Six months ago, a federal appeals court struck down net neutrality rules that prohibited Internet service providers from blocking Web content or discriminating against Web services. The court said the FCC messed up by imposing "per se common carrier obligations" onto ISPs without first reclassifying them as common carriers.

The FCC responded by coming up with a weaker set of rules that would effectively outlaw blocking by requiring a minimum level of service, while allowing ISPs to sell "fast lanes" in which Web services can pay for priority access to consumers.

The common wisdom is that the FCC can't issue stronger rules unless it re-classifies broadband as a telecommunications service, which would open ISPs up to utility-style, common carrier regulations under Title II of the Communications Act.

AT&T has vehemently argued against Internet service being treated like a utility. And now, despite that court ruling, AT&T claims that the FCC can ban fast lanes or "paid prioritization" without reclassifying broadband. However, AT&T's argument includes a big loophole that would actually allow extensive paid prioritization.

AT&T made its case today in a blog post and in comments submitted to the FCC.

"AT&T has no intention of creating fast lanes and slow lanes or of using prioritization arrangements for discriminatory or anti-competitive ends, as some net neutrality proponents fear. And AT&T does not oppose reasonable rules designed to protect against such conduct," the company wrote.

Fast lanes are ok if they are “user-directed”

AT&T claims the FCC could implement a fast lane ban and still comply with the court ruling "by concluding that paid prioritization is a per se commercially unreasonable practice under the theory that it threatens the open Internet." But in the next sentence, AT&T says that "User-directed prioritization, as distinct from paid prioritization arrangements, would remain permissible."

"User-directed prioritization" is different from regular paid prioritization, in AT&T's view:

This approach would permit user-directed prioritization as well as other individualized arrangements that are commercially reasonable and that do not involve prioritization of packets. Broadband Internet access providers could, for example, enter into commercially reasonable arrangements to host edge-provider content within their networks or to provide transit services. Likewise, subject to user direction and without any prioritization, a broadband Internet access provider could allow an edge provider to pay for an increase in the maximum bandwidth available to a customer; this would allow that edge provider to transmit at a higher speed than would otherwise be available under the customer’s chosen broadband speed tier, obviating the need for the customer to pay for a higher-speed service just to obtain a better experience when using a particular application. Additionally, an ISP might enter into arrangements that provide incentives for edge providers to transmit their traffic during non-peak hours. In short, there are many innovative arrangements that would still be permissible, provided that they were commercially reasonable. Broadband Internet access providers accordingly would not be categorically prohibited from entering into individual relationships with specific edge providers or compelled to carry edge providers’ traffic on identical terms. Indeed, the Commission would not be banning all prioritization arrangements as an undifferentiated whole, but instead would be imposing restrictions on when such arrangements may be used (i.e., at the direction of the end user). In that way, the rules would be akin to time, place, and manner restrictions—not a broad, unqualified per se common-carriage obligation.

The FCC's first net neutrality rules issued in 2010 were challenged in court by Verizon, which won the major parts of its case. Any new rules could face a similar challenge, especially if they're based on a shaky legal argument to begin with.

AT&T's real goal is to avoid stricter regulations. In addition to arguing that the FCC shouldn't reclassify broadband as a telecommunications service, AT&T says the FCC shouldn't change its current approach of applying weaker rules to cellular service than fixed broadband. Under the FCC's 2010 rules and its latest proposal, cellular carriers can block applications that don't compete against their voice and video telephony services and do not have to follow the rule banning unreasonable discrimination.

As one of the largest cellular carriers, AT&T wants to keep it this way. "Mobile networks face spectrum constraints, a shared 'last mile' radio access network, and other impediments that make it far more challenging to provide mobile broadband than wireline service," the company said. "These factors create capacity and quality-of-service challenges for mobile broadband Internet access providers that are particularly acute in the 'last mile' radio access network. To ensure high-quality service for all customers, mobile providers need greater flexibility in how they address congestion over their networks—particularly in the 'over-the-air' segment. Intrusive net neutrality rules that hamstring mobile providers’ efforts to grapple with such network management challenges would degrade the quality of mobile service for all users."