On March 12, 2015, the Federal Communications Commission (“FCC”) released the full text of its “Open Internet Order” (“Order”) (commonly called the “net-neutrality order” in the media) which it adopted on February 26, 2015. The 300-page Open Internet Order has generated a great deal of controversy because for the first time the FCC has classified broadband Internet access service as a “telecommunications service” under Title II of the Communications Act of 1934, which imposes a number of regulatory obligations on the providers of such regulated services. While the rules adopted by the FCC directly regulate broadband Internet service providers, they will no doubt have a ripple effect on every enterprise that purchases broadband Internet service.

Who Is Covered By the Rules?

The new rules apply to both fixed (like Cox or Comcast’s service) and mobile broadband providers, including resellers of broadband Internet service that provide mass market retail service to consumers.

Who Is Not Covered By the Rules?

The FCC clarified that certain types of providers and services fall outside the definition of broadband Internet service and are therefore not covered by the Order. For example, the FCC ruled that specialized services like VoIP services, hosting or data storage services, and Internet backbone services are not broadband Internet services because they are not retail, mass-market services.

The FCC also specifically held that coffee shops, bookstores, airlines, private end-user networks such as libraries and universities, and other businesses that acquire broadband Internet access service from a broadband provider to enable patrons to access the Internet from their respective establishments are not broadband Internet service providers unless the service is offered to patrons as a retail mass market service—meaning that most instances are not covered by the rules. The Order also helpfully clarified that a user’s provision of a wireless router or a Wi-Fi hotspot to create a personal Wi-Fi network that is not intentionally offered for the benefit of others is not broadband Internet service and therefore not covered by the new rules.

What Are the Rules?

In classifying broadband Internet access service as a telecommunications service the Order establishes three “bright-line rules” that prohibit certain network practices of broadband providers.

The bright line rules are:

  • No blocking. Fixed and mobile broadband Internet service providers may not block access to legal content, applications, services or non-harmful devices, subject to reasonable network management practices.
  • No throttling. Fixed and mobile broadband Internet service providers may not impair or degrade lawful Internet traffic on the basis of content, applications, services, or non-harmful devices, subject to reasonable network management practices.
  • No paid prioritization. Fixed and mobile broadband Internet service providers may not favor some lawful Internet traffic over other lawful traffic in exchange for consideration of any kind. The “no paid prioritization” rule bans “Internet fast lanes,” and also prevents providers from giving preferential treatment to the content or services of their affiliates. This rule does not have an exception for reasonable network management practices.

In addition to these three bright-line rules, the Order adopts rules to address possible future conduct by broadband Internet service providers and promote technological innovation, consumer demand, and investment. This rule has two components:

  • Service providers cannot “unreasonably interfere with or unreasonably disadvantage” a consumer’s ability to select, access, or use lawful content, applications, services, or devices of their choosing.
  • Service providers cannot “unreasonably interfere with or unreasonably disadvantage” the ability of edge providers to make lawful content, applications, services, or devices available to consumers. Edge providers are companies like Amazon and Netflix.

When Do the Rules Go Into Effect?

The new rules will become effective 60 days after the Order is published in the Federal Register, and publication could take several weeks from the March 12 release of the Order given its size and complexity. Federal Register publication also starts the clock ticking on the deadline for parties to appeal the Order, which a number of stakeholders have promised to do.

Unresolved Questions

The Order postpones a number of critical questions. The biggest questions left for another day are:

  • Will Universal Service Fund (“USF”) contributions be required on broadband Internet access services?USF is a system of telecommunications subsidies and fees assessed upon telecommunications service providers and managed by the FCC. USF is intended to promote universal access to telecommunications services in the United States. The question of whether to apply USF obligations to broadband Internet access service is deferred to a separate FCC proceeding examining wholesale reform of the USF assessment system.
  • Will privacy regulations apply? The FCC deferred the question of whether to apply Customer Proprietary Network Information (“CPNI”) rules to providers covered by the Order. CPNI is the data collected by telecommunications companies about a consumer’s telephone calls. It includes the time, date, duration and destination number of each call, the type of network a consumer subscribes to, and any other information that appears on the consumer’s telephone bill. FCC Chairman Tom Wheeler has announced that the FCC will be hosting a privacy workshop next month to discuss privacy rules in the broadband context, especially as those rules affect the jurisdiction of the Federal Trade Commission (“FTC”) to investigate and prosecute privacy violations of broadband Internet service providers under Section 5 of the FTC Act, an issue about which FTC Commissioners have raised concerns. 
  • Implications for disabilities access. The FCC has stated that it will address the applicability of mobile wireless hearing aid compatibility requirements to mobile broadband Internet service services in a pending rulemaking.

Conclusion

The Order makes unprecedented changes to the system of regulations applicable to broadband providers. As the law continues to be implemented AGG will keep interested parties informed of the proceedings.