a perennial frontrunner for the title.”

‘Extremely Vulnerable’

Net neutrality advocates say the FCC’s rules will prevent broadband companies from discriminating against Internet services such as Google and Skype, but Verizon’s Glover disagrees with the premise that providers are engaging in unfair practices. “Verizon has long been committed to preserving an open Internet and meeting the needs of our customers,” he said.

“We have worked extensively with all players in the Internet and communications space to shape policies that ensure an open Internet and encourage investment, innovation, and collaboration with content providers and others to meet the needs of consumers,” Glover added.

“The FCC’s Open Internet Order is extremely vulnerable in court, so Verizon’s appeal is highly likely to succeed,” said Scott Cleland, chairman of NetCompetition.org, a free-market organization staunchly opposed to net neutrality. “The FCC does not have the sweeping legal authority to regulate the Internet that it unilaterally deemed itself to have in its order.”

Congressional Review Act

“As if we needed yet another example of how the FCC—and the government—is too slow to regulate the Internet in any but the absolute lightest of manners,” said Seton Motley, president of Less Government, an organization dedicated to less government and protecting the First Amendment from governmental assault.”We now have their net neutrality order sued before they even manage to file it in the federal register.”

Even before the Verizon filing, members of the House of Representatives had already begun to challenge the FCC’s claim of authority to impose Internet rules.

Rep. Marsha Blackburn (R-TN) has introduced a bill to rescind the regulations, and Rep. Fred Upton (R-MI), chairman of the House Energy and Commerce Committee, says his agenda includes employing the Congressional Review Act to undo the FCC’s net neutrality rules. Any legislation passed by Congress, however, would more than likely be vetoed by President Obama, an ardent net neutrality supporter.

Nonetheless, “the arrogance of the FCC will now be met, again, with legal fact,” said Bartlett Cleland, director of the Center for Technology Freedom at the Institute for Policy Innovation, a Texas-based public policy institute.

“Only a truly arrogant agency would have been told by the court that they did not have the authority to regulate broadband when one company, Comcast, was at issue, but then turn around and try to regulate the entire industry,” Cleland continued. “This hubris may now very well be struck down a second time.”

Bruce Edward Walker ([email protected]) is managing editor of Infotech & Telecom News.

On the Internet

Verizon Press Release, January 20, 2011: http://www.heartland.org/infotech-news.org/article/29176/Verizon_Net_Neutrality_Appeal_Statement.

Verizon Notice of Appeal, January 20, 2011: http://www.heartland.org/infotech-news.org/article/29175/Verizon_Notice_of_Appeal.html.

Verizon Panel Motion, January 20, 2011: http://www.heartland.org/infotech-news.org/article/29174/Verizon_Panel_Motion.html.