Regulators overstepped when they gutted Obama-era rules that barred broadband providers from interfering with web traffic, advocates seeking to restore the old rules told an appeals court that gave few clues how it may rule in a closely watched case on so-called “net neutrality.”

Pantelis Michalopoulos, an attorney for groups trying to restore Obama-era net neutrality regulations, told a three-judge panel at the U.S. District Court of Appeals for the D.C. Circuit that the decision by the current Federal Communications Commission to rescind those rules “does not restore anything except an imaginary past.“

After the election of President Donald Trump, the FCC gained a Republican majority and in 2017 tossed out regulations the agency had put in place two years earlier when overseen by a Democratic chairman. The switch eliminated rules that barred internet service providers from blocking or slowing traffic. The new rules permit companies to do that but only if they disclose their practices to consumers.

The main question before the court Feb. 1 was whether the agency was within its rights to change its mind, and whether it followed procedures that require it to fully assess evidence before acting.

“The commission has the authority to do precisely what it did” and followed Supreme Court precedent, Thomas Johnson Jr., the agency’s general counsel, told the judges.

Broadband Companies

The court could uphold the FCC, or strike down its 2017 decision. In the latter case, the judges could send the issue back to the agency for further proceedings, or even reinstate the old rules. It likely will be months before the court releases a decision.

The case pits the FCC and broadband companies such as AT&T Inc., Comcast Corp. and Verizon Communications Inc., which argued the old FCC rules were too extensive and threatened to damp investment, against the likes of Alphabet Inc.’s Google, Facebook Inc. and Amazon.com Inc., which want a regulator to help ensure they can reach customers through the web.

The arguments in a courthouse near Capitol Hill attracted a rapt courtroom audience that included Sen. Ed Markey (D-Mass.), who has criticized the FCC’s 2017 vote, and Tom Wheeler, a former FCC chairman whose policy the vote swept aside.

Baloney Slicing

Part of the arguments revolved around the distinction between simply providing the transmission of information, an activity traditionally under the FCC’s purview, and offering a more complete service that shouldn’t be regulated. Circuit Judge Robert Wilkins brought up the example of Comcast, which offers high-speed internet service and also offers NBC programming. “How are we supposed to slice the baloney here?” Wilkins asked.

According to critics, the new arrangement risks allowing broadband providers such as Comcast or DirecTV owner AT&T to favor their own content. The fear is the companies could place obstacles, such as higher prices or slower speeds, before subscribers seeking to view rival fare -- such as Netflix Inc.’s programming, or Dish Network Corp.’s Sling TV online offering.

Large internet service providers have said they have no interest in providing customers with less than the full web, and that in any event competitive pressures would forestall them from doing so.

Internet Openness

Trade groups representing the largest wireless, landline and cable providers joined the case on the FCC’s side. The associations in a brief told the court they “have made public commitments to preserve core principles of internet openness” and that the FCC’s order “ensures that those commitments are transparent and enforceable.”

Openness proponents led by browser maker Mozilla Corp. and a coalition of 22 states and the District of Columbia petitioned the court to undo the 2017 decision.

“We’re not just going into court to argue that the FCC made a policy mistake. It broke the law, too,” Chris Lewis, vice president of the Public Knowledge policy group, said before the court session. “The FCC simply failed in its responsibility to engage in reasoned decision-making” by selectively citing submissions that favored its preferred outcome.

The FCC expressed confidence before the Feb. 1 hearing, with Chief of Staff Matthew Berry in a statement saying the agency with its decision returned to the “regulatory framework under which the internet flourished prior to 2015 and is continuing to thrive today.”

The panel was made up of Wilkins and Judge Patricia Millett, both appointed by President Barack Obama, and Judge Stephen Williams, an appointee of President Ronald Reagan and the lone dissenting voice in 2016 when the same court upheld the Obama-era rules passed under Wheeler.

The case is Mozilla Corp. v. FCC, D.C. Cir., No. 18-1051, oral argument 2/1/19.

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