The Sixth Circuit’s January 2, 2025, decision in Ohio Telecom Association et al. v. Federal Communications Commission et al. may reshape the future of the Internet, delivering a significant blow to the concept of net neutrality and altering the regulatory landscape for businesses that rely on online connectivity. In Ohio Telecom, the court invalidated the Federal Communications Commission’s (FCC) 2024 “Safeguarding and Securing the Open Internet Order,” which sought to reimpose net neutrality rules by classifying broadband Internet service providers (ISPs) as “telecommunications services” under Title II of the Communications Act. The ruling not only affects how ISPs operate but also reflects a broader shift in administrative law, limiting agency power and increasing the burden on Congress to legislate.
What is Net Neutrality?
Net neutrality is the principle that all Internet traffic should be treated equally, without discrimination or favoritism based on its source, destination, or content. Under net neutrality, ISPs such as Comcast, Verizon, and AT&T cannot block access to certain websites, slow down data for specific services, or create “fast lanes” for companies they either own or for others willing to pay for better performance. The principle assumes that ISPs should function as neutral conduits, enabling unrestricted access to the full range of content and services on the Internet. In other words, users should get all the content they want in the same manner.
The FCC first formally embraced net neutrality in its 2015 Open Internet Order, which classified broadband providers as “telecommunications services.” This move placed ISPs under the stricter regulatory framework of Title II of the Communications Act, traditionally applied to utilities like phone companies. Title II regulations required ISPs to avoid discriminatory practices, treat all data equally, and restricted how ISPs could monetize their services. Subsequent changes in FCC leadership reversed this position, vacillating between net neutrality enforcement and deregulation, with the 2024 Safeguarding Order marking the most recent attempt to reimpose net neutrality rules.
Is Net Neutrality a Good Thing?
Proponents of net neutrality argue that it is essential to preserve a free and open Internet. By treating all data equally, net neutrality ensures a level playing field where innovation can flourish, new companies can emerge, and consumers can access content without interference or additional costs. Advocates emphasize that net neutrality protects freedom of speech, as ISPs cannot block or throttle politically sensitive or controversial content. It also lowers the barriers to entry for companies and provides consumers with an equality of service for all the information they seek at a known price.
Opponents of net neutrality, however, contend that it stifles innovation by imposing unnecessary regulations on ISPs. They argue that ISPs need flexibility to manage their networks and invest in new infrastructure. Without the ability to charge for premium services or manage traffic, ISPs claim they will lack the financial incentive to upgrade and expand their networks, potentially harming consumers in the long run.
What Did the Sixth Circuit Do?
The court rejected the FCC’s attempt to classify broadband ISPs as telecommunications services, determining instead that they provide “information services.” This distinction is crucial: telecommunications services are subject to common-carrier regulations under Title II, which enforce net neutrality, while information services are regulated more lightly under Title I.
The court found that broadband providers do more than simply transmit data (a hallmark of telecommunications services); they enable users to retrieve, store, and interact with data, making them information service providers. By offering capabilities such as streaming video, accessing cloud storage, and browsing the web, ISPs allow users to interact with content in ways that transcend mere data transmission. This interpretation aligns with the Communications Act’s definition of “information services” and reflects longstanding FCC precedent prior to 2015.
Additionally, the court’s decision was influenced by the Supreme Court’s 2024 ruling in Loper Bright Enterprises v. Raimondo, which overturned the “Chevron deference” doctrine. Under Chevron, courts deferred to agency interpretations of ambiguous statutory language if the agency interpretation was reasonable. The Sixth Circuit, freed from this deference, noted that it was no longer bound by the FCC’s interpretation of its authority to regulate Internet carriers, and it independently analyzed the Communications Act, concluding that the FCC overstepped its authority.
At the heart of the court’s decision was the distinction between “telecommunications services” and “information services” as defined by the Communications Act of 1934, as amended by the Telecommunications Act of 1996. Under applicable law, telecommunications services are defined as the simple transmission of data without alteration, akin to a “dumb pipe.” By contrast, information services provide users with the ability to acquire, process, retrieve, or manipulate data. The FCC argued that ISPs merely transmit data from one point to another and should thus be classified as telecommunications services. However, the court rejected this argument, pointing out that broadband ISPs enable users to interact with stored data, such as streaming video, cloud storage, and online gaming. This capability to process and retrieve data is the hallmark of an information service, not a telecommunications service.
The Sixth Circuit emphasized that for nearly two decades, the FCC itself classified broadband as an information service. This classification changed only in 2015 with the Open Internet Order under the Obama administration, when the FCC sought to enforce net neutrality by subjecting ISPs to Title II’s stringent regulatory framework. The court saw this shift as inconsistent with the statute’s plain language and legislative intent. The Communications Act, the judges noted, was crafted with the aim of fostering innovation and minimizing regulatory burdens, particularly for emerging technologies like broadband. By reclassifying ISPs as telecommunications services, the FCC departed from this deregulatory framework without sufficient justification.
Adding to this legal scrutiny, the Sixth Circuit invoked the major questions doctrine, which requires explicit congressional authorization for agency actions involving issues of significant political or economic importance. The court described broadband Internet access as a cornerstone of the modern economy, with more than 90% of American households relying on it. Imposing net neutrality rules under Title II, the court reasoned, represented a major regulatory action that Congress had not explicitly authorized. In the absence of clear statutory language granting the FCC this authority, the agency’s actions were deemed invalid.
What Does the Ruling Mean in Practice?
