Verizon challenged it, and this week a U.S. Court of Appeals struck it down, based on the FCC's 2002 decision to categorize broadband as an "information service." Judge David Tatel said that the Open Internet Order should be overturned because "the Commission has chosen to classify broadband providers in a manner that exempts them from treatment as common carriers" — in other words, as an information service, not a telecommunication service.
What might be the effects of the ruling? Well-funded websites will be able to pay extra to have their traffic delivered speedily, making it much more difficult for startups and competitors to survive. In the long run, that means less competition and less innovation. Established services like Netflix will thrive because they'll be able to pay ISPs and pay big. Other services may wither and die, if they even get to start at all, because they'll be at a competitive disadvantage.
Consumers may end up paying more for services. For example, if Netflix pays the ISPs to deliver video more quickly, Netflix will need to get that money from somewhere, and that will likely mean higher subscription fees.
ISPs could also favor websites and services they own over others. Comcast, for example, owns NBC, and could give that network's websites and online services precedence over NBC's competitors.
ISPs could black out entire websites and services. This isn't as far-fetched as it might seem, and there is already a precedent for it. Last summer, Time Warner Cable and CBS were locked in an exceedingly nasty financial dispute about Time Warner Cable's payments to CBS for content. Time Warner Cable went nuclear and blacked out CBS broadcasts to its subscribers for weeks until the disagreement was settled. Now, with Net neutrality struck down, an ISP could do the same thing to a website, blocking access to all Google services unless Google paid what the ISP wanted, for example.
What will be the likely result of all this? A balkanized Internet that bears no resemblance to the freewheeling network that has revolutionized the way people live, work and communicate, while fueling massive economic growth.
But the FCC can do something about the ruling, and should. The court didn't give Verizon everything it wanted — the court said that the FCC did, in fact, have the authority to regulate broadband traffic, even though it had exceeded its authority with the Open Internet Order.
As a first step, the FCC should appeal the decision. But that's not enough, because another judge may well rule that the FCC exceeded its authority. The FCC should also come up with a set of Net neutrality regulations that don't depend upon common carrier precedents, and therefore might pass court muster.
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