Landmark Verizon ‘Net Neutrality’ Case Tests Open Internet Rules

Verizon argues that the FCC's net neutrality rules violate the telecom giant's First Amendment rights

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Gary Cameron / REUTERS

Does the U.S. government have the authority to enforce rules designed to ensure that the Internet remains the open, dynamic platform that has spawned one of the greatest periods of technological innovation in U.S. history? That’s the question facing a federal appeals court today in a landmark case about “net neutrality,” the principle that Internet Service Providers don’t get to control what consumers do online. The outcome of the case, brought by telecom titan Verizon against the Federal Communications Commission, could have profound implications for anyone who uses the Internet, for the tech giants who have built billion dollar businesses online, and for the thousands of startups that hope to follow in their footsteps.

“Verizon vs. FCC presents a very significant historical moment,” says Susan Crawford, a tech policy expert and professor at the Benjamin N. Cardozo School of Law who served as Special Assistant to President Obama for Science, Technology, and Innovation Policy. “The question presented by the case is: Does the U.S. government have any role in ensuring ubiquitous, open, world-class, interconnected, reasonably priced Internet access?”

Crawford, who supports net neutrality, believes the answer is yes, because without such a government role, the U.S. could be at a global competitive disadvantage, particularly relative to countries in Asia that are pursuing industrial policies designed to bolster their own high-speed broadband networks. A robust, open, reasonably priced system of nationwide broadband access is crucial for the health of the American middle class, Crawford says, and that will only be possible if the government has the power to ensure open, unfettered access to the Internet.

The principle of net neutrality was enshrined in the FCC’s 2010 Open Internet order, which aims to prevent Internet service providers (ISPs) like Comcast, Verizon, and AT&T from interfering with Internet traffic or favoring their own services in order to disadvantage rivals. The main thrust of the order boils down to three rules. First, the order requires ISPs to be transparent about how they handle network congestion; second, the ISPs are prohibited from blocking traffic such as Skype or Netflix on wired networks; third, the order outlaws “unreasonable” discrimination, meaning the ISPs can’t put such services into an Internet “slow lane” in order to benefit their own competing services.

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The FCC says the net neutrality rules are designed to “preserve the Internet as an open platform enabling consumer choice, freedom of expression, end-user control, competition, and the freedom to innovate without permission.” Verizon argues that the FCC lacks the authority to enforce the rules, which the telecom giant also claims violate its First Amendment rights to free speech.

For nearly a decade, net neutrality has been the subject of an intense series of battles among ISPs, Internet giants, consumer groups, policy experts, and the FCC itself. Today, the Internet largely adheres to net neutrality, and most people don’t even think about it, so it’s easy to take for granted. All Internet users have open access to the Internet, just like all Americans have the right to travel anywhere in the 50 states without a passport. Without this open access, net neutrality advocates argue, startups like Google, Twitter and Facebook could never have flourished.

Cable and telecom giants have traditionally argued that because they spent billions of dollars to build the infrastructure underlying the Internet, they should have more latitude in deciding what content travels over those networks. Net neutrality, they’ve argued in the past, allows companies like Google, Yahoo and Facebook to make billions of dollars using the “pipes” and wireless networks that the cable and telecom giants spent billions to build. In 2005, incoming AT&T CEO Ed Whitacre famously remarked that upstarts like Google would like to “use my pipes free, but I ain’t going to let them do that because we have spent this capital and we have to have a return on it.”

In the latest case, Verizon argues that the FCC lacks the authority to enforce net neutrality because, it claims, Congress did not grant the agency the ability to do so. In essence, Verizon says that the FCC overstepped its authority with the Open Internet rules, and is asking the U.S. Court of Appeals for the District of Columbia Circuit to agree. “The FCC has acted without statutory authority to insert itself into this crucial segment of the American economy, while failing to show any factual need to do so,” Verizon argues in its brief to the court.

For its part, the FCC argues that it has the authority to enforce net neutrality under provisions of the Telecommunications Act of 1996 and the Communications Act of 1934. The FCC’s position received a boost in May when the U.S. Supreme Court ruled in a separate case that regulatory agencies should be granted leeway in applying their own rules. “The court must defer to the administering agency’s construction of the statute so long as it is permissible,” Justice Antonin Scalia wrote in a 6-3 decision.

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Verizon further argues that the net neutrality rules violate the company’s First Amendment rights. Because broadband companies transmit their own speech as well as the speech of others, the providers “possess ‘editorial discretion,'” Verizon asserts. “Just as a newspaper is entitled to decide which content to publish and where, broadband providers may feature some content over others,” the telecom giant argues. “Although broadband providers have generally exercised their discretion to allow all content in an undifferentiated manner, they nonetheless possess discretion that these rules preclude them from exercising. For example, they could distinguish their own content from that of other speakers or offer that capability to others.”

Net neutrality advocates reject Verizon’s attempt to turn government oversight over broadband service into a constitutional issue about free speech. “In its capacity as a broadband provider, Verizon is not a speaker but a conduit for others’ speech,” Kevin Bankston, lead attorney for the Center for Democracy and Technology, wrote in a brief supporting the FCC. “A broadband provider is no more the publisher or speaker of third-party content than is the postal service delivering letters or the maker of the soapbox on which a speaker stands.”

Verizon’s position is hypocritical, according to the CDT and others, because the company previously argued that it is merely a passive conduit — protected by the “safe harbor” provisions of the 1998 Digital Millennium Copyright Act — for legally questionable content like unauthorized music and movies that travels over its network. “Verizon cannot have it both ways,” Bankston wrote. “It cannot be a speaker when it suits its purposes and a conduit when it does not. Either Verizon is expressing itself by its choice to transmit certain content, or it is a passive conduit for the expression of others.”

To Susan Crawford, Verizon’s First Amendment argument is insidious because it suggests an equivalence between the kind of speech that is protected by the Constitution, and the business of transporting data on broadband networks. That’s wrong, she says. “Verizon is free to speak anytime it wants to about anything,” says Crawford. “Merely allowing other people’s speech to cross its lines does not amount to compelled speech. Indeed, the First Amendment, and its great tradition of cases protecting dissent and press freedom, is demeaned by Verizon’s argument.”