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The Net Neutrality Drama Plays On

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The FCC voted on net neutrality rules in an open meeting today (that was delayed an hour due to yet more snow in DC), and the highly anticipated vote ran into a few last minute snags. First, Commissioner Mignon Clyburn, one of the three Democrats on the FCC’s five-member Commission and an essential vote given the party-line split at the FCC on net neutrality, asked Chairman Wheeler to scale back some of the proposed provisions in the Order prior to today’s vote.

Second, the tension between the Chairman and Republican commissioners Pai and O’Rielly continued, with Pai and O’Rielly not merely voting against the item, but vocally making their case for minimizing rather than expanding the FCC’s dominion over Internet business practices. This followed their spirited opposition in the weeks leading up to the meeting, where commissioners Pai and O’Rielly very publicly urged Chairman Wheeler to release the FCC’s proposed rules to the public for review and to postpone the vote to allow the public 30 days to comment on those rules, a request which the Chairman rejected.

As anticipated, the final vote today was a 3-2 split in favor of reclassifying broadband Internet access under Title II of the Communications Act, thereby making it subject to significant regulation by the FCC. Each of the commissioners released a statement in support of their respective position, with statements in favor from Democratic commissioners Wheeler, Clyburn, and Rosenworcel, and statements in opposition from Republican commissioners Pai and O’Rielly.

The FCC released a Public Notice summarizing the rule changes adopted by the Commission in the Order. According to the Public Notice, the FCC adopted the following bright line rules:

  • No Blocking: broadband providers may not block access to legal content, applications, services, or non-harmful devices.
  • No Throttling: broadband providers may not impair or degrade lawful Internet traffic on the basis of content, applications, services, or the use of non-harmful devices.
  • No Paid Prioritization: broadband providers may not favor some lawful Internet traffic over other lawful traffic in exchange for consideration of any kind–in other words, no “fast lanes” and no prioritizing the content and services of an Internet Service Provider’s (ISP) affiliates.

The FCC also adopted a “standard for future conduct” whereby ISPs cannot “unreasonably interfere with or unreasonably disadvantage” the ability of consumers to select, access, and use the lawful content, applications, services, or devices of their choosing; or of edge providers to make lawful content, applications, services, or devices available to consumers.” Finally, the FCC added additional ISP disclosure provisions to its existing transparency rule.

Let the litigation begin.

So how did we reach this regulatory crescendo? The core issue that launched the “network neutrality” debate is whether an Internet Service Provider can deliver selected Internet sites and services to customers faster than others in exchange for compensation from the website receiving the benefit. In line with the FCC’s previous approach of treating the Internet as something completely new and different from the telecommunications services it had traditionally regulated, the FCC resisted involving itself in anything that could be described as regulation of the Internet. However, as the Internet grew and it became clear that it (a) was no longer a fledgling service that might be accidentally extinguished by government regulation; and (b) had moved from being a convenience to being as essential to the public as gas or electric, regulatory attitudes began to change.

The result was the FCC’s 2005 Open Internet Policy Statement, in which the FCC concluded that ISPs were not subject to mandatory common-carrier regulation like telephone services (referred to as “Title II” regulation because it is governed by Title II of the Communications Act of 1934). The FCC did conclude, however, that it had authority to regulate ISPs under its ancillary authority to impose “light touch” regulatory obligations under the less restrictive Title I of the Communications Act.

The 2005 Policy Statement was challenged in 2008, after the FCC determined that a cable company had interfered with the usage of Internet peer-to-peer applications for some of its customers and imposed reporting conditions on the company. The FCC argued that Section 706 of the Communications Act, which requires the FCC to encourage deployment of advanced services to “all Americans”, authorized it to take this action despite the agency’s historical conclusion that Section 706 did not provide the FCC with independent authority to regulate ISPs. The cable company appealed the FCC’s decision, and in 2010 the D.C. Circuit invalidated the FCC’s action, holding that the FCC could not change its mind without proper explanation and suddenly find authority under Section 706 to regulate the management of Internet traffic.

In response to that court decision, the FCC issued its Open Internet Order in 2010, containing three basic rules, which are also in the new order, although in modified form: (1) transparency; (2) no blocking; and (3) no unreasonable discrimination against websites and Internet services. To the surprise of many, the FCC relied on Section 706 as the statutory basis for its authority to adopt new Open Internet rules, stating that Section 706(a) “generally” urges the FCC to “encourage” the deployment of advanced telecommunications capability to all Americans. The FCC concluded that because the stated goal of the FCC’s net neutrality rules is to encourage broadband deployment and the “availability of advanced telecommunications”, Section 706 provided the FCC with authority to adopt its Open Internet Rules consistent with the Communications Act.

Like the 2005 Policy Statement, the 2010 Open Internet Order was appealed to the DC Circuit. This time, the court said that the FCC actually could use Section 706 as a means to regulate ISPs, but the court also held that the FCC is not allowed to treat ISPs as “common carriers” because the FCC had previously specifically determined that ISPs are not common carriers. As a result, the court stated that the FCC must allow ISPs to negotiate with content providers and enter into “commercially reasonable” agreements, which, by implication, could include paid prioritization of content.

While this debate raged on, Chairman Wheeler took the helm of the FCC and had to decide how to proceed in the wake of the court’s decision. The FCC ultimately issued the Notice of Proposed Rulemaking in this proceeding, resulting in today’s vote.

The NPRM essentially followed the court’s blue print but with a twist–the FCC indicated that it might apply Title II to ISPs. In his comments at the meeting today, Commissioner Pai accused the Democratic commissioners of broadly applying Title II regulations solely because of politics and pressure from the White House. Commissioner Pai announced he had no doubt that the FCC’s abrupt decision to reclassify Internet services (including mobile broadband) under Title II is unlawful and will be overturned either by the courts or by Congress. Commissioner O’Rielly joined in, chiding the majority for its “secrecy” in forwarding the proposal and for what he termed a “monumental and unlawful power grab.” He also noted that the final rule treating broadband Internet access service as a telecommunications service under Title II is radically different than what was originally proposed in the NPRM, and thus had not been properly open to the public for comment and discussion.

Chairman Wheeler of course disagreed, starting his comments today with the assertion that “no one should control free and open access to the Internet” and that it should not be left to broadband providers to determine the rules of access. He announced that today’s decision was about “protection of Internet access” for consumers while giving network operators the tools needed to continue to provide service to the public. He also accused opponents of the new rules of overstating the impact, quoting the CEO of Cablevision as saying the “idea of more regulation is never great for us, but to be honest, we don’t see at least what the Chairman has been discussing as having any real effect on our business”. The Chairman agreed, and argued that the FCC was simply laying down ground rules to ensure that the “Internet remains open.”

While the final rules are not yet public, this caustic debate will not fade away soon. Once the actual Order is released, the court appeals will commence, and congressional opponents of the net neutrality rules will launch their efforts to legislatively void today’s FCC action. In the meantime, the FCC will conduct further proceedings to fully implement the requirements of the Order. As a result, today’s vote is more likely to be just one more stop along the net neutrality highway, rather than the end of the journey.