In Time Warner Telecom, Inc. v. FCC, the 3rd Circuit Court of Appeals ruled that the Commission's decision to classify wireline broadband as an information service was based on "a permissible interpretation of the Communications Act" with a "proper exercise of agency discretion."
"The petition under review arises from an order of the Federal Communications Commission ("FCC"), which substantially limits federal regulation of high-speed Internet access service provided over traditional telephone lines (referred to as "wireline broadband Internet access service"). The dispute centers, in large part, on the FCC's decision to relieve telephone companies of decades-old regulations that required them to grant competing Internet service providers nondiscriminatory access to their wirelines in order to reach consumers. The FCC contends that these regulations "imposed significant costs" on telephone companies, "thereby impeding innovation and investment in new broadband technologies and services." (FCC Br. at 43.) Presumably, the FCC’s order now allows telephone companies to enter into individually negotiated arrangements with entities that seek access to their broadband wireline facilities.
"Petitioners, who are independent Internet service providers, competing telecommunications service providers, cable modem providers, and various public interest organizations, argue that the FCC’s order allows telephone companies to deny competitors access to their wirelines, thereby resulting in decreased competition and consumer choice in the market for broadband Internet service. For the reasons stated below, we conclude that the FCC’s order is based on a reasonable interpretation of the Communications Act of 1934, 48 Stat. 1064 (codified as amended at 47 U.S.C. §§ 151-614 (2006)), and a proper exercise of agency discretion. Accordingly, we will deny the petition for review."
The result of this ruling is that the FCC may, at its discretion, free incumbent local DSL providers from competition over the same local telephone lines.