Oral arguments begin Monday in Verizon's lawsuit against the Federal Communications Commission regarding whether it can regulate Internet speeds and create a fast lane of sorts for those who pay extra. Rick Wilking/Reuters

A potential landmark case for U.S. regulation of Internet traffic goes before a panel of federal judges on Monday, testing whether the Federal Communications Commission (FCC) has authority to enforce so-called net neutrality rules.

Net neutrality is the principle that Internet users should be able to access any Web content and use any applications they choose, without restrictions or varying charges imposed by Internet service providers or the government.

Oral arguments in the case pit Verizon Communications against the FCC, with the biggest U.S. wireless provider challenging the commission's order that guides how Internet service providers manage their networks.

The FCC's 2011 open Internet rules require Internet providers to treat all Web traffic equally and give consumers equal access to all lawful content.

Verizon has argued the rules are an excessive, "arbitrary and capricious" intrusion which violates the company's right to free speech, stripping it of control over what its networks transmit and how.

The ruling of the U.S. Court of Appeals for the District of Columbia Circuit on the case will have major implications for the debate over the degree of regulatory power possessed by the federal communications agency.

The outcome will also determine whether Internet service providers can restrict some so-called crossing content, for instance, by blocking or slowing down access to particular sites or charging websites to deliver their content faster.

Public interest groups have termed the FCC rules too weak, saying the agency was swayed by big industry players and needs to forge more direct and clearer power of oversight.

"I'd like to see political impetus for the FCC to go back and do the right thing instead of fumbling along and continuing to make bad compromises," said Matt Wood, policy director at public interest group Free Press, adding that a loss to Verizon could serve as such an impetus.

In calling for clearer oversight and warning of the risks of letting Internet providers go free without net neutrality rules, Wood, however, acknowledged that since the case has dragged on, the industry has largely accepted the rules as they are written now and "generally stayed in line."

James Cicconi, top lobbyist for Verizon's chief competitor, AT&T, said the court doing away with the FCC's rule is unlikely to prompt any business practice changes.

"I don't think if the rule goes away that you're going to find people out in Silicon Valley thinking the sky is falling," said Cicconi, who had negotiated and helped draft the net neutrality rule with the FCC in what he called "a pragmatic decision" to end the years-long debate over it.

"I'm keeping my fingers crossed that if Verizon wins the case, we don't end up back in some morass," he told Reuters. "I think it would be a debate without purpose."

Democrats on Capitol Hill have said they would push against the court's decision if it sides with Verizon. It is unclear whether Verizon would further appeal the case if it lost.

MetroPCS, another wireless provider that stood alongside Verizon in the case, dropped its lawsuit earlier this year after being acquired by Deutsche Telecom AG's T-Mobile.

The parties will present their arguments to judges Judith Rogers and David Tatel, appointed by Democratic President Bill Clinton, and Laurence Silberman, appointed by Republican President Ronald Reagan.

Tatel authored the 2010 court opinion that struck down the FCC's earlier attempt to pursue a net neutrality case against Comcast.

The FCC's position in the Verizon case received a boost from the Supreme Court in May, when in a separate case it ruled in favor of giving regulatory agencies deference in interpreting the extent of their own regulatory authority.

Reuters