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Fight over net neutrality rules returns to appeals court

A long-running legal battle over government rules that require Internet providers to treat all Web traffic equally is back for another round before a federal appeals court.

Cable and telecom industry groups will urge a three-judge panel on Friday to throw out regulations that forbid online content from being blocked or channeled into fast and slow lanes.

The Federal Communications Commission approved the new rules in February after its previous attempt to mandate "net neutrality" was struck down last year by the U.S. Court of Appeals for the D.C. Circuit.

Protesters march past the FCC headquarters before the Commission meeting on net neutrality proposal on May, 15, 2014 in Washington, DC.
Bill O'Leary The Washington Post | Getty Images
Protesters march past the FCC headquarters before the Commission meeting on net neutrality proposal on May, 15, 2014 in Washington, DC.

The rules, which for the first time treat broadband like a public utility, have won praise from consumer advocates and content companies such as Netflix and crowdfunding site Kickstarter. They want to prevent Internet service providers from manipulating data moving across their networks or offering paid preferential treatment to some content over others.

But providers like Comcast, Verizon, and AT&T say the FCC's move will threaten innovation and undermine investment in broadband infrastructure. The U.S. Telecom Association, an industry group, calls the latest rules "a sweeping bureaucratic power grab" that subjects companies to "intrusive, central-planner-style oversight." (Disclosure: Comcast is parent of NBCUniversal and CNBC.)

In an added twist, one of the judges hearing the latest case has twice authored opinions striking down the FCC's earlier attempts to enforce net neutrality.

Judge David Tatel ruled last year that the FCC rules were not grounded in legal authority because the commission at the time classified broadband as an information service. After Tatel's 2014 opinion, the agency reclassified broadband providers as common carriers akin to utilities, giving it power to impose the new rules.

Tatel had also ruled against the agency in a similar 2010 case, finding that the FCC could not prevent Comcast Corp. from slowing Internet access to a popular file-sharing service.

Barbara Cherry, a professor of telecommunications at Indiana University who supports net neutrality, said the FCC is simply restoring the classification that Internet providers should have had all along.

"It's a legal chess game basically," Cherry said. "They never should have classified it as an information service in the first place."

Tatel was appointed to the court by President Bill Clinton in 1994. The other judges on the panel are Stephen Williams, appointed by President Ronald Reagan, and Sri Srinivasan, appointed by President Barack Obama.

Placing Internet service in the same regulatory camp as telephone service means providers have to act in the "public interest" when supplying service. It gives the government power to investigate complaints about unjust or unreasonable behavior by service providers, such as controlling Internet traffic in a way that promotes their own financial interest.

Obama endorsed the idea of net neutrality last year, calling on the FCC to regulate Internet service like it does other public utilities to protect consumers.

Cable and telecom opponents say the FCC went too far in reclassifying broadband as a common carrier. They argue the new rules will prevent them from recovering costs for connecting to broadband hogs like Netflix that generate a huge amount of Internet traffic.

"Congress never envisioned entrusting the FCC with the extraordinary authority that the order purports to exercise or subjecting the Internet to intrusive central-planner-style oversight," says a brief from the U.S. Telecom Association.

Defending the regulations, the FCC said in court briefs that it has the authority "to ensure that the Internet, the central means of communication in the 21st century, remains open to all Americans."

A small Texas broadband provider, Alamo Broadband, has also challenged the rules, claiming among other things that they violate free speech rights.

A ruling could take several months.