Late yesterday, the Federal Communications Commission released a public notice requesting further comment on two issues involved in its Open Internet proceeding, in which the FCC is considering network neutrality rules that would apply to broadband Internet access providers. Noting a growing consensus (described as “narrowed disagreement”) on many of its proposals, the FCC asked for input on two more controversial issues: specialized services provided to customers over the same last-mile facilities as broadband Internet access and the extent to which the proposed rules should apply to mobile wireless platforms. Comments and reply comments on the public notice will be due 30 and 55 days, respectively, after the notice is published in the Federal Register. In practical terms, this means that the FCC cannot act on the Open Internet proceeding until at least December. The public notice is available on the FCC’s web site at http://www.fcc.gov/Daily_Releases/Daily_Business/2010/db0901/DA-10-1667A1.pdf and Chairman Genachowski’s statement on the public notice is at http://www.fcc.gov/Daily_Releases/Daily_Business/2010/db0901/DOC-301262A1.pdf.

OVERVIEW

The public notice suggests that the process since the FCC began the Open Internet rulemaking has “narrowed disagreement on many of the key elements” of the proposed rules. In fact, the notice reflects that two central questions in that proceeding have remained intractable – the regulation of managed or specialized services and whether to apply the new requirements to wireless services. The notice also does not acknowledge that the extent of the FCC’s authority adopt any rules remains unsettled, and is now the focus of a separate proceeding, the so-called “Third Way” inquiry.1  

Nevertheless, this notice reflects and acknowledges that industry discussions on potentially acceptable network neutrality requirements have made progress over the past several months. Even if the notice overstates the extent of that progress, the specific focus on two issues suggests that the FCC believes that these are the most significant substantive roadblocks to eventual action to adopt network neutrality rules.  

SPECIALIZED SERVICES

The first focus of the public notice is on specialized services, which include the class of services the FCC referred to as “managed services” in the original rulemaking. There has been renewed interest in this issue since the Google-Verizon proposal suggested excluding those services entirely from the regulatory regime.  

The FCC identified three chief concerns about the effect that specialized services offered by a broadband Internet service provider (“ISP”) could have on the ISP’s Internet access service: (a) that ISPs could bypass the FCC’s rules by offering specialized services substantially similar to Internet access; (b) that ISPs would expand capacity for specialized services more rapidly than capacity for Internet access; and (c) that vertically-integrated ISPs could engage in anticompetitive conduct using their affiliated applications or content. The FCC requested comment on these areas of concern, as well as six policy approaches that could address these concerns:  

  • Broadly defining broadband Internet access to encompass substantially similar services.  
  • Prohibiting ISPs from marketing specialized services as broadband Internet service.  
  • Requiring disclosure of information regarding specialized services.  
  • Requiring vertically-integrated ISPs to offer specialty services on the same terms to non-affiliated parties.  
  • Limiting the scope of new specialty services  
  • Requiring ISPs to provide or expand network capacity devoted to broadband Internet access.  

One of the significant issues raised by the FCC’s questions about specialized services is the extent to which extending some or all of a network neutrality regime to specialized services would affect services already offered by those providers. Given the extent to which broadband facilities already are used to support multiple services, how the FCC draws the line that separates services that are covered by open Internet rules from those that are not likely will be very important to most providers.  

WIRELESS INTERNET

The notice acknowledged several significant changes in wireless since the release of the Notice of Proposed Rulemaking. In particular, some mobile broadband providers have begun charging consumers based on the amount of data they consume rather than allowing “all-you-can-eat” Internet access for one price, and the Verizon-Google legislative proposal would exclude wireless from all network neutrality obligations other than transparency.  

Noting these developments, the FCC asked three questions:  

  • What disclosure requirements would be appropriate for mobile broadband services?  
  • Whether standards-setting practices, device certification requirements, or next generation network technologies would alleviate the burden of a requirement that non-harmful third-party devices be allowed to connect to mobile broadband networks.  
  • Whether imposing regulations on the certification, distribution, and management of mobile applications would help maximize consumer choice and application innovation.  

Unlike the questions concerning specialized services, these questions do not focus on how to manage open Internet rules as much as they focus on peripheral issues. This approach may signal the FCC’s reluctance to address mobile network neutrality directly.  

TIMING

The schedule announced in the public notice means that the FCC will not finish receiving comments until the end of October or early November. As a consequence, it is unlikely that the FCC can act on the open Internet proposals until at least its December meeting.

While the delay in this proceeding does not require the FCC to delay action in its “Third Way” proceeding, it does remove some of the timing pressure in that proceeding. Since the FCC has to resolve the jurisdictional questions raised in the Third Way proceeding by the time it acts on open Internet issues, a schedule that pushes off a decision on open Internet rules creates more breathing room. At the same time, however, there is nothing that would prevent the FCC from deciding the Third Way proceeding before it decides whether to adopt open Internet rules.  

IMPLICATIONS

It may be most useful to view this public notice as recognition that much of the discussion about open Internet issues over the past several months has focused on industry parties, and not on concerns raised by public interest groups. It likely is no coincidence that the two general topics covered by the public notice reflect the most significant complaints that public interest groups have had about the Google-Verizon proposal.

The public notice also suggests that the FCC itself is concerned about the basic question of whether the rules it adopts will be bypassed or superseded by the actions of ISPs and wireless providers. This is a significant concern for parties that support a network neutrality regime, and is particularly important in the context of wireless servies.

The issue of how to define the scope of the rules, however, is important to all service providers, not just to wireless providers. As noted above, many services typically share the facilities used to provide Internet access, and often compete with services offered by third parties via the Internet. Consequently, the extent of the coverage of any open Internet rules the FCC adopts likely will be significant to both ISPs and to providers of Internet-based services.