Appeals court blocks return of US net neutrality rules for ISPs

The reintroduction of neutrality rules for network providers is looking increasingly unlikely, at least for the next five years, after a US appeals court blocked efforts by the US Federal Communications Commission (FCC) to reinstate them.

The US Court of Appeals for the Sixth Circuit court upheld its earlier stay on the FCC’s May 2024 Safeguarding and Securing the Open Internet Order, effectively pausing the policy’s return.

The net neutrality rules require that providers of telecommunications services treat all traffic equally, but give providers of information services more freedom to filter or prioritize what they transmit. The FCC’s view on whether internet service providers (ISPs) provide telecommunications or information services has flip-flopped over the years.

Originally, the FCC classified ISPs as information services, exempt from the most stringent rules, but under the Obama administration it shifted position to treat them as telecommunications services. During President Trump’s first term of office his appointee as FCC chairman, Ajit Pai, reversed that shift — only for President Biden’s appointee, Jessica Rosenworcel, to attempt to bring ISPs once again under the net neutrality provisions.

That move foundered on January 2 with the appeals court’s ruling.

“We hold that Broadband Internet Service Providers offer only an ‘information service’ […], and therefore, the FCC lacks the statutory authority to impose its desired net-neutrality policies through the ‘telecommunications service’ provision of the Communications Act,” the court order read. “Nor does the Act permit the FCC to classify mobile broadband — a subset of broadband Internet services — as a ‘commercial mobile service’ […] and then similarly impose net-neutrality restrictions on those services,” the order stated. “We therefore grant the petitions for review and set aside the FCC’s Safeguarding Order.”

The appeals court based its argument, in part, on the ending of the so-called Chevron deference principle. This principle, which once required courts to defer to agency interpretations of ambiguous laws, was ended by a US Supreme Court ruling in June 2024, and has widespread regulatory consequences for IT departments.

With Rosenworcel’s term of office drawing to a close, it seems unlikely that the FCC will continue to pursue the reinstatement of net neutrality rules for ISPs. Trump’s pick as her replacement, Brendan Carr, favors market-led innovation over federal oversight.

Implications for enterprises

With net neutrality off the table for now, enterprises face an unregulated internet landscape that could favor large ISPs. ISPs can legally prioritize or throttle specific traffic, forcing businesses to pay premiums for reliable, high-speed access to cloud services, SaaS applications, or online collaboration tools. Without rules preventing practices like throttling or prioritizing traffic, companies reliant on stable, fast internet connections may face increased operational costs.

The absence of net neutrality is particularly concerning for smaller businesses. These businesses may struggle to compete if ISPs offer premium services to larger firms at higher prices. The lack of affordable, equitable access also risks disrupting digital transformation plans across industries.

For enterprises, the Sixth Circuit’s ruling is a clarion call to adapt to an increasingly market-driven internet landscape. It underscores the growing importance of proactively securing reliable and cost-effective internet services, as policy uncertainty looms over digital commerce and operations.

A longer timeline for reinstatement

The court’s ruling suggests net neutrality rules return will remain stalled for at least the duration of the Trump administration. As President-elect Donald Trump prepares to take office, his administration is expected to maintain the deregulatory trajectory set under the Biden administration. Trump has aligned with Carr’s market-driven vision, opposing federal oversight of ISP practices.

Analysts predict that with Trump’s re-election priorities, policies like the suspended FCC ruling will take a backseat to broader economic goals. The absence of net neutrality for another five years is all but assured.

Broader implications: a geopolitical lens

The absence of net neutrality also carries global implications. The US decision sets a precedent for other nations grappling with the balance between regulatory oversight and market freedom. In regions where state-controlled internet infrastructure dominates, the delay in net neutrality restoration in the US may limit policy inspiration for protecting smaller stakeholders in the internet economy.

This context places additional pressure on US enterprises that compete globally. Their ability to innovate, streamline operations, and scale may be hampered without equitable internet access.