Verizon Communications should be able to block its broadband customers from going to websites that refuse to pay the provider to deliver their traffic, a lawyer for Verizon told an appeals court Monday.

Current U.S. Federal Communications Commission rules prohibiting broadband providers from selectively blocking or slowing web traffic go beyond the agency’s authority granted by the U.S. Congress in the Telecommunications Act of 1996, Verizon lawyer Helgi Walker told judges in the U.S. Court of Appeals for the District of Columbia Circuit. Verizon is appealing FCC net neutrality rules passed in December 2010.

The net neutrality rules prevent Verizon from charging websites for bringing traffic to them, Walker told the three judges. “But for these rules, we could be pursuing those types of commercial arrangements,” she said. “My client wants freedom to explore that.”

Congress did not give the FCC the authority to regulate broadband in the same way it regulates so-called common-carrier telephone networks, and the FCC itself had long stayed away from broadband regulation before passing the net neutrality rules, Walker said.

The FCC found new authority to regulate broadband more than 10 years after Congress passed the Telecom Act,” she said. “Poof, it discovers direct authority that apparently was hiding in plain sight.”

Skeptical judges

Lawyers for the FCC and a coalition of groups that filed briefs supporting the rules faced a skeptical panel of judges. Judge David Tatel repeatedly asked lawyers for both sides if the court could uphold the FCC’s antiblocking rule, preventing broadband providers from totally blocking their customers from going to some websites, while rejecting the agency’s antidiscrimination rule, preventing broadband providers from giving some Web traffic preferential treatment.

The antidiscrimination rule seems to be a common carrier rule, Tatel said.

Congress, in section 706 of the Telecom Act gave the FCC authority to encourage broadband deployment to the entire U.S. and to take steps to accelerate deployment when it isn’t available nationwide, countered Sean Lev, general counsel at the FCC. The net neutrality rules remove barriers to investment in Internet services and promotes competition, as section 706 instructs, he said.

Verizon shouldn’t be able to charge its consumer broadband customers, then “extort” another fee from websites that the provider’s customers want to read, Lev said

Lev also rejected Verizon’s claim that the net neutrality rules violate its First Amendment free speech rights. Verizon is free to publish its own websites, but it isn’t acting as a speaker when carrying customers’ traffic, he said.

When Tatel asked why Verizon, acting as a consumer broadband provider, should deliver service to websites for free, Lev said those websites pay their own broadband fees. The websites are “not requesting service from Verizon,” he said.

Tatel and Judge Laurence Silberman asked several questions about section 706 of the Telecom Act, with Tatel suggesting that section gives the FCC broad authority to encourage broadband deployment and competition.

But Walker argued that the FCC was grasping for legal authority for the net neutrality rules when citing section 706. It’s a reach to suggest that net neutrality rules encourage broadband deployment, when they may do the opposite, she said.

Citing section 706 is “an after-the-fact rationalization,” she said. “It’s bootstrapping.” The deregulatory language of section 706 “can’t bear the weight of these rules,” she added.

With Tatel coming back several times to a question about whether the court should uphold the antiblocking rule but reject the antidiscrimination rule, Lev suggested the rules don’t explicitly prevent broadband providers from entering into priority traffic agreements with websites. The commission, in the rules, said such commercial agreements would raise significant concerns, he noted.

Much of the push for the net neutrality rules was to prevent broadband providers from charging websites, Tatel counted. If pay-for-priority agreements are allowed, “then I don’t understand why the FCC approved these rules,” he said.

Walker urged the court to reject the entire set of net neutrality rules, saying the antiblocking and antidiscrimination rules work together. “For the court to essentially blue pencil this order would be outside this court’s common practice,” she said.