FCC Shifts Net Neutrality into High Gear

On March 12, 2015, the FCC published its long-anticipated Net Neutrality order. The Final Rules¹ stem from the question asked by the FCC in its May Notice of Proposed Rulemaking: “What is the right public policy to ensure that the Internet remains open?”

The question generated over 4 million submissions to the FCC. The FCC notes that the record overwhelmingly supported adopting rules against three practices that harm the Internet: blocking, throttling, and paid prioritization. As a vehicle for the Final Rules, the FCC used Title II of the Communications Act of 1934.

The Final Rules apply to “consumer facing services” called “broadband Internet access service” (“BIAS”). The FCC defines BIAS as being “mass-market retail service by wire or radio that provides the capability to transmit data to and receive data from all or substantially all Internet endpoints, including any capabilities that are incidental to enable the operation of the communications services, but excluding dial-up Internet access service.” Further, BIAS includes any service that provides a functional equivalent of services to the mass market. The Final Rules are also applicable to Internet access on mobile devices.

The major provisions of the Final Rules will be found in part 8 of the Code of Federal Regulations, titled “Protecting the Open Internet” and may be summarized as follows:

• No Blocking: In Section 8.5, the rules prohibit Internet providers from blocking “lawful content, applications, services, or non-harmful devices, subject to reasonable network management.”
• No Throttling: Section 8.7 prohibits Internet providers from impairing or degrading “lawful Internet traffic on the basis of Internet content, application, or service, or use of a non-harmful device, subject to reasonable network management.”
• No Paid Prioritization: Under Section 8.9, Internet providers are prohibited from engaging in paid prioritization. The Final Rules define “paid prioritization” as “the management of a broadband provider’s network to directly or indirectly to favor some traffic, including through use of techniques such as traffic shaping, prioritization, resource reservation, or other forms of preferential traffic management, either (a) in exchange for consideration (monetary or otherwise) from a third party; or (b) to benefit an affiliated entity.” However, the FCC may permit paid prioritization for a party that shows that the practice “would provide some significant public interest benefit and would not harm the open nature of the Internet.”
• No Unreasonable Interference, or Unreasonable Disadvantage Standard for Internet Conduct: In Section 8.13, the FCC mandates that Internet providers cannot unreasonably interfere with or unreasonably disadvantage “(i) end users’ ability to select, access, and use broadband Internet access service or the lawful Internet content, applications, services, or devices of their choice, or (ii) edge providers’ ability to make lawful content, applications, services, or devices available to end users.” The FCC notes that a provider may interfere or disadvantage Internet conduct for reasonable network management.

The major provisions of the Final Rules are prefaced with an understanding of “reasonable network management.” In Section 8.2, The FCC defines “reasonable network management” as having “primarily technical network management justification” that does not include other business practices. Further, network management is reasonable where “it is primarily used for and tailored to achieving a legitimate network management purpose, taking into account the particular network architecture and technology of the broadband Internet access service.”

The FCC also provides that much of Title II will not be applied to the Final Rules. Through a process called forbearance, over 700 codified rules in Title II will be inapplicable; regulation of the Internet will include “no unbundling of last-mile facilities, no tariffing, no rate regulation, and no cost accounting rules, which results in a carefully tailored application of only those Title II provisions found to directly further the public interest in an open Internet and more, better, and open broadband.” The FCC will continue to enforce other provisions of Title II, including privacy protection and regulation of attachment to utility poles.

The Final Rules leave much work for the FCC and industry. Whether and when Internet Service Providers will sue to block the rules is an open question. Congressional opponents could try to legislatively change or block the rules. Finding “reasonable network management” and “significant public interest” will occupy telecom professionals for years in any case, and, on top of all the legal issues, Internet technology will move ahead much faster than the regulators.