At the Federal Communications Commission’s (“FCC”) Open Meeting on February 26, the Commission voted along party lines (3-2) to reclassify broadband Internet access service as a “telecommunications service” under Title II of the Communications Act of 1934 (as amended), imposing common carrier-based “Open Internet” rules on fixed and mobile broadband providers. Chairman Tom Wheeler, along with Commissioners Rosenworcel and Clyburn voted in favor of the item, while Commissioners Pai and O’Rielly voted against it.

The new Open Internet Order relies on multiple sources of authority, including Title II of the Communications Act and Section 706 of the Telecommunications Act of 1996. Pursuant to its Title II authority, the Commission reclassified “broadband Internet access service” as a “telecommunications service.” The Commission’s Order also uses its Title III authority to classify mobile broadband access service as a “commercial mobile service.” As such, the new rules – in their entirety – will apply to both fixed and mobile broadband Internet access services.

The Commission revised its 2010 Open Internet rules in light of the D.C. Circuit’s decision in Verizon v. FCC. The three major rules in the new Open Internet Order are:

  • No blocking. Fixed and mobile broadband providers may not block access to legal content, applications, services or non-harmful devices.
  • No throttling. Fixed and mobile broadband providers may not impair or degrade lawful Internet traffic on the basis of content, applications, services, or non-harmful devices.
  • No paid prioritization. Fixed and mobile broadband 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 what are commonly referred to as “Internet fast lanes,” and also prevents ISPs from giving preferential treatment to the content or services of their affiliates.

The Order also reinforces the 2010 transparency rule which was the only rule to survive judicial scrutiny. The transparency rule requires broadband providers to disclose network information to end-users and edge providers. The Commission’s Open Internet Order imposes additional disclosure requirements on providers, strengthening the current rule. The Open Internet Order temporarily exempts fixed and mobile providers with 100,000 or fewer subscribers from the enhanced transparency requirements but delegates authority to the Commission’s Consumer and Governmental Affairs Bureau to determine whether the FCC should retain this exemption.

Finally, the Order adopts a “standard of future conduct,” stating that 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. Similarly, 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. Using this standard, the Commission will investigate questionable practices on a case-by-case basis, subject to a multi-factor test.

The Title II provisions that will apply to broadband providers are:

  • “no unjust or unreasonable practices” and “no discrimination” (Sections 201 and 202);
  • investigation of consumer complaints and related enforcement mechanisms (Sections 206-209, 216, 217);
  • consumer privacy protections (Section 222);
  • fair access to poles and conduits (Section 224);
  • accessibility requirements for the disabled (Sections 225 and 255); and
  • partial application of the obligation to provision broadband in universal service fund (“USF”) programs (partially applies Section 254).

While the Open Internet Order will apply key “common carrier” provisions of Title II, it will forbear – or refrain – from applying several others. For instance, the Order will not impose any utility-style rate regulation, such as tariffs or last-mile unbundling. Further, broadband services will remain exempt from state and local taxes, under the Internet Tax Freedom Act. The question of whether to apply USF contribution obligations to broadband is deferred to a separate proceeding examining reform of the USF contribution mechanism.

In addition, the Order opens the door for FCC oversight of interconnection between providers and other networks and services, establishes an Open Internet ombudsman and authorizes the Enforcement Bureau to solicit expert advisory opinions on “technical matters.”

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The Open Internet Order represents a landmark decision. Commissioners Rosenworcel and Clyburn strongly supported the Chairman’s proposal and also applauded the 4 million Americans who commented throughout the proceeding.

Commissioners Pai and O’Rielly both voiced strong dissents. Commissioner Pai asserted that if the new Open Internet rules survive judicial review, they will be bad for consumers. The new rules, he said, are sure to increase broadband prices, slow broadband speeds, decrease broadband deployment and hinder innovation.

Commissioner O’Rielly sees the rules as an overreach by the FCC. He believes that the Commission will find a way to apply a number of restrictive Title II provisions that the agency claimed it would forbear from applying. O’Rielly does not view the rules as the “light regulatory” approach that the Commission promised.

Though the full Order has yet to be released, it is clear that yesterday’s decision (if upheld) will change the regulatory landscape. We will post updates here as we learn more about the new Open Internet rules.