• by Wendy Davis  @wendyndavis, February 2, 2011

Handing Verizon a minor setback, an appellate court on Tuesday rejected the telecom's attempt to pick and choose the judges who would consider the telecom's challenge to the Federal Communications Commission's new open Internet rules. The appellate court didn't give a reason for its ruling.

Last month, Verizon challenged the FCC's open Internet rules on the theory that the agency exceeded its authority. The regulations prohibit wireless providers from blocking or degrading traffic or otherwise engaging in unreasonable discrimination. The order also prohibits wireless providers from blocking sites or competing applications, but doesn't prohibit wireless carriers from creating fast lanes for companies that pay for prioritized service.

The rules, which passed in December by a 3-2 vote, drew criticism from all sides. Consumer advocates argue that the regulations will not adequately protect consumers, while telecoms say that regulation will discourage investment and innovation.

Verizon -- which vowed to challenge the rules the same day they were passed -- appealed the regulations to the Circuit Court of Appeals for the D.C. Circuit. Last year, a three-judge panel of that same court ruled that the FCC lacked authority over the Web.

In that case, the appellate panel vacated an FCC ruling imposing sanctions on Comcast for violating neutrality principles by throttling peer-to-peer traffic. The three judges who decided that matter ruled that the FCC lacked authority over broadband because it was classified as an "information service," subject to Title I of the Telecommunications Act.

In addition, Verizon has wanted those same three officials to decide its challenge to the new open Internet rules. Had the court granted Verizon's request and assigned the case to those particular judges, the move would have been taken as a sign that the appellate judges were leaning toward vacating the FCC's new open Internet rules. >

Wireless carrier MetroPCS also appealed the FCC's neutrality rules. MetroPCS recently rolled out a controversial new $40-a-month plan that arguably violates neutrality principles. The plan includes unlimited voice calls, text messages and YouTube access, but appears to bar users from VoIP services, like Skype and Google Voice, and from visiting sites like Netflix. (MetroPCS company also is offering other, less restrictive tiers of service for $10 and $20 a month extra.) Neutrality proponents including Free Press and Center for Media Justice argue that MetroPCS will violate the FCC's neutrality rules by preventing users from accessing competing VoIP services or charging users more to reach some sites than others.

The FCC last week filed papers arguing that both companies filed appeals prematurely. The agency says the rules can't be challenged until after they have been published in the Federal Register, which has not yet occurred.