Net Neutrality: A Law's Evolution And Impact

Net neutrality is the principle that internet service providers (ISPs) should treat all internet traffic equally, without blocking or prioritising certain types of content. While net neutrality has been a topic of debate since the 1990s, it was in 2015 that the Federal Communications Commission (FCC) adopted the Open Internet Order, classifying broadband as a utility under Title II of the Communications Act and granting the FCC greater authority to enforce net neutrality rules. However, in 2017, under the leadership of Chairman Ajit Pai, the FCC voted to repeal the 2015 Open Internet Order, sparking widespread protests from net neutrality advocates. The issue of net neutrality has continued to be a subject of contention, with the FCC voting in 2024 to advance a proposal to reinstate net neutrality rules.

The Communications Act of 1934

The Act replaced the Federal Radio Commission with the FCC and transferred regulation of interstate telephone services from the Interstate Commerce Commission to the FCC. The Act is updated periodically to add provisions governing new communications technologies, such as broadcast, cable, and satellite television.

The Communications Act, as amended, is an expansive statute regulating U.S. telephone, telegraph, television, and radio communications. Its seven subchapters regulate virtually all aspects of the communications and broadcasting industry, including the assignment of frequencies, rates and fees, standards, competition, terms of subscriber access, commercials, broadcasting in the public interest, and government use of communication systems.

The Act also addresses customer privacy, access for individuals with disabilities, and non-discrimination. For example, the Act requires telecommunications carriers to provide confidentiality for customer information and prohibits carriers from disclosing customer information except as required by law or with the customer's permission. The Act also requires carriers to provide accommodation for individuals with disabilities through technologies such as closed captioning and telephone typewriters.

In terms of net neutrality, the Communications Act of 1934 created the FCC to regulate the industry and ensure fair pricing and access. Different titles of the Act covered different modes of communication, but the primary focus of the net neutrality debate has been on Titles I and II. The Act distinguished between common carriers, who were bound under Title II of the Act, and other telecommunication systems of the time, covered broadly under Title I. Within Title II, common carriers such as phone networks were to be regulated by the FCC to assure reasonable pricing rates and non-discriminatory practices. Systems under Title I were left unregulated by the FCC.

The Telecommunications Act of 1996

The Act was designed to allow smaller companies to enter the telecommunications and broadcasting markets and for existing companies to operate across market sectors. It achieved this by relaxing cross-ownership rules, multi-sector prohibitions, and other barriers to entry. One specific provision empowered the Federal Communications Commission (FCC) to preempt all attempts by state or local governments to prevent telecommunications competition.

The Act also introduced more precise and detailed regulations for the funding of universal service programs via subsidies generated by monthly customer fees. This was intended to reduce the tendency of smaller telephone firms to charge above-market rates for underserved users and to provide more transparency of fees charged to customers.

In the media and broadcasting sector, most media ownership regulations were eased, and the cap on radio station ownership was eliminated. The Act also attempted to prohibit indecency and obscenity on the Internet, via a section that was separately titled the Communications Decency Act, though most of this section was ruled unconstitutional by the U.S. Supreme Court for violating the First Amendment.

Some smaller telecommunications companies and consumer groups stated their opposition to the Act during Congressional hearings. They predicted that smaller firms would experience financial difficulty in competing with incumbent firms, and this would result in market consolidation in favor of those firms. This prediction was correct, and by 2001, concentration in the American telephone market had increased, with four major companies owning 85% of all network infrastructure. Critics warned that the same would happen in the media content industry.

The number of American major media content companies shrank from about fifty in 1983 to ten in 1996, and to just six in 2005. An FCC study found that the act led to a drastic decline in the number of radio station owners, even as the actual number of stations in the United States increased. This decline in owners and increase in stations has resulted in radio homogenization, in which local programming and content has been lost and content is repeated regardless of location. Activists and critics have cited similar effects in the television industry.

The Chevron deference principle

The Chevron deference was central to several cases regarding net neutrality, including the 2015 Open Internet Order, which established net neutrality rules. However, in 2024, the Supreme Court's decision in Loper Bright Enterprises v. Raimondo et al. overturned the Chevron deference, significantly impacting how agencies can regulate society. This ruling emboldened the Sixth Circuit Court to strike down the FCC's net neutrality rules in 2025, stating that the FCC does not have the authority to classify internet service providers as Title II services.

The Chevron deference has been a highly influential principle in legal history, and its removal has shifted the power dynamics between courts and regulatory agencies. The overturning of this principle has had a direct impact on net neutrality, with courts now having more freedom to interpret statutes without deference to expert agencies. This shift has led to ongoing debates and legal challenges regarding the authority of agencies like the FCC and the future of net neutrality regulations.

The Supreme Court case Loper Bright Enterprises v. Raimondo (2024)

The National Marine Fisheries Service, which administers the FCMA, adopted a rule requiring Atlantic herring fishermen to pay observer fees. Businesses operating in the fishery challenged the rule, arguing that the statute expressly listed three categories of vessels that must pay for observers, and the agency did not have the authority to add another. Both district courts and the Court of Appeals for the First and D.C. Circuits upheld the rule, citing Chevron deference.

However, the Supreme Court granted certiorari and overruled Chevron, finding that the Administrative Procedure Act requires courts to exercise independent judgment in determining whether an agency has acted within its statutory authority. The Court rejected the presumption of agency expertise, reasoning that resolving statutory ambiguity is within a court's competency. It also rejected Chevron's rationale of promoting uniformity and found that stare decisis did not require adherence to Chevron.

As a result of the ruling, the Sixth Circuit ruled in 2025 that the Federal Communications Commission (FCC) does not have the authority to classify Internet Service Providers (ISPs) as Title II services, meaning there are currently no federal regulations requiring net neutrality.

The Federal Communications Commission (FCC)

The FCC's five-member commission changes with each new administration, and no more than three members can be from the same political party. This has led to frequent shifts in the FCC's attitudes and rule-making regarding net neutrality. In 2010, the FCC introduced the Open Internet Order, which established net neutrality principles prohibiting ISPs from blocking, throttling, or engaging in paid prioritization of internet traffic. However, these rules were struck down by the courts in 2014.

In 2015, the FCC, under the leadership of Chairman Tom Wheeler, reclassified ISPs as common carriers under Title II of the Communications Act, giving the agency greater regulatory authority over them. This move was intended to protect net neutrality by preventing ISPs from blocking, throttling, or discriminating against specific content or services. However, in 2017, the FCC, now led by Chairman Ajit Pai, voted to repeal the 2015 Open Internet Order, sparking widespread protests and debates within the net neutrality advocacy community.

In 2021, President Biden appointed Jessica Rosenworcel as the new FCC chairperson. Rosenworcel, a vocal proponent of net neutrality, moved to restore net neutrality rules by reclassifying ISPs as common carriers. In 2024, the FCC voted to advance Chairwoman Rosenworcel's proposal to reinstate net neutrality rules, indicating a potential return to regulatory measures aimed at preserving an open and fair internet environment. The FCC's decision to revisit net neutrality rules has reignited the debate over how the internet should be regulated.

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