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Posted at 9:42 PM ET, 01/20/2011

Verizon sues the FCC in challenge of net neutrality rules

By Cecilia Kang

Just weeks after the Federal Communications Commission adopted its first-ever rules aimed at regulating Internet access, Verizon Communications on Thursday filed a federal lawsuit to overturn the controversial order.

Verizon argues that the FCC does not have the legal authority to mandate how Internet service providers treat content on their networks.

A legal challenge was widely expected, and the FCC has said it thinks Congress enabled the agency to pursue its rules under several interpretations of telecommunications laws. The FCC's rules are supported by consumer groups and Web giants such as Google and Facebook.

Verizon filed its case in the same federal court - the U.S. Court of Appeals for the District of Columbia - that ruled last April that the FCC overstepped its authority in trying to sanction Comcast for blocking Web traffic.

"We are deeply concerned by the FCC's assertion of broad authority for sweeping new regulation of broadband networks and the Internet itself," said Michael E. Glover, Verizon's senior vice president and deputy general counsel. "We believe this assertion of authority goes well beyond any authority provided by Congress, and creates uncertainty for the communications industry, innovators, investors and consumers."

Verizon's lead attorney for the suit is Helgi Walker, who successfully represented Comcast last spring. Verizon also asked to choose the judges who hear its case, an unusual move that telecom industry observers say is an attempt to get the same judges who earlier ruled against the FCC. Analysts said other companies are likely to file similar suits in other courts around the country.

The FCC declined to comment. The agency's rules are expected to go into effect within months and would not be overturned unless the court ruled in Verizon's favor. That could take many months. Comcast's appeal of the FCC's sanctions took more than 18 months.

A senior official at the FCC who spoke on the condition of anonymity said the agency thinks it has the authority to carry out its net-neutrality rules. The rules are largely focused on the Internet lines into American homes that connect to desktop computers and private Wi-Fi networks. The rules prevent Internet service providers such as Verizon, AT&T and Comcast from intentionally blocking or favoring some Web sites over others.

The rules also prevent wireless operators from blocking Internet voice applications, such as Vonage and Skype.

"Congress told us to do the things we have done in the 'open Internet' order," the FCC official said. Specifically, the official said the Communications Act and the Telecommunications Act of 1996 instruct the FCC to expand broadband Internet connections, ensure that consumers have access to Internet voice services and Internet videos, and make sure wireless phone networks are used in the public interest.

Verizon has long criticized FCC Internet access rules, calling instead for a legislative overhaul of communications laws that take into account "the whole ecosystem" of the Internet, which includes services such as Google's search and Facebook's social network.

A source familiar with Verizon's thinking said the firm was concerned the net neutrality rules would lead to additional regulation. Verizon recently sided with Comcast in a dispute with Level 3 over peering - or traffic exchange - deals. Level 3 had complained Comcast was violating net neutrality rules by forcing the content delivery network to pay more to transmit traffic to Comcast customers. And the source, who was not authorized to speak, said the firm was concerned that the FCC would act on complaints by consumer groups that wireless provider Metro PCS was violating rules by blocking certain sites.

New Republican House leaders lauded Verizon's suit in a joint statement, calling the net-neutrality rules a power grab.

"At stake is not just innovation and economic growth, although those concerns are vital," said the lawmakers, including Commerce and Energy Committee Chairman Fred Upton (Mich.). "Equally important is putting a check on an FCC that is acting beyond the authority granted to it by Congress."

By Cecilia Kang  | January 20, 2011; 9:42 PM ET
Categories:  FCC, Net Neutrality  
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