Verizon Says FCC Open-Internet Rule Violates Owner Rights

Verizon Communications Inc. (VZ) said a Federal Communications Commission rule that prevents Internet service providers from blocking or slowing the flow of Web content to homes and businesses violates the constitutional rights of broadband network owners.

Verizon, in a filing today in the U.S. Court of Appeals in Washington, said the commission relied on a “hodgepodge of provisions” in the Communications Act to give itself “broad authority” to create the rule, which the company said infringes on free speech and property rights.

“It violates the First Amendment by stripping them of control over the transmission of speech on their networks,” Verizon argued. “And it takes network owners’ property without compensation by mandating that they turn over those networks for the occupation and use of others at a regulated rate of zero, undermining owners’ multibillion-dollar-backed expectations that they would be able to decide how best to employ their networks to serve consumers and deterring network investment.”

The net-neutrality rule, approved in December 2010 by the FCC on a 3-2 Democrat-led vote, took effect Nov. 20. In October, Verizon’s challenge to the rule was consolidated with six others into a single case before the Washington court, which has yet to schedule a date to hear argument.

Joint Filing

Verizon’s filing today was made jointly with MetroPCS Communications Inc., based in Richardson, Texas.

“We look forward to defending our open Internet rules in court,” Neil Grace, an FCC spokesman, said in an e-mail. “This strong and balanced framework is helping ensure that the Internet continues to thrive as an engine for innovation, investment, job creation, and free expression.”

It’s the second time New York-based Verizon has asked the Washington court to overturn the regulations. The court dismissed the first suit in April 2011, saying it was premature.

The FCC’s Open Internet Order requires Internet service providers to disclose their network-management practices and performance, prohibits providers from blocking access to competitor websites or applications, and bars providers from “unreasonably discriminating” in the speed of transmissions.

The FCC’s censure of Comcast Corp. in 2010 for interfering with subscribers’ Internet traffic was vacated by the same Washington court, which ruled the agency lacked the authority to do so.

The Verizon case is Verizon v. Federal Communications Commission, 11-1355, U.S. Court of Appeals for the District of Columbia (Washington).

To contact the reporters on this story: Tom Schoenberg in Washington at tschoenberg@bloomberg.net; Todd Shields in Washington at tshields3@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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