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U.S. FCC Chairman Announces Title II Net Neutrality Proposal

Article 4 USA rewriting the US Communications Act for the 21st CenturyComing hot on the heels of an op-ed in Wired Magazine and a more detailed U.S. FCC-released “Fact Sheet,” FCC Chairman Tom Wheeler has proposed Open Internet “net neutrality” rules to the other FCC Commissioners and scheduled a vote on the rules for the FCC’s Open Meeting on February 26, 2015. As discussed below, these rules would represent a shift in U.S. telecommunications policies governing Internet access services, creating new net neutrality protections for Internet content, applications, services and devices by applying “Title II” common carriage duties to broadband.

Reclassification Under Title II

Representing a notable departure from the FCC’s previous Open Internet rules adopted in 2010 and from prior FCC orders classifying broadband Internet access as a Title I “information service,” Chairman Wheeler’s current proposal would adopt Open Internet rules under provisions of the Communications Act (as amended) governing Title II common carrier “telecommunications services” while finding additional independent statutory support for the rules under Section 706 of the Telecommunications Act of 1996. The proposed rules would reclassify retail broadband Internet access services under Title II of the Communications Act and, if a court determines it necessary to classify broadband ISPs’ service to “edge providers,” the proposed rules would similarly reclassify that service under Title II. In another notable departure from the FCC’s 2010 Open Internet rules, Chairman Wheeler’s proposal would apply similar Open Internet requirements to both fixed and mobile broadband Internet access services.

Proposed Open Internet Requirements

The substantive Open Internet rules that Chairman Wheeler proposes to adopt include:

  • 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 non-harmful devices.
  • No Paid Prioritization: Broadband providers may not favor some lawful Internet traffic over other lawful traffic in exchange for consideration (i.e., no “fast lanes”). This rule would also ban ISPs from prioritizing the content and services of their affiliates over those of non-affiliates.  Although this rule would not prohibit ISPs from entering into paid peering arrangements, those arrangements would separately be subject to oversight and enforcement under the “just and reasonable” standard in the FCC’s new interconnection rule discussed below.
  • Reasonable Network Management Allowed. The proposed rules would permit broadband providers to engage in reasonable network management, taking into consideration their particular network technology (g., fiber vs. wireless). The proposed rules would, however, require network management practices to be tailored to achieving a legitimate network management, rather than commercial, purpose.
  • Additional Transparency Requirements.  The proposed rules would enhance the FCC’s existing requirements for transparency in broadband ISPs’ network management practices.
  • Managed Services. Managed broadband services that do not travel over the public Internet (e.g., cable system VoIP services, remote heart-rate monitoring) would not be subject to Title II regulation under the proposed rules. The proposed rules would, however, establish guidance directed at preventing these services from being used to undermine the Open Internet rules, and furthermore rely on the transparency requirements discussed above to constrain abuses involving these services.
  • Future Conduct Standard.  The proposed rules would create a future conduct standard that ISPs cannot harm consumers or edge providers. The FCC’s Fact Sheet offered little additional explanation of how this future conduct standard would be applied and what types of behavior it would proscribe.
  • Interconnection.  Under the proposed rules, the FCC would have authority to take enforcement action based on complaints that ISPs’ interconnection practices are not “just and reasonable.” This would permit the FCC to intervene in disputes relating to paid peering, for example.

Partial Forbearance from Title II Requirements

Chairman Wheeler’s proposal would apply core Title II common carrier duties to broadband Internet access services, including provisions governing:

  • “unjust and unreasonable” practices;
  • consumer complaints;
  • consumer privacy;
  • access to poles and conduits;
  • disabilities access; and
  • universal service support for broadband.

However, the Chairman’s proposal would also forbear from applying Title II requirements regarding, for example, rate regulation, tariffing, and facilities unbundling to broadband Internet access. Furthermore, the proposal would purportedly not apply Universal Service fees or any new taxes or fees to broadband Internet access services.

The FCC’s proposal is remarkable for a few reasons: first, it applies the same net neutrality rules to mobile and fixed networks alike. This contrasts with previous FCC orders, which provided stricter rules for fixed line networks than for mobile. Second, the proposal directly addresses, for the first time, the issue of upstream interconnection, including peering and transit agreements. Previously, it was unclear whether net neutrality rules extended to the highly-complex ecosystem of peering and transit arrangements. Third, it applies a Title II “telecommunications service” classification to broadband Internet access after a long period of treating it as a lightly regulated “information service,” raising the prospect of greater future regulation of broadband services under the Communications Act.