U.S. appeals court says Web traffic suits premature

WASHINGTON Mon Apr 4, 2011 10:12pm BST

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WASHINGTON (Reuters) - A U.S. federal appeals court threw out challenges to controversial Internet traffic rules adopted in December, saying the complaints were filed too early.

The U.S. Court of Appeals for the District of Columbia Circuit granted on Monday the Federal Communications Commission's motions to dismiss as premature lawsuits filed by Verizon Communications Inc and MetroPCS Communications Inc.

Both companies accused the FCC of overstepping its authority in creating new rules aimed at regulating Internet traffic.

The FCC order, criticized by opponents as a legally shaky government intrusion into regulating the Internet, would prevent network operators from blocking lawful content but still let them ration access to their networks.

FCC rulemakings are traditionally challenged during a 60-day window after the rules are published in the Federal Register.

Verizon, the majority owner of the largest U.S. wireless service, and fifth-ranked MetroPCS, argued that the rules would modify wireless licenses they hold in an attempt to anchor their challenges in a venue favourable to them.

Disputes over airwaves licenses are only heard by the D.C. appeals court. The same court ruled last year that the FCC lacked the authority to stop Comcast Corp from blocking bandwidth-hogging applications on its broadband network.

But the court ruled to uphold the traditional process for overturning rulemakings.

"The challenged order is a rulemaking document subject to publication in the Federal Register, and is not a licensing decision," the D.C. Circuit said on Monday.

The rules, which provided additional flexibility for wireless providers, have still not been published in the Federal Register.

"The prematurity is incurable," the court said.

All requirements of the Paperwork Reduction Act must be met and cleared by the Office of Management and Budget before the order can be published in the Federal Register.

MetroPCS declined to comment on any legal matters.

Verizon spokesman Ed McFadden said the FCC's rules governing the timing of an appeal were unclear, so their early filing was simply to protect their right to appeal.

He viewed the court's decision as just part of the procedural process.

"When we did that initial filing, we made it clear that we intended to file a second time when the order was published in the Federal Register," McFadden said in a phone interview.

Aparna Sridhar, policy counsel for the public interest group Free Press, said the Verizon and MetroPCS were likely not finished trying to undo the FCC's policy.

"But we hope that this ruling sends a signal to those companies that their arguments will face close scrutiny, no matter how novel or clever they appear to be," she said.

Rural telecom companies, mid-sized phone companies, content providers and public interest groups are among those also identified by attorneys and analysts as likely to take the FCC to court once the rules are published.

At stake is ensuring consumer access to content such as huge movie files while letting Internet providers manage their networks to prevent congestion.

(Reporting by Jasmin Melvin; Editing by Tim Dobbyn)

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