Internet providers who oppose the government's net-neutrality rules will once again take the issue to court this week as they ask more than a dozen federal judges to throw out the regulations.
A Washington trade group representing cellular carriers, CTIA, will be requesting a rehearing of the case by the U.S. Court of Appeals for the D.C. Circuit, according to a person familiar with the matter. Likely joining the group will be AT&T, the trade association USTelecom and a number of others, according to another person familiar with the issue. Both spoke on the condition of anonymity to discuss pending legal proceedings.
The challenge comes weeks after the industry was broadly defeated at the D.C. Circuit Court, when three judges ruled to uphold the net-neutrality rules, which dramatically broaden the government's ability to regulate Internet providers. As written, the rules ban the blocking and slowing of Internet traffic by companies, such as Comcast and Verizon, as well as wireless carriers, such as T-Mobile and Sprint. In defending the rules from the industry's legal assault, the Federal Communications Commission argued that discriminating against some types of online content while giving other types preferential treatment would create an uneven playing field.
The industry's attempt to draw out the legal battle comes as telecom and cable firms are seeking new ways to supplement their legacy business of providing access to connectivity. Increasingly, broadband companies are looking to acquire their own online content and sell ads against it, much in the way Google sells ads alongside its search results and Spotify sells ads between songs. Verizon's recent announcement that it intends to acquire Yahoo reflects this industry shift. So does AT&T's acquisition last year of DirecTV and Comcast's acquisition in 2011 of NBCUniversal.
Underlying this shift toward content, analysts say, is the broadband industry's hope that it will be able to turn what data it collects on subscribers — such as your browsing history and your mobile-location information — into tools for targeting ever more specific advertisements. These hyper-targeted ads are more lucrative and stand to make Internet providers even more money.
But the FCC's net-neutrality rules could put a damper on those plans. Under the regulations, Internet providers could soon be required to obey stricter privacy policies aimed at protecting consumers. Allowing the rules to stand will probably restrict providers' ability to pursue these types of business models.
"To me, the privacy question swamps everything else," said Craig Moffett, an industry analyst at MoffettNathanson, in a recent interview on the Verizon-Yahoo deal.
The industry's latest attack on the net-neutrality rules is not technically an appeal. Instead, it is a request for the case to be argued again before all of the court's judges. Legal analysts on either side of the issue say the attempt is a long shot, one that may be more about trying to create the impression of uncertainty as the FCC attempts to put its rules into practice.
"If they were to go straight to the Supreme Court, they would lose this window of time to keep casting doubt on whether this decision is final," said Matt Wood, policy director of the consumer-advocacy group Free Press.
But for the companies growing more interested in pushing proprietary content through the pipes they own, it is a major battle that few are prepared to give up anytime soon.