On Nov. 20, 2011, the Federal Communications Commission’s (FCC) net neutrality rules took effect. Several companies are already challenging the rules in consolidated appeals before the DC Circuit, which previously has shown some hostility to the FCC claiming authority to regulate this area. In addition to the legal challenges they face, the net neutrality rules may also be in political jeopardy depending on the results of the 2012 elections.

In its purest form, net neutrality means that all websites providing content and all users searching for it are treated the same. An alternative view held bymany Internet service providers (ISPs), is that ISPs should be able to charge their users different amounts to obtain different levels of service (such as guaranteed speeds), as well as being able to charge websites to have their content provided to users more expeditiously than other web content. While few advocate the purest form of net neutrality, many have come to believe in recent years that some form of net neutrality is necessary to maintain the Internet’s open nature.

In 2007, it was discovered that Comcast, a broadband ISP, was interfering with peer-to-peer networking applications that can be used to share large files, such as videos. Comcast argued that its interference was necessary given the bandwidth consumed by such applications. A complaint was filed with the FCC, which issued an order finding that the FCC had jurisdiction over Comcast’s network management practices and that it could resolve the dispute through adjudication, rather than rulemaking.

The FCC did not claim to have express authority to regulate Comcast’s Internet access services under Title II (telecommunications), Title III (broadcast television and radio) or Title VI (cable) of the Communications Act. Rather, the agency maintained that it had ancillary authority under section 4(i) of the Act. The FCC found Comcast to be in violation of federal policy. The D.C. Circuit, however, agreed with Comcast that the FCC had failed to establish that it had authority to regulate an ISP’s network management practices. (Comcast Corp. v. FCC)

Subsequently, the FCC went through formal rulemaking procedures and created its rules for “Preserving the Open Internet,” which are commonly referred to as the “net neutrality rules.” The rules generally apply to broadband ISPs and have three basic requirements: transparency;  no blocking and no unreasonable discrimination.

1. Transparency requires fixed and mobile broadband ISPs to disclose their network management practices, performance characteristics and commercial terms for their broadband services.

2. The no blocking rule means that fixed broadband ISPs shall not block lawful content, applications, services or non-harmful devices, subject to reasonable network management. A less restrictive no blocking rule applies to mobile broadband ISPs.

3. The no unreasonable discrimination rule means that fixed broadband ISPs shall not unreasonably discriminate in transmitting lawful network traffic over a consumer’s broadband Internet access service. Reasonable network management (generally a practice that is appropriate and tailored to achieving a legitimate network management purpose) is not unreasonable discrimination. The FCC did not adopt a no unreasonable discrimination rule for the relatively young mobile broadband ecosystem as it first wants to monitor how this area develops. For example, users typically have many more choices in selecting a mobile broadband ISP than in selecting a fixed broadband ISP.

The FCC spelled out in its order establishing the net neutrality rules that the agency believes that it has authority to do so under numerous sections of the Communications Act, including those in Titles II, III and VI, that it did not rely on in Comcast. Legal challenges have already been made to the net neutrality rules. For example, Verizon challenged the net neutrality rules in the D.C. Circuit on several bases, including that they exceed the FCC’s statutory authority.

In a stroke of bad luck for the FCC, the Panel on Multidistrict Litigation randomly selected the D.C. Circuit over five other federal appellate courts to hear all of the challenges to the net neutrality rules. Thus, the same court that decided Comcast will now determine whether the FCC had authority to issue its net neutrality rules.

Separate from the current legal challenges assailing the net neutrality rules are potential political challenges in the near future. Shortly before the net neutrality rules took effect, the Republican dominated House of Representatives voted to repeal them, but the Democratic led Senate voted down the measure. The votes were largely along party lines. President Obama had said he would veto the measure if it passed. Thus, if Republicans gain the White House and Senate in 2012 and maintain control of the House, the net neutrality rules may be short lived, even if they survive in court.