Initially, this ruling will impact and limit consumer choice. The end of net neutrality (assuming that the Supreme Court does not overturn the ruling) creates a new dynamic for the Internet, with clear winners and losers. Without net neutrality, ISPs gain significant leverage over how they manage traffic on their networks. They can charge businesses for prioritized access, enter exclusive partnerships, and potentially create tiered pricing models for different levels of service. For ISPs, this ruling is a major victory, as it allows them to monetize their infrastructure more freely and recover the costs of maintaining and upgrading networks. They can treat different kinds of data differently and charge consumers or other businesses accordingly.
One of the most immediate impacts likely will be the introduction of tiered pricing models. ISPs now have the flexibility to charge different rates based on the level of service provided. This could manifest in the creation of “fast lanes,” where companies willing to pay a premium would enjoy prioritized data delivery, ensuring that their services—whether video streaming, online gaming, or cloud computing—perform optimally. Conversely, smaller companies or those unable to afford these fees might find their services relegated to slower speeds, potentially stifling competition and innovation.
In addition to tiered pricing, ISPs may forge exclusive partnerships with major content providers. For example, a company like Netflix or Disney might enter into agreements with ISPs to ensure that their platforms receive superior performance compared to competitors. These arrangements could create a significant competitive edge for larger, well-funded companies while disadvantaging smaller content providers or new market entrants. Such partnerships would allow ISPs to monetize their networks more effectively while potentially altering the competitive landscape of the Internet.
Without the safeguards of net neutrality, ISPs might also engage in practices such as throttling or blocking content from certain providers. This could include slowing down traffic for companies that do not pay for prioritization or outright blocking services that pose a competitive threat to ISP-owned platforms. For instance, an ISP with a stake in a streaming service could degrade the performance of rival platforms, pushing consumers toward its own offerings. This ability to control the flow of data across the Internet introduces the risk of market manipulation and reduced consumer choice.
For companies that rely on the Internet, especially smaller startups and niche players, the loss of net neutrality poses significant challenges. Large companies like Netflix, Google, and Amazon may be able to afford higher fees for prioritized access, ensuring their services remain fast and reliable. In contrast, smaller companies without similar resources might struggle to compete, as their content could be relegated to “slow lanes,” making it less accessible to consumers.
Another expected negative impact on consumers is the likely increased focus on enterprise clients and high-bandwidth users. ISPs are likely to prioritize businesses that depend heavily on reliable, high-speed connectivity, such as streaming platforms, cloud service providers, and financial institutions. This shift could result in specialized service offerings for these clients, while residential users and smaller customers may experience reduced attention or less consistent service quality.
Additionally, ISPs may expand their efforts to monetize consumer data. By analyzing user habits and preferences, ISPs could develop new revenue streams, such as targeted advertising or personalized service plans. While this presents a lucrative opportunity for ISPs, it also raises significant privacy concerns, particularly in jurisdictions with stringent data protection regulations.
As is clear, the implications of this ruling on consumers are significant. The absence of net neutrality protections means that accessing the Internet could become more expensive, fragmented, and unequal. ISPs might introduce higher fees for access to premium services or bundle popular websites and applications into costly packages, akin to cable television. The open and egalitarian Internet that has defined the digital age may give way to a system where access and performance are dictated by the ability to pay. This could lead to higher costs and fewer choices, particularly for consumers who rely on smaller, niche online services.
Businesses, particularly smaller ones, face equally challenging prospects. Without the ability to afford prioritized access, many may struggle to compete with larger firms that can ensure superior performance for their services. Startups and nonprofits, which often operate on tight budgets, could find themselves at a disadvantage in a landscape increasingly shaped by pay-to-play dynamics. On the other hand, well-funded companies may use this opportunity to solidify their market positions, leveraging exclusive partnerships with ISPs to gain a competitive edge.
Implications for Businesses
For companies that do business online, the Sixth Circuit’s decision underscores the importance of adapting to an Internet that may become less predictable and more segmented. Businesses that rely heavily on high-speed internet—such as streaming platforms, e-commerce sites, and cloud service providers—should prepare for potential cost increases if ISPs begin charging for premium access. Smaller startups may face additional hurdles in competing with larger, well-funded rivals that can afford these fees.
To mitigate these risks, companies should consider diversifying their strategies. Partnerships with multiple ISPs or the use of alternative technologies like private networks and edge computing could help maintain service quality. Additionally, businesses should closely monitor legislative developments and engage with policymakers to advocate for clear, fair regulations that balance the needs of consumers, ISPs, and businesses.
What Will Our Internet Service Look Like?
The Sixth Circuit’s ruling leaves the Internet in a state of flux, with significant implications for businesses, consumers, and policymakers. Companies must be proactive, developing contingency plans for a post-net-neutrality world and engaging with stakeholders to shape the future of Internet regulation. Large Internet Service Providers (ISPs) such as Comcast Corporation, AT&T Inc., and Verizon Communications Inc. are likely to experience a positive impact on their stock prices.
Freed from the constraints of net neutrality, these companies can now explore new revenue streams, including tiered pricing models and exclusive partnerships with content providers. Conversely, major content providers like Netflix Inc., Amazon.com Inc., and Alphabet Inc. (Google’s parent company) may face both increased operational costs and service advantages. The decision highlights the growing importance of legal and technical expertise in navigating the increasingly complex and contentious digital landscape. As Congress grapples with the broader implications of this decision, businesses and consumers alike will need to adapt to an Internet that may look very different in the years to come.
For more information, please contact KJK Cyber Security & Data Breach attorneys Mark Rasch at MDR@kjk.com or Brett Krantz at BK@kjk.com.