Landmark Open Internet Order Released by FCC

On February 26, 2015, the FCC voted to approve new Open Internet (or Net Neutrality) rules (on a 3-2 party line vote). The FCC released the full Order explaining the details of the new rules on March 12, 2015. Most of the new rules took effect on June 12, 2015, but the FCC's new, expanded obligations on ISPs to disclose their terms service, network management practices, etc., have not yet taken effect, pending approval by the Office of Management and Budget.

In addition to explaining the majority's actions and reasoning, the Order contains lengthy and vigorous dissents from Commissioners Pai and O'Rielly.

We summarized the FCC's key actions in an advisory based on an early release by Chairman Wheeler and a subsequent advisory following the Commission's vote. The Order confirms that the FCC's main regulatory actions are as follows:

• It changes the regulatory classification of broadband Internet access service both fixed and mobile, from an "information service" to a Title II "telecommunications service."
• It "forbears" from applying the vast majority of traditional Title II requirements, although the true scope and ultimate effectiveness of this forbearance is in dispute. Taking the agency at face value, however, it forbears from (among other things): ex ante rate regulation; tariff filing and related requirements; network unbundling requirements; and any obligation on providers to contribute to the universal service fund—although the agency has signaled that such contributions may be required in the future. However, the agency holds that the "core" Title II provisions—Section 201 (generally requiring terms of service to be just and reasonable) and Section 202 (generally banning unreasonable discrimination)—do apply to broadband.
• It imposes three "bright line" rules—no blocking, no throttling, and no paid prioritization—and a general rule barring unreasonable interference with/disadvantaging of (a) end users' ability to access lawful content or to use non-harmful devices in connection with the service, and (b) edge providers' ability to disseminate content.
• It defines broadband Internet access service to include interconnection arrangements between a broadband provider and other networks and asserts authority to review disputes regarding such arrangements on a case-by-case basis.
• Except for the ban on paid prioritization, the rules permit a provider to engage in "reasonable network management," defined to include technical aspects of running a network, but to exclude actions taken for "business" purposes. The rule against paid prioritization indicates that waivers might be available, but the discussion in the Order itself indicates that the bar for obtaining such a waiver is quite high.
• The FCC imposes more detailed and onerous disclosure ("transparency") requirements on broadband providers, but temporarily exempts providers with fewer than 100,000 subscribers from those more detailed requirements; as noted above, these new requirements have not yet taken effect.
• It concludes that data services that do not provide end users with access to the Internet (such as interconnected VoIP and certain IP video services) are not subject to its new rules. Instead, these services (referred to as "specialized services" in the former rules) will be subject to monitoring and additional disclosures to ensure that they do not degrade broadband quality.
• It modifies its enforcement/complaint procedures to permit the Enforcement Bureau to seek written input from outside technical bodies to assist in resolving claims that the rules have been violated, and also permits the Enforcement Bureau to issue advisory opinions about possible future conduct.

There are a number of significant impacts from the FCC's ruling. That said, with one major exception—the extension of active FCC regulatory oversight of interconnection between broadband providers and other networks—the new rules directly governing the provision of broadband may fairly be viewed as an update (albeit, in the case of transparency/disclosure, a substantial one) of its earlier rules from 2010, with a specific process by which the Commission could render ad hoc judgments on broadband rates, terms and conditions.

Numerous parties have challenged the FCC's new rules in federal appeals court; as of late July, parties opposing the FCC's action have filed their opening brief, challenging the FCC's decision to classify wired and wireless broadband Internet access as a Title II "telecommunciations service," along with a number of related claims.