New U.S. Internet traffic regulations, known as net neutrality rules, will go into effect today after a federal appeals court rejected the telecommunications industry's request to partly suspend their implementation while they are being litigated.
The ruling yesterday marked an early win for the Federal Communications Commission, whose assertion of a broader enforcement authority over Internet service providers is being challenged in court by AT&T (NYSE:T) and cable and wireless industry groups.
The rules, passed by a partisan 3-2 vote in February, ban Internet providers from blocking and slowing down access to websites and applications or striking deals with content companies for priority delivery of traffic. The FCC will also be able to address complaints about potential "unreasonable interference" with consumers' access to the Web.
“This is a huge victory for Internet consumers and innovators,” FCC Chairman Tom Wheeler said in a statement after yesterday ruling. “Starting Friday, there will be a referee on the field to keep the Internet fast, fair and open.”
USTelecom, whose members include AT&T and Verizon Communications Inc., in March asked the court to vacate the FCC’s rules. AT&T filed a separate challenge, as did CTIA-The Wireless Association and the National Cable & Telecommunications Association and others. The cases are being heard together.
Telecom companies say they do not object to specific net neutrality rules like no-blocking or no-throttling. They are fighting the legal path the FCC chose to set the new regulations after the previous version was struck down in court last year.
AT&T and industry groups' lawsuit objects to the reclassification of broadband Internet as a more heavily regulated telecommunications service, and the new broad "unreasonable interference" general conduct standard.
Walter McCormick Jr., president of the U.S. Telecom Association, the trade association attacking the FCC’s rule, said he was “disappointed” by the ruling from a three-judge panel.
The expedited schedule shows the gravity of the issues, which include “the proper legal treatment for regulating broadband Internet access service,” he said.
Also yesterday, a U.S. House subcommittee passed a budget provision that would cut FCC funding by $25 million and prevent it from enforcing the net neutrality rules until court cases were decided.
Shares of AT&T were down 0.4% at $34.72 at 2:10 p.m. in New York. The stock is up 3.5 percent this year.