Somewhat sooner than expected, the Federal Communications Commission (FCC) released the full text of the Open Internet Ordervoted February 26, 2015, on March 12, 2015. The Order is available here.

The document, which is 290 pages long excluding addenda and Commissioner statements, comprises three separate types of agency decisions summarized as follows:

Report and Order: This portion of the Order adopts final rules to prevent “three practices [that] in particular demonstrably harm the open Internet: blocking, throttling, and paid prioritization” (Para. 110). Under these rules, broadband providers:

  • Must not “block lawful content, applications, services, or non-harmful devices, subject to reasonable network management” (Para. 112). This rule, in sharp contrast to the 2010 rules that later were vacated by the US Court of Appeals for the DC Circuit, applies to mobile wireless services (Paras. 116-18).
  • Must not “impair or degrade lawful Internet traffic on the basis of Internet content, application, or service, or use of a non-harmful device, subject to reasonable network management” (Para. 119). This rule covers “conduct that is not outright blocking” but nonetheless “inhibits the delivery of particular content” (Para. 120).
  • Must not “engage in paid prioritization,” which means “to directly or indirectly favor some traffic over other traffic” (Para. 125). This rule bans “traffic shaping, prioritization, resource reservation” and other such conduct if done in exchange for financial or other consideration or to benefit an entity affiliated with the broadband provider (Para. 125). Providers can seek a waiver of this rule if “the practice would provide some significant public interest benefit and would not harm the open nature of the Internet” (Para. 130). The waiver standard is “a high bar” and the FCC expects to grant waivers “only in exceptional cases” (Para. 132).

The term “reasonable network management” means “a practice that has a primarily technical network management justification” (Para. 215). Broadband providers cannot invoke this exception to cover “other business practices.” In other words, blocking or throttling that is used to favor one content provider over another, or to give more prominence to content sold by the broadband provider, is unreasonable and unlawful under these rules.

Declaratory Ruling: In this portion of the Order, the FCC holds that broadband Internet access service is a telecommunications service which is subject to regulation under Title II of the Communications Act. The “reclassification” mentioned in our previous Client Alert appears here. The FCC reasoned that the service by which a customer obtains a broadband transmission path to the Internet is telecommunications, and that any additive services that a provider may offer, such as email and storage, are legally separate from the telecommunications path (Para. 356).

The FCC also made clear in this portion of the Order that the “broadband Internet access service” to which the new rules apply includes “wire, terrestrial wireless service, and satellite service” (Para. 337), but does not include virtual private networks, content delivery service, hosting or data storage service, or Internet backbone service (Para. 340). Any non-dial up, retail market offering by which a customer can transmit and receive data “from all or substantially all Internet endpoints” is covered by the rules (Para. 336).

Order: In this portion of the Order, the FCC uses its authority under Section 10 of the Act to refrain, or “forebear,” from imposing 27 provisions of Title II on broadband Internet access service. Forbearance is a tool that Congress granted the FCC in the Telecommunications Act of 1996 in order to eliminate regulatory requirements that are no longer needed to protect consumers or prevent unjust and discriminatory conduct (Para. 435). The FCC preserved the core provisions of Title II with regard to broadband Internet access, including:

  • Sections 201 and 202 which require just, reasonable, and nondiscriminatory provision of telecommunications service (Paras. 441-52).
  • Section 208 which authorizes the FCC to enforce its rules (Paras. 453-55).
  • Section 222 which protects the privacy of data about customers’ telecommunications usage (Paras. 462-67).
  • Sections 225, 251(a), and 255 which require providers to give persons with disabilities “meaningful access” to telecommunications services (Paras. 468-77).

Chairman Tom Wheeler and each Commissioner provided separate statements on the Open Internet Order. But whereas the statements of the Chairman, Commissioner Mignon Clyburn, and Commissioner Jessica Rosenworcel take up seven pages, Commissioners Ajit Pai and Michael O’Rielly issued dissenting statements that together cover 80 pages and question not only whether the rules are warranted, but also whether they will in fact benefit consumers.

It is expected that the major broadband service providers will seek review of theOpen Internet Order in a federal Court of Appeals. Unless the Order is stayed by a reviewing court, it will become effective 60 calendar days after it is published in the Federal Register, a process that generally takes three to four weeks.