The Silicon Valley and Internet companies worldwide are pouring over a landmark decision, released yesterday, by a three-judge panel of federal appellate judges sitting in Washington, D.C.
In short, the D.C. Circuit overruled a Federal Communications Commission (FCC) holding on “net neutrality.” Supported by the Obama Administration, the FCC had previously required broadband Internet providers like Verizon and Comcast to treat all content providers equally—analogizing to the “common carrier” rules that apply to traditional services (e.g. phone landlines) in the telecommunications industry. That rule no longer applies, although the FCC is likely to appeal to the U.S. Supreme Court.
As a result of the ruling, broadband providers may now use variable pricing models, attempting to charge more for companies that require faster download speeds or greater bandwidth. Professor Tim Wu of Columbia Law School told the Wall Street Journal, “It takes the Internet into completely uncharted territory.”
The market seems to agree with Prof. Wu. This morning, companies that may benefit from such tiered pricing are generally up (Verizon is up 1.7%, Comcast up 2.8%), and those that may be forced to pay are down (Netflix is 4% in the red).
Yesterday’s decision and the ongoing conversation about “net neutrality” has the potential to shift the power balance amongst major players in the Silicon Valley. Given the stakes, any possible contest at the Supreme Court would likely be amongst the Term’s most closely watched. For now, opinions on Capitol Hill are varied and often cross traditional party lines, as the core debate on the federal government’s role in Internet regulation intersects free-market, “open Internet,” and First Amendment arguments.
The case is Verizon v. FCC, No. 11-1355, (D.C. Cir. Jan. 14, 2014). It is available here.