The Death Of Net Neutrality: Winners, Losers, What It Means For Future Of The Internet

The Sixth Circuit Court of Appeals officially pulled the plug on net neutrality.

What Happened: On Jan. 2, the court ruled that the Federal Communications Commission lacks legal authority to reclassify broadband as a "telecommunications service" under Title II of the Communications Act.

Instead, a three-judge panel of the Cincinnati-based Sixth Circuit declared that broadband is an “information service.” This distinction matters because "information services" are subject to lighter regulatory oversight.

The court essentially overturned rules first established under the Obama administration in 2015, which prohibited ISPs from throttling speeds, blocking access, or prioritizing certain websites or services for a fee.

The first Trump administration repealed those rules in 2017. The FCC voted last April to reinstate net neutrality by reclassifying broadband. The attempt received a decisive burial under the new ruling, marking a major defeat for the outgoing Biden administration.

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Why It Matters: The decision could reshape how Americans access and pay for the internet. It also gives internet service providers a victory lap while potentially stranding consumers and tech giants in the slow lane.

FCC Chair Jessica Rosenworcel, a staunch supporter of net neutrality, is urging Congress to step in and legislate an open internet.

“Consumers across the country have told us again and again that they want an internet that is fast, open and fair. With this decision it is clear that Congress now needs to heed their call, take up the charge for net neutrality and put open internet principles in federal law,” she said.

Meanwhile, incoming FCC chair Brendan Carr, who voted against net neutrality's reinstatement in 2024, welcomed the court’s decision. He called Biden's attempt to restore the rules an "internet power grab."

"President Biden's entire plan rested on the Chicken Little tactic of persuading Americans that the Internet would break in the absence of these so-called ‘net neutrality' regulations," Carr said in a statement.

Former FCC chair Ajit Pai also praised the court's decision, urging a focus on expanding internet access rather than resurrecting net neutrality.

Why Big Telecom Is Smiling

The ruling is a victory for ISPs like Comcast Corp. CMCSA, Verizon Inc. VZ, and AT&T Inc. T, which now enjoy greater freedom to manage their networks without regulatory constraints.

These companies can explore tiered pricing models, prioritize certain types of traffic, and charge content providers for faster delivery.

For years, ISPs have argued that deregulation spurs innovation and investment. Industry group USTelecom, which represents major ISPs, hailed the court's decision as a win for "American consumers," promising it would lead to more competition, investment, and faster internet services, especially in rural and underserved areas.

Equipment Makers Could Cash In

Network infrastructure providers like Cisco Systems Inc. CSCO, Ericsson (NASDAQ: , and Nokia Corp. (NYSE: NOK) stand to benefit as ISPs ramp up capital expenditures to upgrade and expand their networks.

If ISPs follow through on promises to improve infrastructure, these firms could see heightened demand for their routers, switches, and fiber technologies.

Who Loses? Consumers

For everyday internet users, the implications of this decision are murky and potentially grim. While ISPs argue that deregulation will lead to better services, consumers might find themselves paying more for the same internet access.

Critics warn that the decision could limit competition, as ISPs consolidate power and consumer choice shrinks. Advocacy groups like Free Press have raised concerns that this ruling will create an uneven internet, where access and quality depend on your ability to pay.

Past net neutrality violations include:

• Comcast allegedly throttling users’ internet speeds in 2007.
• AT&T restricting the use of Apple’s FaceTime application over its cellular network and limiting it to customers on specific data plans in 2012.
• Verizon blocking text messages from NARAL Pro-Choice America, a pro-choice organization, in 2007.
• Sprint, Verizon, and AT&T favoring access to their own mobile payment solutions over Alphabet Inc.‘s GOOGL Google Wallet.

The absence of net neutrality could mean headaches for companies like Alphabet, Amazon.com Inc. AMZN, Meta Platforms Inc. META, and Netflix Inc. NFLX.

These content providers may now be forced to pay ISPs for "fast lane" access to ensure their services run smoothly. While giants like Netflix and Alphabet can absorb the costs or negotiate favorable deals, smaller content providers may not be so lucky.

Startups, Small Businesses Lose Equal Footing

Startups that rely on equal access to the internet are likely to suffer the most. In a world without net neutrality, deep-pocketed tech firms can afford to pay for speed advantages, but startups and small businesses could face slower connections and higher costs, limiting their ability to compete.

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