More broadly, the decision affirms Washington's ability to regulate Internet providers like legacy telephone companies. Approved in a bitterly partisan vote last year, the move by the FCC to "reclassify" Internet providers significantly expanded the agency's role in overseeing the industry. It opened up Internet providers to all-new obligations they were not subject to before, such as privacy requirements that all telecom companies currently follow in order to protect consumers' personal data.
Tuesday's opinion from the U.S. Court of Appeals for the D.C. Circuit comes months after a group of industry leaders, including AT&T and the nation's top cable association, sued the FCC in hopes of overturning the rules. They argued that the agency overstepped its congressionally granted authority in applying telecom-style rules to Internet providers, a class of industry that had been only lightly regulated during the Bush administration.
The court verdict puts to rest — for now — a key question: Whether the Internet represents a vital communications platform that deserves to be regulated with the same scrutiny as the common networks of the past, such as the telephone system. Writing for the court, Judges David Tatel and Sri Srinivasan held that despite advances in technology, the underlying importance of the Internet to everyday communications and commerce makes it more similar to the phone system than not. Today, for example, consumers are accustomed to using not just the email accounts that their broadband provider gave them, but also using third-party services such as Gmail as well as Netflix, Amazon and Uber.
"Given the tremendous impact third-party internet content has had on our society, it would be hard to deny its dominance in the broadband experience," the judges wrote. "Over the past two decades, this content has transformed nearly every aspect of our lives, from profound actions like choosing a leader, building a career, and falling in love to more quotidian ones like hailing a cab and watching a movie."
The industry had claimed that certain services they offered as part of the Internet bundle, such as email, were one reason it deserved to be lightly regulated as "information services" under the FCC's rules, rather than as "telecommunications services," which are policed more strictly.
The court's lone dissenting voter, Judge Stephen Williams, said that while he agreed that the FCC could legally classify broadband companies as telecommunications carriers, the agency did not do enough to prove that today's information ecosystem has changed sufficiently to justify the move.
Federal regulators and consumer advocates hailed the landmark ruling — marking the third time the FCC had gone to court to defend its net neutrality rules — as a decisive outcome in a years-long battle over the future of the Internet.
"Today’s ruling is a victory for consumers and innovators who deserve unfettered access to the entire web, and it ensures the internet remains a platform for unparalleled innovation, free expression and economic growth," FCC chairman Tom Wheeler said in a statement.
"This is a slam-dunk win," said Gene Kimmelman, president of the advocacy group Public Knowledge. "It's just a huge win for the open Internet order and for the FCC."
Industry officials must now mull whether to escalate the court battle. The National Cable and Telecommunications Association, the top cable trade group that also challenged the FCC rules, said it was considering its options in light of the decision.
"This is unlikely the last step in this decade-long debate over Internet regulation," it said.
Broadband providers could next request a re-hearing at the D.C. Circuit — but some carriers hinted at going further.
“We have always expected this issue to be decided by the Supreme Court, and we look forward to participating in that appeal,” said AT&T general counsel David McAtee.
Even as Internet providers weigh an appeal, Tuesday's ruling sets the stage for a new set of debates over the future of the Web. Now the FCC must decide how to implement many of the regulations it laid out in its net neutrality policy.
Internet providers now face expectations they once could safely ignore because they were not considered telecommunications carriers. For instance, phone companies currently must obtain consumers' explicit consent before sharing their names, phone numbers, addresses or other personal information with marketers. Internet providers do not, but a pending proposal at the FCC would seek to extend a similar set of expectations to broadband companies.
The FCC has also held recent meetings with companies to discuss an increasingly common practice known as "zero rating," where carriers allow subscribers to use certain partner services without counting that usage against data caps. While zero-rating gives users virtually unlimited access to popular online content, critics say it could give large, established companies an advantage over smaller ones.
With the D.C. Circuit's approval, the FCC can now move more decisively toward implementing and enforcing rules such as these.
Read the full court opinion here (PDF).