(CN) - Verizon and MetroPCS urged the D.C. Circuit to review the Federal Trade Commission's net-neutrality rules that they classify as burden to their free-speech rights.
In 2010, the FCC prohibited Internet providers from either blocking lawful websites or preventing users from downloading applications that compete with the provider's services.
The rules require all Internet service providers to treat web traffic equally, not discriminating between websites in transmitting lawful traffic over a consumer's broadband link.
Earlier that year, in Comcast v. FCC, the federal appeals court had struck down the commission's first attempt to enforce network neutrality regulations.
After the FCC censured Comcast for interfering with subscribers' use of peer-to-peer software, the court disagreed that the FCC had "ancillary authority" under the Communications Act of 1934, the Telecommunications Act of 1996 and congressional policy to regulate bandwidth allocation.
"The commission may exercise [its] 'ancillary' authority only if it demonstrates that its action is 'reasonably ancillary to the ... effective performance of its statutorily mandated responsibilities,'" that ruling said. "The commission has failed to make that showing."
But the new regulations face challenges as well. Two Republican FCC commissioners say that the rules will stifle innovation by preventing providers from capitalizing on their investments.
Verizon and MetroPCS, which filed the current brief together, first challenged the Open Internet Order in January 2011 before it was even published in the Federal Register. The D.C. Circuit tossed that case finding that it was premature. The two service providers tried again in September 2011, a week after the order was published.
In their latest 46-page brief, filed Friday with the D.C. Circuit, Verizon and MetroPCS argue that the FCC's order "sets forth a sweeping assertion of statutory authority that arrogates to the FCC plenary power to control all aspects of broadband Internet access service - and, taken to its logical conclusion, all components of the Internet - without any evidence Congress ever intended such a dramatic result."
The FCC's order "claims for the first time with clarity that it possesses direct authority to regulate the Internet, but fails to ground this authority firmly in the Communications Act," according to the telecoms' brief authored by Wiley Rein attorney Helgi Walker. "Instead, the agency relies on supposed ambiguities in disparate provisions scattered throughout the act that simply do not say that Internet service should be regulated by the FCC, much less in this intrusive fashion. None of the cited provisions can bear the weight of these rules, particularly given Congress's clear statement that the Internet should remain unregulated." (Italics in original.)
Earlier this year, the FCC urged the court to uphold net neutrality.
Without federal regulation, "the next Google or Facebook might never begin," the FCC said in a 121-page brief. "A service provider could prevent an end user from accessing Netflix, or the New York Times, or even this Court's own website, unless the website paid the provider to allow customer access."
But the phone companies asserted that "broadband providers are speakers protected by the First Amendment."
"This is so because they possess discretion to provide, for example, differentiated offerings that highlight their own or their partners' content," Walker wrote for the telecoms. "The order curtails providers' speech without demonstrating any actual problem in need of solution. And the rules take private property without compensation by banning charges for the compelled carriage of edge providers' traffic."
Oral argument on the matter is not yet scheduled.
In a related decision this month, the D.C. Circuit denied Verizon's bid to overturn a new FCC rule requiring wireless carriers to offer data roaming agreements to other providers.
Subscribe to Closing Arguments
Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.