UPDATE 3-FCC seeks to dismiss challenges to Internet rules

Fri Jan 28, 2011 4:43pm EST

* Says Verizon, MetroPCS filed appeals too early

* Asks court to dismiss their appeals

* FCC seeking to preserve power to regulate Internet (Adds analysts' comments)

By Sinead Carew and Jasmin Melvin

NEW YORK/WASHINGTON, Jan 28 (Reuters) - The Federal Communications Commission filed on Friday to dismiss challenges to its new Internet traffic rules, an agency official said.

A senior FCC official said the agency filed several motions with the U.S. Court of Appeals for the District of Columbia Circuit asking the court to dismiss as premature challenges from Verizon Communications Inc (VZ.N) and MetroPCS Communications Inc PCS.N.

"The rules that govern when and how parties may challenge FCC orders are clear, and Verizon and MetroPCS filed too early when they challenged the Open Internet order," the senior FCC official said in an e-mail.

The order, criticized by opponents as a legally shaky government intrusion into regulating the Internet, would prevent network operators from blocking lawful content but still let them ration access to their networks.

At stake is ensuring consumer access to content such as huge movie files while letting Internet providers manage their networks to prevent congestion.

Last week Verizon filed a case against the FCC in the U.S. Court of Appeals for the District of Columbia, arguing that the regulator had overstepped its authority in creating new rules aimed at regulating Internet traffic. [ID:nN20157175]

Smaller rival MetroPCS followed with its own lawsuit challenging the new rules. [ID:nN25269174]

Verizon, the majority owner of the largest U.S. wireless service, and fifth-ranked MetroPCS appear to have attempted to anchor their challenges in a venue favorable to them by arguing that the rules would modify their wireless licenses. Such disputes are sent to the D.C. appeals court. [ID:nN26225867]

The same court ruled last year that the FCC lacked the authority to stop Comcast Corp (CMCSA.O) from blocking bandwidth-hogging applications on its broadband network, spurring the agency's most recent rulemaking effort.

Rebecca Arbogast, an analyst with Stifel Nicolaus, said the FCC's motions were a "classic move in the dance of litigation."

A spokesman for Verizon said the company would respond in due course, while MetroPCS's spokesman said the company was assessing the FCC actions and had no comment.

An FCC official had said last week that Verizon appeared to be premature in filing its appeal as the new rules, which were adopted in December, had not yet been published in the Federal Register.

FCC rulemakings are traditionally challenged during a 60-day window after the rules are published in the Federal Register.

The FCC may also challenge Verizon and MetroPCS's characterization of the rules as a license modification.

Medley Global Advisors analyst Jeffrey Silva said to expect more of this type of legal maneuvering before a court hears the merits of the appeals.

"This is not unusual. The warring parties have begun to spar before throwing any hard punches," he said.

Silva added, regardless of how the D.C. Circuit rules on the FCC's motions, legal challenges to the order are unlikely to disappear.

In a 3-2 vote on Dec. 21, the FCC highlighted a huge divide between those who say the Internet should flourish without regulation and those who say the power of high-speed Internet providers to discriminate against competitors needs to be restrained. [ID:nN21259466] (Reporting by Sinead Carew in New York and Jasmin Melvin in Washington; Editing by Gary Hill)

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