FCC Releases Order Subjecting Broadband Internet Access Services to Greater FCC Oversight
As was widely anticipated, in a party-line, 3-2 vote last month, the Federal Communications Commission (“FCC”) sought to impose network neutrality rules on mobile and wireline broadband Internet access service providers. To give it a stronger statutory hook for the current iteration of its open Internet regulations, the FCC also took the unprecedented step of reclassifying broadband Internet access service as a “telecommunications service” subject to regulation under Title II of the Communications Act of 1934 (the “Communications Act”). Ending much industry anticipation and speculation, last week the FCC released the complete text of its Report and Order on Remand, Declaratory Ruling and Order (the “Open Internet Order”), which ultimately hews closely to the
Overview of the Open Internet Order
Report and Order on Remand: Establishing Open Internet Rules
In what may portend imminent legal challenges, the FCC begins the Open Internet Order by responding directly to the D.C. Circuit’s
Three Bright-Line Rules
As expected, the Open Internet Order establishes three bright-line rules that will apply to providers of broadband Internet access service:
No Blocking of access to legal content, applications, services, or non-harmful devices;
No Throttling of lawful traffic on the basis of content, applications, services, or non-harmful devices; and
No Paid Prioritization that would create “fast lanes” by favoring traffic from some sources (including content and services of affiliates of broadband Internet access service providers).
In addition, as in the FCC’s prior iterations of open Internet regulations, the Report and Order on Remand includes a mechanism to permit broadband Internet access service providers to engage in “reasonable network management.” The item looks to account for differences in broadband technologies but emphasizes that network management practices must be tailored to technical requirements and not commercial purposes.
Expanded Transparency Rules
In a departure from the
Enhanced Enforcement Authority Over Broadband Internet Access Service Providers
The Open Internet Order also broadens the FCC’s authority to conduct enforcement proceedings on a number of related issues. In addition to affirming the applicability of the enforcement mechanisms left untouched by the D.C. Circuit’s decision last year, the Commission has created the position of “Open Internet Ombudsperson” to provide parties with assistance in the context of open Internet complaints filed against broadband Internet access service providers.
Declaratory Ruling and Order: A “Light Touch” Reclassification of Broadband Internet Access Service
In the Declaratory Ruling portion of the Open Internet Order, the FCC broadly reclassified broadband Internet access service—whether delivered by wire or wirelessly—as a “telecommunications service.”
Scope of Reclassification
Importantly, the scope of the FCC’s reclassification hinges on the meaning of the term “broadband Internet access service.” The FCC defines a broadband Internet access service expansively as a “mass market retail service . . . that provides the capability to transmit data to and receive data from all or substantially all Internet endpoints.”
Application of Certain Title II Obligations to Broadband Internet Access Services
Given the magnitude of the obligations imposed on telecommunications services under Title II of the Communications Act, the FCC took pains to emphasize that it was approaching reclassification of broadband Internet access services with a “light touch” from the outset. The Communications Act provides the FCC with authority to forbear from enforcing portions of Title II against telecommunications service providers.
Nevertheless, much ink will be spilled debating whether the FCC’s touch was sufficiently light, as the Commission determined that it will apply the following Title II provisions to broadband Internet access service providers:
Certain “core” statutory provisions prohibiting “unjust and unreasonable practices”,
Provisions granting the FCC authority to hear consumer complaints,
Protections for consumer privacy,
Provisions relating to pole attachments,
Protections for individuals with disabilities, and
Provisions that will allow universal service fund support to be used for future deployment of broadband networks.
The Open Internet Order does not impose the following:
Any form of rate regulation (including tariffs, rate approval, or unbundling of services),
Any requirement that providers of broadband Internet access service contribute to the universal service fund, or
Any other form of FCC-imposed tax or fees.
While the intricacies of the regulations—and the merits of the FCC’s approach—will continue to be debated by policymakers and advocates over the coming months, we highlight below several significant implications of the Open Internet Order of particular relevance for telecommunications providers, content companies, wireless carriers, and other industry participants.
Internet Fast Lanes to End Users Will be Prohibited
In a clear victory for edge service providers, the FCC has implemented a rule that specifically prohibits paid prioritization agreements—also known as “fast lanes”—between edge providers and broadband Internet access service providers.
Note, however, that the FCC’s ban on paid prioritization is not an outright ban on Internet traffic exchange agreements. In the Open Internet Order, the FCC expressly stated that it does not have sufficient background to adopt a bright-line rule regarding Internet exchange agreements. Instead, the agency will regulate Internet traffic exchange agreements on a case-by-case basis using its general Title II authority to prohibit unjust and unreasonable practices.
Broadband Internet Access Service Provider Conduct Will Be Regulated by Bright-Line Rules and a Reasonableness Standard
In the Open Internet Order, the FCC repeatedly touts the clarity associated with the bright-line open Internet rules. The three bright-line rules—no blocking, no throttling, and no paid prioritization—are aimed at addressing the FCC’s current concerns about the openness of the Internet, but the FCC also recognized that technology and markets often evolve faster than codified rules. Accordingly, the FCC included a “no-unreasonable interference/disadvantage” rule that provides it with flexibility to address market and technological developments that might not be captured by its bright-line rules. While much attention has been focused on the bright-line rules, broadband Internet access service providers and content providers should remain mindful that the FCC will retain significant regulatory flexibility to enforce its no-unreasonable interference/disadvantage standard.
Wireless Broadband Carriers Will See Additional Regulation
As previewed in the
The FCC’s Role as a Privacy Regulator Will Grow
The FCC’s Fact Sheet noted, without much fanfare, that the consumer protection provisions of Title II would apply to broadband Internet access service. But, in contrast to this passing reference in the Fact Sheet, issues of consumer privacy permeate the Open Internet Order. For instance, the FCC expands providers’ obligations to disclose certain privacy practices as part of the agency’s transparency requirements. And, in discussing its decision not to forbear from enforcing Section 222 consumer privacy protections in this context, the FCC took the opportunity to underscore its recent efforts to expand its role as a national privacy regulator.
The Road Ahead: The Dissenting Commissioners Flag Avenues for Appeal
The Open Internet item will not go into effect until 60 days following its publication in the Federal Register, which usually occurs several weeks after the FCC releases the text of an item. Publication in the Federal Register will also start the clock for parties to petition for FCC reconsideration or to seek appellate review of the FCC’s decision. It is widely anticipated that the FCC’s Open Internet item will be challenged in court. And, while the FCC has attempted to limit the Open Internet Order’s vulnerability to an appellate challenge, in their dissenting statements, Commissioners Pai and O’Rielly have effectively seeded the record with possible grounds for appeal. For example, both dissenting statements suggest that the Commission’s Open Internet Order is procedurally flawed because the underlying Notice of Proposed Rulemaking did not adequately signal that reclassification with forbearance was a possibility.
The fate of the FCC’s open Internet rules—and, more fundamentally, its reclassification of broadband Internet access service—may ultimately be years away. More immediately, the most pressing question is whether parties seeking appellate review will request—and whether a court will grant—a stay of the new rules while the appellate process unfolds.