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Despite the Federal Communications Commission’s repeated efforts to expand their regulatory reach over the Internet beyond what Congress has authorized, their Open Internet order may finally be neutralized in the D.C. Court of Appeals.

Last Monday, two out of three judges who heard in Verizon’s challenge to the 2010 rule expressed doubt in the FCC’s statutory authority to enforce net neutrality, perhaps foreshadowing an end to the beginning of government regulation of the World Wide Web. Or, at least for the time being.

At issue is the FCC’s assertion that the Telecommunications Act of 1996 grants it power to regulate broadband companies as a common carrier subject to government review. Unfortunately for the Commission’s creative interpretation, the Act expressly states that a “telecommunications carrier shall be treated as a common carrier… only to the extent that it is engaged in providing telecommunications services.”

As Verizon points out in its brief on the case and as the D.C. Circuit has already ruled in Comcast v. FCC, the FCC has already classified broadband Internet as an “information service” and thus lacks authority to tell them how to run their business.

One wrinkle in the D.C. Circuit’s reconsideration of the Open Internet issue is the Supreme Court’s recent Arlington v. FCC decision, which granted agencies more deference in determining their own jurisdictional boundaries.  Noted free market tech author Scott Cleland doesn’t think Arlington will upset the D.C. Circuit’s consideration in Verizon because “he FCC’s Open Internet Order is so unambiguously far outside the bounds of the FCC’s statutory authority, that Chevron deference is unlikely to apply,” even in a post-Arlington world.

While it’s still too early to declare the death of net neutrality, such a fatality is desperately needed to keep the Internet flourishing. For years net neutrality has been a government solution to a problem that simply doesn’t exist. The FCC issued the 2010 rule that Internet service providers (ISPs) cannot block or prioritize access to specific websites despite acknowledging that “the Internet as we know it” is already “open.”

That’s because customers value unfettered access to view, stream, and download data from the World Wide Web without barriers. If an ISP were to suddenly shake up this equation, many of their customers would revolt by switching providers. This “vote with your money” mentality is what drives the market’s creative forces, syncing the goods and services producers supply with what consumers demand.  This ability to move from provider to provider also undercuts the FCC’s ability to claim that Verizon has some sort of market power that would justify a common carrier designation, which the FCC has thus far not asserted.

Even if the FCC’s worst fears come to fruition and ISPs start charging cell phone-style “plans” for different levels of Internet access, online access would only become cheaper for low data users. As it is today, a grandmother who logs online once a day pays just as much as the tech-savvy teenager next door who regularly downloads gigabytes of data. As such, she is subsidizing his usage and could instead be paying a cheaper rate if her ISP offered varying plans.

But that doesn’t mean that the techie teen is out of luck, either. He can urge his parents to patronize a plan that charges one rate for unlimited data usage to its customers. In this manner, the market accommodates each customer’s demand instead of imposing a one-size-fits-all policy through government force, as net neutrality advocates would prefer.

It should come as no surprise that the FCC’s few accusations of companies violating the net neutrality rule have only chilled market innovation, such as its January 2011 complaint against MetroPCS. What exactly was the anticompetitive line the cell phone company so carelessly crossed? MetroPCS offered its customers access to unlimited YouTube videos in a format customized for fast streaming. While such market innovation was a win for millions of MetroPCS customers, net neutrality advocates saw it as a threat.

Granting federal bureaucrats veto power over the market forces that made the Internet the bastion of creativity and enterprise it is today is a scarier thought than an ISP innocuously traffic shaping data tailored to its customers’ needs. What’s worse is the dangerous precedent that net neutrality sets for future federal regulation of this exciting ether of human flourishing. For the sake of freedom and prosperity online, here’s to hoping that the D.C. Court of Appeals hammer’s the nail in the coffin of net neutrality. After that, we need to make sure that the FCC cannot and does not attempt to reclassify broadband Internet service as a common carrier under Title II.

Casey Given is a policy analyst at Americans for Prosperity.

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