Cinnamon Mueller Client Updates

 

FCC Reclassifies Broadband Internet Access Service as Title II Common Carrier Service; Imposes Net Neutrality Rules, Enhanced Transparency Requirements

On February 26th, the FCC adopted an Order that, among other things, reclassifies broadband Internet access service from a lightly regulated Title I “information service” to a more heavily regulated “telecommunications service” subject to Title II of the Communications Act, in the process creating significant new compliance obligations for broadband Internet service providers (ISPs).

The text of the Order is not yet available, and no release date has been announced.  Below is a summary of the main actions of the Order based on FCC news releases and other publicly available information.  We will release further updates as more information about the Order becomes available.

Overview.  The 2015 Open Internet Order does two main things.  First, it adopts Net Neutrality prohibitions, and second, it bases these new rules on its authority under both Title II and Section 706 of the Communications Act.  The Order institutes three “bright line” rules targeting behavior the FCC believes to impair Internet openness.  It imposes a new general standard for future conduct.  It also authorizes the FCC, for the first time, to address issues related to the exchange of Internet traffic—interconnection, peering, transiting arrangements—and increases ISPs’ network management disclosure obligations.  In order to ground its rules on its Title II authority, the FCC reclassifies broadband Internet access from a Title I “information service” to a Title II “telecommunications service,” permitting it to impose common carrier obligations.

Bright line rules.  The Order adopts three bright line net neutrality rules to “ban practices that are known to harm the Open Internet”:

  • No blocking of legal content, applications, services, or non-harmful devices.
  • No throttling of traffic on the basis of content, applications, services, or non-harmful devices.
  • No paid prioritization or fast lanes: broadband providers may not favor some lawful Internet traffic over other lawful traffic in exchange for consideration.

The no blocking and no throttling rules are subject to “reasonable network management,” which, among other things, accounts for the attributes of the network technology involved (e.g., fiber, DSL, cable, Wi-Fi).  Under this standard, a network practice “must be primarily used for and tailored to achieving a legitimate network management—and not business—purpose” to pass muster with the FCC.

 

General Internet conduct standard.  The Order adopts a vague new standard for future conduct, under which ISPs cannot “unreasonably interfere with or unreasonably disadvantage” consumers’ ability to select, access, and use lawful content, applications, and services, or edge providers’ ability to make lawful content, applications, services, and devices available to consumers.  The FCC will address practices alleged to harm Internet openness under this standard on a case-by-case basis using a multi-factor test.

Title II.  The Order adopts what the FCC claims is a “modernized” version of Title II by applying 21 of its 48 provisions to broadband Internet access service.  The provisions we are told will definitely apply include:

  • Section 201—imposing a duty to serve upon reasonable request; mandating “just and reasonable” rates, terms, and conditions of service; authorizing the FCC to establish physical connection with other carriers; declaring any unjust or unreasonable charge, practice, classification, or regulation to be unlawful.
  • Section 202—declaring as unlawful any “unjust or unreasonable discrimination in charges, practices, classification, regulations, facilities, or services for or in connection with” a common carrier service.
  • Sections 206, 207, 207, 208, 216, and 217—allowing the FCC to investigate complaints and take enforcement action, including imposing monetary damages.
  • Section 222—addressing consumer privacy and imposing CPNI rules.
  • Section 224—authorizing the FCC to regulate pole attachment rates.
  • Sections 225 and 255—creating protections for people with disabilities.
  • Section 254—obligating carriers to pay into the federal USF program—a provision the Order will “partially” apply.

The FCC will also forbear, or refrain, from imposing certain Title II obligations:

  • Section 203—requiring carriers to file tariffs with the FCC.
  • Section 205—authorizing the FCC to set rates for common carriers.
  • Sections 251, 252, and 256—governing resale, interconnection, unbundling of facilities, and market entry rules for telecommunications carriers and ILECs.

While the FCC will forbear from imposing these rules on broadband Internet access service for now, this FCC cannot prohibit a future FCC from attempting to apply them.

 

No small ISP relief.  The Order does not grant any relief from new Title II obligations for small ISPs.

 

Interconnection.  The FCC, for the first time, asserts authority over Internet traffic exchange—interconnection, peering, and transiting.  Accordingly, ISPs will be subject to FCC complaint procedures concerning their interconnection arrangements with edge providers.  As with the general conduct standard, the FCC will enforce its authority on a case-by-case basis.

Increased transparency.  In addition, the Order enhances the existing Open Internet transparency rule, requiring ISPs to disclose: promotional rates, fees, and surcharges, and data caps; packet loss as a measure of network performance; and network management practices that can affect service. 

Temporary partial transparency exemption for small ISPs.  The Order will provide a partial, temporary exemption from the enhanced transparency rules for ISPs with no more than 100,000 subscribers but delegates authority to the FCC’s Consumer and Governmental Affairs Bureau to determine whether to retain this exemption and, if so, at what level.

What’s next?  The rules will take effect 60 days after the Order is published in the Federal Register, except the transparency rule enhancements, which require further approval by the Office of Management and Budget.  No publication date for the Order was announced, but given the length of the Order, it could be several weeks.  Once published, the Order is sure to be challenged in the courts.

Additional information.  In the meantime, stay tuned to our Client Updates for more.  CM partner Barbara Esbin works closely with the ACA in its advocacy on this issue.  Given her experience with Net Neutrality issues and the FCC’s authority to regulate in this area, dating back well over a decade, Barbara is a nationally-recognized authority on the topic and is frequently asked to speak about it, most recently at a TechFreedom event exploring the ramifications directly following the FCC’s reclassification vote.  (See what Barbara and others had to say here—Barbara’s panel is in Part Two.) 

For readers attending this week’s ACA Summit, you can hear more from her there, where she’ll join a panel covering the Order on Wednesday afternoon.