FCC Adopts Net Neutrality Rules (Genachowski-style)

New rules, solidly endorsed only by the Chairman, seem to displease everybody else; Nagging problem of statutory authority (or lack thereof) persists

The FCC, nominally a five-member organization, proved to be more of a one-man band in the adoption of net neutrality rules. While the official record reflects a 3-2 vote in favor of the rules imposing “open Internet” limitson broadband Internet access service providers, closer inspection reveals that only one member actually favored the rules which have been adopted. The vote tally was: one in favor; two strongly opposed; and two unhappy-with-the-rules-but-willing- to-sort-of-go-along-with-Chairman-Genachowski. 

And with that ringing endorsement, net neutrality has become the law of the land . . . at least for the time being.

The full text of the rules (along with the accompanying order explaining them) has not yet been released. (Check back here for more in-depth analysis once the actual rules and order are available for review.) But from the FCC’s public notice announcing its decision, and from the separate statements of the Commissioners, we can report that, as anticipated, the key provisions of the rules are:

  • Mandatory transparency regarding transmission performance, traffic management practices and commercial terms of service (applicable to both wireline and wireless providers);
  • Prohibition against blocking of content, applications, services, or non-harmful devices (again, for both wireline and wireless); and
  • Prohibition against “unreasonable discrimination” among lawful network traffic (wireline only).

Notwithstanding these strictures, providers will still be permitted to undertake “reasonable network management”, but that won’t necessarily afford them much latitude. For example, paid prioritization is unlikely to be considered “reasonable” under any circumstances. Providers will be allowed to try to demonstrate that such prioritization is, at least in some cases, in the public interest, but they shouldn’t hold their breath: the staff has already indicated that such efforts are not likely to be successful.

Nor will ISPs be able to avoid the new “open Internet” rules by offering “specialized services”. The Commission is defining “broadband Internet access service” – i.e., the type of service subject to the net neutrality limits – as any service that is the “functional equivalent” of Internet, or that is designed to evade Open Internet protections. And the FCC is already warning that it plans to monitor “specialized services” offerings in order to assure compliance with applicable rules.

The new rules are somewhat softer on wireless providers than on their wireline compatriots. In particular, when it comes to blocking, wireline providers may not block any lawful content, applications, services or non-harmful devices; wireless providers, on the other hand, are only prohibited from blocking lawful websites and apps that compete with wireless voice/video services.  So, wireless carriers may block some kinds of lawful content and applications. 

This disparity in treatment between wireline and wireless may not be long-lived, though: the Commission has reserved the right to take another bite at the wireless apple in a couple of years.  

Nobody (with the obvious exception of The Chairman) is happy with the order.  Proponents of net neutrality think the new rules are weak and subject to circumvention; opponents think they are unnecessary and overreaching. Commissioners’ reactions vary from fretful disappointment and half-hearted (at best) support (Copps and Clyburn) to clear loathing (McDowell and Baker).  

Reaction on Capitol Hill has been predictable, with a number of Republicans expressing concern bordering on outrage at the FCC’s perceived effrontery. Look for legislative efforts to block or unravel the new rules early in the upcoming Term. Senator Hutchison has already announced that she plans to propose amendments to an omnibus appropriations bill as a way to prevent the FCC from implementing the rules. And on the House side, hearings may be scheduled to grill Genachowski about the rules. We are also hearing about possible efforts to invoke the Congressional Review Act to effectively overrule the FCC – although that approach, rarely used, would ordinarily require the President’s signature as well, and it’s pretty much a given that the President would not do anything to derail Genachowski’s efforts.

While reasonable people could – and do – disagree over whether there exists a need for regulatory intervention to prevent ISPs from acting as Internet gatekeepers, there is near-universal skepticism about the jurisdictional basis for the rules. Recall that, just last April, the U.S. Court of Appeals for the D.C. Circuit (in the Comcast decision) rejected the FCC’s claims that the Communications Act gives it the authority to regulate the Internet. The FCC’s claims were based in large measure on its reading of Section 706 of the Act. The Court emphatically tossed those claims.

So what is the basis for the new net neutrality rules? Why, Section 706, together with various strands of statutory thread clipped from Titles II, III and VI of the Act. (Since the FCC’s order has not been released, we don’t know for sure precisely how the Commission is using 706 this time around – but Commissioner Baker’s statement, for one, makes abundantly clear that 706 is being advanced as a major basis for the new rules.)  Commissioners Copps and Clyburn would rather have asserted jurisdiction over broadband Internet access service by reclassifying it as a Title II telecommunications service. That approach would raise a host of conceptual and practical problems, and the Chairman was apparently not prepared to head down that road. And he apparently had lost enthusiasm for the “Third Way” approach he tentatively embraced in the wake of the Comcast decision. So he and his staff have apparently re-woven familiar statutory strands, hoping (presumably) to create a sturdier fabric.

Whether this fragile weave of statutory floss holds together remains to be seen. The fact that the Commission has already taken its Section 706 arguments to the judicial well once and come up dry does not bode well on that front. To be sure, Chairman Genachowski and his staff may have been able to tease more nuances from Section 706 than they had previously. But in view of the Comcast Court’s seemingly flat-out rejection, it would appear that something more than nuances may be necessary. We await the inevitable court challenge.

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