Verizon sues FCC over net neutrality rules

Verizon Communications (NYSE:VZ) filed a lawsuit asking a federal appeals court to block the FCC's net neutrality regulations for wireless and wired networks, which the commission approved by a 3-2 margin one month ago.  

The telecommunications company, which has been one of the harshest industry critics of the rules, said that the FCC does not have the authority to enact the new rules. Verizon argued that the agency's rules have retroactively modified Verizon's wireless spectrum licenses in ways that did not exist when the licenses were granted.

Verizon filed its appeal with the U.S. Court of Appeals for the D.C. Circuit, which is the same court that in April struck down the FCC's authority to sanction Comcast for blocking subscribers from using a file-sharing service. Additionally, Verizon's lawyer in its new case, Helgi Walker of Wiley Rein LLP, is the same lawyer who argued for Comcast in the case Comcast won.

Under the FCC's order, which passed on a deeply contentious, party-line vote, 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."

The FCC's office of general counsel has said the FCC has the authority to promote advanced telecommunications services and encourage broadband deployment--factors that underpin its authority to create the rules. That legal route was attacked by the FCC's two Republican commissioners, Robert McDowell and Meredith Attwell Baker, in December.

Public interest groups, which have argued that the net neutrality rules do not go far enough to protect consumers, took issue with Verizon's latest legal maneuver. Harold Feld, the legal director of Public Knowledge, a digital rights advocacy think tank, said the D.C. Circuit is the only court designated to hear license challenges. He said typical license challenges relate to a single company's operations, not to a rulemaking that affects numerous companies, and that challenges to rulemakings can be heard in any federal appellate circuit.

"Verizon is trying to be too cute in trying to pick not only the venue for the challenge to the rules, but also to pick the judges to hear it," Feld said in a statement. "The court should see through this ploy and reject Verizon's attempt to pick the home field for its appeal."

For more:
- see this Verizon statement
- see this WSJ article (sub. req.)
- see this NYT article
- see this Washington Post article

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