Yesterday, the U.S. Court of Appeals handed down a ruling that has big implications for net neutrality. In a 2 to 1 decision, the D.C. Circuit Court ruled to support the FCC’s (Federal Communications Commission) efforts to reclassify Internet service providers as “Title II common carriers”. The ruling gives the government agency a broader authority to enforce rules surrounding net neutrality. Internet service providers have vowed to appeal the decision to the Supreme Court, but the ruling is seen as a resounding victory for FCC chairman Tom Wheeler and President Obama. Both have been strong and vocal supporters of increased FCC regulatory measures for a troubled telecomm industry and they’ve championed the effort to bring the public better access to high-speed Internet.

A Bit of Backstory

Before we discuss the ruling and its implications for the future of the Internet, let’s clarify what net neutrality is. Net neutrality refers to the concept that all Internet traffic should be treated equally. The principle implies that the Internet is a right, not a privilege or a luxury afforded to people of means. Net neutrality opposes the throttling of content or imposing “fast” lanes that might prevent individuals from having unfettered access. Cable companies have been staunch opponents of net neutrality, insisting that the regulations the FCC wants to put in place would squelch innovation in a fledging industry.

Back in 1996, Congress passed The Telecommunications Act, which provided some much needed regulation after over sixty years of legislative silence. It did not, however, specifically classify Internet service providers. Congress had decided that while it was in the best interest of consumers to impose some laws that prevented monopolies among the telecoms, the Internet was still in its infancy and legislation might stifle innovation. Throughout the 90’s, under the leadership of a conservative Bush administration, the FCC was adamant about loosening restrictions in the Internet industry and allowing an open market to encourage competition.

By 2005, the FCC had decided it was time to support net neutrality and they proposed a series of regulatory efforts targeted at Internet service providers. The case was eventually heard by the Supreme Court, who upheld deregulation and sent the government agency back to the drawing board. In 2010, the FCC tried again and failed to gain support for some fairly meager attempts to modulate the commercialization of the Internet. And again, in 2014, another lawsuit was filed, challenging what many saw as weak rules aimed at net neutrality and won. But in this victory for the telecommunications company lay the seeds of its own defeat. Judges made clear that their decision was due in large part because the current statute didn’t allow for the kinds of measures the FCC was seeking to impose. The issue was the way in which ISPs were classified.  As long as Internet providers continued to be considered information service carriers rather than common carriers like the telephone companies, efforts at regulation would fall flat.

In 2015, The Federal Communications Commission fired its manifesto across the bench, a 400-page document that would come to be called to across the bench, a 400 page  carriers like the telpehone  providers continued to be classified as informati The Open Internet Act. In it, the government agency outlined a broad set of regulations aimed at protecting a free Internet as a public utility. And this time, Tom Wheeler left nothing to chance. They meticulously framed an argument against every objection Internet Service Providers had ever made, dotting every “I” and crossing every “t”.  ISPs had often argued that because they bundled their service with email and web hosting, they qualified as information service providers by default. The FCC fired back that in many cases, ISPs used the exact same “pipes” and infrastructure as every other telecommunications company and that differentiating their service from the ones delivered along the same lines was virtually impossible.  When the legislative smoke cleared earlier this week, the FCC emerged unequivocally victorious.

The Decision in Favor of the FCC

The ruling essentially supports the FCC’s authority to determine how to classify Internet service providers and allows them to regulate the industry accordingly. The 134-page decision also includes support for measures aimed at protecting privacy and limiting the personal data telecommunications companies can store and share. The ruling applies to both fixed and mobile networks and sets the stage for continued regulatory action within the industry.

“Today’s ruling is a victory for consumers and innovators who deserve unfettered access to the entire web, and it ensures the Internet remains a platform for unparalleled innovation, free expression and economic growth. After a decade of debate and legal battles, today’s ruling affirms the Commission’s ability to enforce the strongest possible internet protections – both on fixed and mobile networks – that will ensure the internet remains open, now and in the future.”

Tom Wheeler, FCC chairman, Statement, 6/14/2016

AT&T and the NCTA have committed to continued opposition of the legislation and while they’re likely to push this through to the highest court in the land, it’s unclear whether the Supreme Court would even consent to hear the case. Many industry analysts have claimed that if not for a long history of poor performance, telecommunications companies would never have found themselves in this situation to begin with. Whether or not the decision is upheld, it appears the tide has finally turned in favor of net neutrality.

“We have always expected this issue to be decided by the Supreme Court, and we look forward to participating in that appeal.”

David McAtee, AT&T Senior Executive Vice President and General Counsel

Implications for a Free Internet

Because the FCC now has the latitude to classify Internet service providers as Title II common carriers, ISPs will be subject to regulatory measures much as a utility would be. Most of these will be aimed at discouraging the throttling of content and the use of data caps. The FCC is also interested in ensuring ISPs don’t seek to impose “fast lanes” that might have a big impact on smaller tech companies and businesses, discouraging innovation and equal opportunity. Internet service providers have expressed concern that the FCC would seek to impose rate regulations, but the agency has promised they have no intention of doing so.

In response to this development, Congressional Republicans passed a bill earlier this week cutting funding to the government agency by $69 million dollars and prohibiting the FCC from using any of their budget to enforce net neutrality rules. While Obama is likely to veto any such bill, it’s unclear who might be in office by the time the budget crosses the desk in the Oval Office.

While the war to free the Internet continues to be waged, this battle is a decided victory for the FCC and may be exactly what is needed to propel change in an industry plagued with customer dissatisfaction.

“Today’s decision upholding net neutrality is an enormous victory for consumers, for businesses and startups, and ultimately for the innovation that has helped drive our modern economy. Net neutrality has been part of the architecture of the Internet since the very beginning — and as we’ve seen for the past several decades, a free and open Internet has been a tremendous engine for innovation and economic growth. That growth hasn’t just happened while we’ve had net neutrality in place — it’s happened because of net neutrality.”

Senator Al Franken, (Democrat, Minnesota)