The D.C. Circuit Court of Appeals sustained the FCC's latest net neutrality rules, which consumer groups and President Barack Obama had backed. | Getty Court upholds Obama-backed net neutrality rules

A federal appeals court Tuesday upheld a White House-supported effort to make internet service providers treat all web traffic equally, delivering a major defeat to cable and telephone companies.

The D.C. Circuit Court of Appeals, in a 2-1 vote, affirmed the FCC's latest net neutrality rules, which consumer groups and President Barack Obama have backed as essential to prevent broadband providers from blocking or degrading internet traffic. The telecom industry and Republicans have heavily criticized the rules as burdensome and unnecessary regulation, with Texas Sen. Ted Cruz once labeling it “Obamacare for the Internet.”


AT&T immediately announced it would appeal the ruling, saying it's always expected the issue to be decided by the Supreme Court. Several industry trade groups are expected to join the effort.

The court decision marks a victory for FCC Chairman Tom Wheeler, who led the agency’s Democratic majority in approving the rules in February 2015 over the objections of the agency's two GOP commissioners. The rules apply utility-style regulation originally written for telephone companies to both land-based and wireless Internet services.

Wheeler on Tuesday celebrated the ruling, calling it a “victory for consumers and innovators who deserve unfettered access to the entire web.”

“It ensures the internet remains a platform for unparalleled innovation, free expression and economic growth,” the FCC chairman said in a statement. “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.”

Big internet service providers, such as Verizon and Comcast, argued the rules will chill investment in network infrastructure. AT&T and CenturyLink, along with cable, wireless and telecom trade groups, filed the lawsuit to overturn the order.

During oral arguments in December, appeals court judges David Tatel, Sri Srinivasan and Stephen Williams had seemed receptive to the FCC’s decision to ground its net neutrality rules in telephone-style regulation. In the majority opinion, written by Tatel and Srinivasan, the judges said the FCC's approach was bolstered by how people view the internet today.

"These conclusions about consumer perception find extensive support in the record and together justify the Commission’s decision," they wrote.

The majority also let stand the FCC's decision to apply net neutrality rules to the wireless internet, citing the "rapidly growing and virtually universal use of mobile broadband service.” That's a critical feature of the rules, since many people today access the web through smartphones.

Williams, the lone dissenter, said he agreed the FCC has the authority to change how it regulates broadband providers, but said the agency didn’t provide enough reasons doing so.

Congressional Democrats cheered the court decision as a win for consumers and free speech, with Bernie Sanders tweeting that it "will help ensure we don't turn over our democracy to the highest bidder." Republicans criticized the opinion, and some GOP lawmakers reiterated calls for legislation to undo the FCC's order and create rules that are less burdensome to industry.

"This is why we need to rewrite the Communications Act," Rep. John Shimkus (R-Ill.) said. "There's a better way to protect consumers from blocking and throttling without stifling innovation or delaying build-out. That way requires action by Congress."

But public interest groups involved in the net neutrality battle urged industry and Republicans to give up the fight.

"The people have spoken, the courts have spoken and this should be the last word on net neutrality," Free Press President and CEO Craig Aaron said in a statement.

Republican FCC Commissioner Ajit Pai — who voted against the net neutrality order — said big cable and telecom firms should keep pursuing the case in court.

"I continue to believe that these regulations are unlawful, and I hope that the parties challenging them will continue the legal fight,” Pai said.

The telecom sector has a successful track record in thwarting the FCC’s net neutrality efforts. A lawsuit by Verizon scuttled the agency’s previous 2010 Open Internet order.

Margaret Harding McGill and Kate Tummarello contributed to this report.