A federal appeals court has tossed the Federal Communications Commission's open access rules, which require Internet providers to treat all Web traffic equally.
Without the so-called net neutrality rules, Internet providers will be able to charge companies a fee in return for putting their content in the fast lane of their pipelines.
The 2-1 decision by a panel of the U.S. Court of Appeals for the District of Columbia Circuit has the potential to upend the telecommunications and entertainment industries, but the court left plenty of room for the FCC to come up with a different plan to regulate the Internet.
The ruling was in response to a Verizon suit looking to overturn the FCC's 2010 rules.
Sen. John McCain (R-Ariz.), cheered the ruling.
“I support today’s decision by the D.C. Court of Appeals, ruling that the FCC overstepped its authority in its attempt to regulate the Internet with so-called ‘net neutrality’ principles through anti-blocking and anti-discrimination rules," he said. "This decision also sends a strong message to federal agencies that may attempt to direct by regulation that which is not authorized by Congress.”
The ruling has "open Internet" advocates, telecommunications industry watchdogs and some Hollywood groups up in arms. They worry that companies that provide Web service will slow down or block access to competitors.
Service providers could create "fast lanes" on the Web and charge competitors more for access to the faster speeds. Consumer advocates fear that the restrictions could make the Internet resemble the cable TV industry -- that is, disproportionately controlled by a few major players.
"Internet users will be pitted against the biggest phone and cable companies -- and in the absence of any oversight, these companies can now block and discriminate against their customers’ communications at will," said Craig Aaron, the president and chief executive of Free Press, a media watchdog group.
One argument is that a video and Internet provider would have an incentive to bog down a video streaming service such as Netflix in favor of its own sites. Or it could charge a toll to those who want their content delivered at a higher speed, which media watchdogs say would stifle innovation and favor big and powerful companies.
Netflix declined to comment.
The issue of companies playing favorites with their own content came to the forefront when Comcast announced plans to acquire NBCUniversal in 2009.
Comcast, the nation's largest cable and Internet distributor, said in a statement Tuesday that the court ruling would not change the company's policies. At the time of the acquisition, the cable giant agreed to abide by the FCC's open Internet rules for seven years, even if the courts changed them.
"We have not -- and will not -- block our customers’ ability to access lawful Internet content, applications or services," the company said. "Comcast’s customers want an open and vibrant Internet, and we are absolutely committed to deliver that experience."
In a statement, Time Warner Cable its practices also would not change.
Hollywood has weighed in as well. The Writers Guild of America said the ruling hurts consumers and people who make content such as television programming and movies.
"To allow the Internet to succumb to corporate forces who seek to control what consumers can access undermines the open, democratic principles on which the Internet was founded," the industry group said in a statement.
FCC Chairman Tom Wheeler said in a statement that the agency would "consider all available options, including those for appeal, to ensure that these networks on which the Internet depends continue to provide a free and open platform for innovation and expression, and operate in the interest of all Americans.”
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