T-Mobile's MetroPCS drops net neutrality lawsuit, leaving Verizon to challenge rules alone

Now that it's owned by T-Mobile US (NYSE:TMUS), MetroPCS has decided to drop its lawsuit against the FCC's net neutrality rules for wireless and wired networks, leaving Verizon Wireless (NYSE:VZ) as the sole challenger to the rules.

Verizon and MetroPCS have both been vocal opponents of the rules in court but MetroPCS indicated in a court filing on Friday in the U.S. Court of Appeals for the D.C. Circuit that it no longer wants to fight the rules. T-Mobile had not opposed the rules and completed its acquisition of MetroPCS earlier this month.

MetroPCS' decision to drop its suit doesn't mean the legal battle is over--far from it. Verizon's challenge to the rules is still pending but arguments for the case have not been set. Verizon declined to comment, according to The Hill.

Outgoing FCC Chairman Julius Genachowski, who stepped down on Friday, praised the move. "The FCC's widely supported open Internet framework has contributed to healthy growth in innovation and investment across the U.S. broadband economy. Since 2010, our strong and balanced rules have been protecting entrepreneurs and consumers, and have increased certainty and predictability for investors in Internet services as well as networks," Genachowski said in a statement. "The ongoing litigation--now pursued by a single company--only serves to reduce that certainty and predictability. I applaud T-Mobile's decision to withdraw from this litigation."

"We're happy that T-Mobile has dropped MetroPCS' lawsuit challenging the Open Internet rules. The rules are working," public interest group Public Knowledge said in a statement. "While they're not perfect, they reassure Internet companies that they will be able to reach users, they give ISPs a framework under which they can manage their networks and they provide a mechanism for working out disputes."

Under the FCC's rules, which the commission passed by a 3-2 party line vote in December 2010, wireless carriers are barred from blocking services such as Google Voice and Skype that compete with their own voice and video offerings, as well as those in which they have an attributable interest. However, the rules go light on wireless carriers, which do not face the same restrictions wired operators do on blocking Web traffic and other applications--a ban on unreasonable discrimination in transmitting lawful network traffic.

Wireless carriers also face transparency requirements on network management policies and a basic "no-blocking" rule on lawful content and applications. The no-blocking rule won't generally apply to carriers engaged in the operations of application storefronts. The rules do allow for reasonable network management, which is defined as actions that are "appropriate and tailored to a legitimate network management purpose, taking into account network architecture."

The debate over net neutrality has flared into the open recently. AT&T Mobility's (NYSE:T) decision to block video chat features over cellular connections integrated into Google's (NASDAQ:GOOG) new Hangouts messaging service for Android for certain customers has revived complaints made against it last year when it imposed restrictions for Apple's (NASDAQ:AAPL) FaceTime.

Further, net neutrality advocates said they were worried by comments last week from AT&T CEO Randall Stephenson that he expects content and app developers to soon introduce new types of business models that will allow customers to get access to their content without racking up high data usage bills. His comments came after Wall Street Journal reported that ESPN was in discussions with at least one large U.S. carrier about subsidizing wireless access to its content.

"If AT&T and Verizon get their way, the days of the open Internet are numbered. Allowing a few deep-pocketed partners to pay for preferred treatment will stifle innovation, hinder competition, raise prices over time and give mobile phone companies the power to pick and choose the content you can access," Free Press Policy Director Matt Wood said in a recent statement. "AT&T has claimed for years that network congestion is the reason it needs data caps and steep overage fees. But if ESPN and other rich companies can pay to get around these artificial limits, it suggests what we've long suspected: AT&T's jacked-up fees and penalties are just there to gouge consumers. AT&T's whole business plan is to profit from the false scarcity it's created."

For more:
- see this court filing
- see this The Hill article
- see this Broadcasting & Cable article
- see this IDG News Service article

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