FCC Goes to Court Over Net Neutrality

The issue of network neutrality rears its ugly head again as Verizon (NYSE:VZ) and MetroPCS (NYSE:PCS) move ahead in their court battle with the Federal Communications Commission over its rule that prevents Internet service providers from discriminating against packets on their networks.

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After a victory on Thursday, the case proceeds to the Washington, D.C. Circuit Court of Appeals, the same court that previously ruled that the FCC can’t set rules to control services on the Internet. The Circuit Court of Appeals also turned down the FCC’s request to push back a hearing so the agency could ponder a petition that sought a better explanation of its regulations regarding “specialized services” for business customers.

Analysts at Stifel Nicolaus and Co. expect a decision by next winter, but they don’t think the FCC will be happy with the results. An outcome that does not allow for FCC regulation in this area could be a problem for companies that don’t trust telecommunications operators’ plans to charge them for access, as well as for Internet users who are already paying for access and expect to maintain their service.

If the court rules against the FCC, the next move would be to head for the Supreme Court. However, in the meantime, the agency would be powerless to regulate cable, DSL and wireless Internet providers due to decisions it made before the web became so intrinsic to our daily lives.

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