The United States Federal Court of Appeals has ruled the Federal Communications Commission’s (FCC) attempt to enforce “net neutrality” on internet service providers invalid after finding that the FCC did not have the power to compel ISPs to treat all internet traffic equally regardless of the source.

The FCC introduced antidiscrimination and anti-blocking rules following concerns that ISPs were slowing internet delivery speeds and blocking internet traffic when their customers were accessing content – such as streaming music and video – from competitors.

“The internet is and must remain the greatest engine of free expression, innovation, economic growth and opportunity the world has ever known,” FCC chair Tom Wheeler said in a statement. “We must preserve and promote the internet.”

Broadband internet providers argue that they should be able to manage their networks as they wish, with the ability to give streaming video suppliers like Netflix and Amazon to provide faster access to their customers – at a cost. Regulators worry that such pay-for-play deals will give an unfair advantage to big media companies, keeping innovators from launching the next Facebook or Google.

Following a loss in court in 2010, when the Court of Appeals held that the FCC lacked statutory authority to support the enforcement of its net neutrality policy, the FCC issued the Open Internet Order, which provided three net neutrality rules:

• Transparency. Broadband internet providers must publicly disclose information about their network management practices, performance and commercial terms, sufficient for consumers to make informed choices;

• No blocking. Broadband internet providers must not block lawful content, applications, services or non-harmful devices; and

• No unreasonable discrimination. Broadband internet providers must not unreasonably discriminate in transmitting lawful network traffic.

The court held that two central provisions of the Open Internet Order, the no blocking and no unreasonable discrimination provisions, were invalid. The majority held that the two rules contravene an express statutory restriction which only allows the FCC to regulate ISPs as “common carriers” to the extent that they provide “telecommunications services.” The Court found that implementation of the rules were akin to regulation of providers as common carriers.

Ian Ranson, a solicitor at King & Wood Mallesons in Melbourne, says that while the decision does not directly impact Australia (as the country does not have any laws specifically regulating net neutrality), it does reignite the debate as to whether or not Australia should. “In Australia, it is common for internet providers to exclude certain content from counting towards a customer’s usage allowance. Such offerings may benefit consumers. Some internet providers reportedly shape certain peer-to-peer traffic like BitTorrent traffic. This might dissuade some customers, but helps to reduce the cost of services for others,” he writes on the firm’s website.