Verizon, MetroPCS take FCC to court again over neutrality rules

Verizon Communications (NYSE:VZ) and MetroPCS (NASDAQ:PCS) once again filed a lawsuit seeking to block the FCC's net neutrality rules for wireless and wired networks, the latest step in the legal saga surrounding the regulations.

The companies filed their brief with the U.S. Court of Appeals in Washington, which was the same court that in April 2010 struck down the FCC's authority to sanction Comcast for blocking subscribers from using a file-sharing service. In April 2011 the court tossed out a suit brought by the two companies, arguing that they had filed it too soon.

In the filing, the companies said that after the Comcast decision, instead of "proceeding with caution" the FCC passed rules that "go even farther than its prior action and impose dramatic new restrictions on broadband Internet access service providers."

"Here again, 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," the brief states.

"We look forward to defending our open Internet rules in court," FCC spokesman Neil Grace told Bloomberg. "This strong and balanced framework is helping ensure that the Internet continues to thrive as an engine for innovation, investment, job creation, and free expression."

The net neutrality rules were first passed on a party-line 3-2 vote in December 2010 after months of contentious debate, and they took effect in November 2011. As they had before, both Verizon and MetroPCS argued that the FCC does not have the authority to enact and enforce the new rules. The companies also said the agency's rules retroactively modified their wireless spectrum licenses in ways that did not exist when the licenses were granted.

"If the commission could issue any rules it deemed in the public interest and compel licensees to comply with them simply by modifying their licenses, it is difficult to imagine what sort of obligation the FCC would be unable to impose on wireless licensees," the companies wrote.

Under the FCC's rules, 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, wireless carriers would not face the same restrictions wired operators will 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."

For more:
- see the lawsuit
- see this Bloomberg article
- see this The Hill article
- see this Multichannel News article

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