• by Wendy Davis  @wendyndavis, May 17, 2013

T-Mobile's newly acquired MetroPCS withdrew its challenge to the Federal Communications Commission's net neutrality rules on Friday. But Verizon, which also challenged the rules, is continuing with its appeal.

The FCC's neutrality rules, passed in late 2010, prohibit broadband providers from blocking or degrading competing apps and sites. The rules also ban wireline companies -- but not wireless carriers -- from engaging in unreasonable discrimination.

Two years ago, Verizon and MetroPCS asked the the D.C. Circuit Court of Appeals to vacate the neutrality regulations. The companies contended that the FCC lacks authority to regulate broadband, because it's classified as an “information” service and not a telecommunications service.

In early 2011, before bringing the challenge, MetroPCS rolled out a new pricing option that potentially violated the neutrality rules. The company said it would offer a $40 a month plan that gave subscribers unlimited voice calls, text messages and YouTube access. But that plan appeared to prevent users from accessing VoIP services like Skype and Google Voice. It also appeared to block users from visiting Netflix on their mobile plans.

Consumer groups said that MetroPCS was violating neutrality rules by restricting competing VoIP services. They  said MetroPCS acted arbitrarily by charging consumers more to access Netflix than YouTube. MetroPCS has since revised its offerings.

On Friday, outgoing FCC Chairman Julius Genachowski cheered the news that T-Mobile had dropped its appeal. “The FCC’s widely supported open Internet framework has contributed to healthy growth in innovation and investment across the U.S. broadband economy,” he stated. “Since 2010, our strong and balanced rules have been protecting entrepreneurs and consumers, and have increased certainty and predictability for investors in Internet services as well as networks. The ongoing litigation -- now pursued by a single company -- only serves to reduce that certainty and predictability.”

Advocacy group Public Knowledge on Friday called on Verizon to drop its case. The group says the telecom's challenge marks “an attempt to take away the FCC's ability to protect consumers and promote competition.”

Some observers think there's a good chance that the D.C. Circuit Court of Appeals will strike down the neutrality rules, given that the court ruled in a case involving Comcast that the FCC lacks authority to regulate broadband.

In the Comcast matter, the appeals court vacated an order sanctioning the Internet service provider for violating the 2005 neutrality principles by throttling peer-to-peer traffic. At the time, the FCC hasn't yet codified those principles into regulations.