The US broadband industry has lost its lawsuit attempting to overturn the Federal Communications Commission's net neutrality rules and the related reclassification of Internet service providers as common carriers.

ISPs' First Amendment claims (among others) were rejected. "Because a broadband provider does not—and is not understood by users to—'speak' when providing neutral access to Internet content as common carriage, the First Amendment poses no bar to the open Internet rules," judges wrote in a decision released today by the US Court of Appeals for the District of Columbia Circuit (full text).

The net neutrality order, passed over a year ago, is FCC Chairman Tom Wheeler's signature move during a whirlwind time as head of the commission.

“Today’s ruling is a victory for consumers and innovators who deserve unfettered access to the entire Web, and it ensures the Internet remains a platform for unparalleled innovation, free expression and economic growth," Wheeler said in a statement issued shortly after the ruling. "After a decade of debate and legal battles, today’s ruling affirms the Commission’s ability to enforce the strongest possible Internet protections—both on fixed and mobile networks—that will ensure the Internet remains open, now and in the future.”

AT&T promised to appeal, saying, "We have always expected this issue to be decided by the Supreme Court, and we look forward to participating in that appeal."

Judges David Tatel and Sri Srinivasan wrote today's decision, while Judge Stephen Williams wrote an opinion concurring in part and dissenting in part. The lawsuit against the FCC was filed by a mix of broadband industry lobby groups and Internet providers, including USTelecom, CTIA—The Wireless Association, the National Cable & Telecommunications Association (NCTA), the American Cable Association, AT&T, CenturyLink, and Alamo Broadband.

In addition to enforcing net neutrality rules against blocking, throttling, and paid prioritization, the decision allows the FCC to continue regulating fixed and mobile broadband providers under the common carrier provisions in Title II of the Communications Act.

"Three separate groups of petitioners, consisting primarily of broadband providers and their associations, challenge the Order, arguing that the Commission lacks statutory authority to reclassify broadband as a telecommunications service, that even if the Commission has such authority its decision was arbitrary and capricious, that the Commission impermissibly classified mobile broadband as a commercial mobile service, that the Commission impermissibly forbore from certain provisions of Title II, and that some of the rules violate the First Amendment," judges wrote. "For the reasons set forth in this opinion, we deny the petitions for review."

Judges were not persuaded by industry arguments that Internet service is unambiguously an "information service" rather than a "telecommunications service" subject to stricter regulation. The industry argument ignores that the statutory definition of information service says that "such services are provided 'via telecommunications,'" the judges wrote.

ISPs to Congress: Please change the rules

Besides planning to appeal the decision, broadband providers are also urging Congress to change the FCC's rules.

“We are reviewing today’s split decision by the DC circuit panel, and will carefully review the majority and dissenting opinions before determining next steps," the NCTA said. "Though disappointed in today’s result, we are particularly gratified by Judge Williams’ recognition of the ‘watery thin and self-contradictory’ nature of the FCC arguments used to justify the imposition of common carriage laws on Internet networks. While this is unlikely the last step in this decade-long debate over Internet regulation, we urge bipartisan leaders in Congress to renew their efforts to craft meaningful legislation that can end ongoing uncertainty, promote network investment, and protect consumers.”

The CTIA said it "will pursue judicial and congressional options to ensure a regulatory framework that provides certainty for consumers, investors and innovators." In the meantime, the wireless lobby group urged the FCC to allow "zero-rating," a practice in which carriers exempt certain types of online services from data caps, sometimes in exchange for payment. The FCC is reviewing zero-rating implementations to determine whether they should be allowed under net neutrality rules.

Industry “misread” judges' previous decision

The court also upheld the FCC's decision to regulate interconnection agreements, deals that let content providers and other network operators connect directly to ISPs' networks. The FCC did not bar ISPs from charging for interconnection, but reserved the right to review agreements to determine whether they harm competitors or customers.

"In the Order, the Commission found that regulation of interconnection arrangements was necessary to ensure broadband providers do not 'use terms of interconnection to disadvantage edge providers' or 'prevent[] consumers from reaching the services and applications of their choosing,'" judges wrote. Industry lawyers argued that the FCC cannot regulate interconnection arrangements under Title II without first classifying interconnection as an offering of telecommunications distinct from the telecommunications offering to home Internet users. To make this argument, industry lawyers pointed to the Verizon v. FCC decision that said the FCC couldn't impose common carrier rules without classifying broadband as a common carrier service.

"USTelecom misreads Verizon," judges wrote. "Although Verizon does recognize that broadband providers’ delivery of broadband to end users also provides a service to edge providers, it does not hold that the Commission must classify broadband as a telecommunications service in both directions before it can regulate the interconnection arrangements under Title II. The problem in Verizon was not that the Commission had misclassified the service between carriers and edge providers but that the Commission had failed to classify broadband service as a Title II service at all. The Commission overcame this problem in the Order by reclassifying broadband service—and the interconnection arrangements necessary to provide it—as a telecommunications service."

Consumer advocacy group Public Knowledge, which supported the FCC's position in court filings, hailed the decision and urged broadband providers to give up the fight. "This decision should lay to rest what has become a needlessly contentious issue," Public Knowledge CEO Gene Kimmelman said. "Now consumers will be assured the right to full access to the internet without interference from gatekeepers. We hope that rather than refight old battles, Congress and the industry will turn toward the problem of ensuring that all Americans have access to broadband that is 'fast, fair and open.'"