We previously reported on the release of the FCC’s net neutrality rules. As promised, we have combed through the 194-page document and now provide a more in-depth look at the content and implications of the Commission’s new net neutrality rules.

The Rationale Behind the Rules

The net neutrality debate is primarily about means, not ends. Both sides agree that the Internet should be open, which means, roughly, “the way it is now.” Today, consumers are free to surf websites, download and upload content, and use any online service they choose. Internet access providers do not generally block or prioritize online service and content providers. Consumers, not ISPs, determine marketplace winners and losers. The Internet is thus increasingly attractive to both consumers and service and content providers, creating a self-nurturing “virtuous circle” of innovation and demand. Shopping, entertainment, and civic participation for all.

Opponents of net neutrality think that the best way to preserve this model of success is to leave it alone. There is no need for government regulation, with its attendant cost, unintended consequences, and possible dampening effect on network investment, because there is no evidence of any systematic failure of the existing marketplace to deter “abuse.” Only a handful of instances of alleged abuse have come to light, and they have been swiftly resolved. In the opponents’ view, absent further evidence, the Commission should not attempt to micromanage a thriving, dynamic economic arena.

Net neutrality proponents, on the other hand, see a convergence of factors that makes future discrimination practically certain. Their thinking, as set out in the Commission’s net neutrality order, boils down to this: broadband providers have an ability and incentive they didn’t have before to block or impede selected traffic on their networks. Deep packet inspection (DPI) technology has advanced and is increasingly used for network management. Simultaneously, Internet telephone and cable services – VoIP and Internet video – are growing fast, delivered side-by-side with cable and phone companies’ own offerings and on their own network. As a result, broadband providers are in a position to, and have every incentive to, favor their own, affiliated, or pay-for-priority content, to the detriment of consumer choice and continued innovation. The few samples of discriminatory behavior already documented reinforce this prediction. Finally, the free market won’t help, because in many places there is little choice of broadband Internet providers.

Given these circumstances, the Commission concludes, it need not wait for substantial, pervasive, and difficult-to-reverse problems to arise before it acts.

What is Subject to the Net Neutrality Rules

The net neutrality rules apply to “broadband Internet access service,” which the order defines as a “mass market retail service” that provides the capability to access “substantially all Internet endpoints.” Broadband Internet access service does not include dial-up, but it does include any service that the Commission finds to be a “functional equivalent” of Internet access service, or that is “used to evade” the net neutrality rules.

The regime will not apply to enterprise service offerings, which typically are individually negotiated. It also will not apply to non-mass market services, such as virtual private networks, content delivery networks, multichannel video programming, hosting or data services, or Internet backbone services. Nor will it likely apply to services offering very limited connectivity, such as those enabling a device like an e-reader or heart monitor to function fully. But the rules would apply to any service with only partial access that is clearly designed to be a substitute for full Internet access, such as a “Best of the Web” or Internet access with certain websites blocked.

The Commission has adopted a “wait-and-see” approach to so-called “specialized services” (i.e., broadband services delivered to the end user other than Internet access). In the meantime, it “expects” that broadband providers will both (a) disclose information regarding specialized services and (b) expand broadband Internet access service to keep pace with any additional capacity for specialized services.

What the Rules Require

Transparency. Both fixed AND mobile broadband Internet providers must publicly disclose information regarding their network management practices, performance characteristics and commercial terms. The extent of disclosure must be “sufficient for consumers to make informed choices regarding use of such services and for content, application, service, and device providers to develop, market, and maintain Internet offerings.” At a minimum, providers must supply this information on their websites and at the point of sale. Providers are expected to tailor their transparency disclosures according to the above standard; however, the Commission provides a bit of guidance:

  • Network management practices include congestion management, application-specific measures, device attachment rules, and security practices.
  • Performance characteristics include the service technology, access speed and latency, suitability for real-time applications, and any specialized services and their impact on broadband Internet access service.
  • Commercial terms includes pricing, privacy policies (including inspection and the treatment of traffic information), and complaint procedures.

The FCC adds that the list is neither exhaustive nor a safe harbor, but does not tell providers exactly what they must do to comply.

Blocking. Fixed broadband Internet providers may not block any lawful content, applications, or services – in other words, any lawfultraffic to or from end users – subject to “reasonable network management” (more below). Nor may providers block any non-harmful device from connecting to the network, though they may require that devices conform to widely accepted and publicly-available standards. Providers also may not impair or degrade traffic to the extent that it makes an Internet service effectively unusable (again, subject to reasonable network management). Furthermore, providers may not offer content, application, or service providers the choice of paying a fee or being blocked.

The order defines “reasonable network management” as follows:

A network management practice is reasonable if it is appropriate and tailored to achieving a legitimate network management purpose, taking into account the particular network architecture and technology of the broadband Internet access service.

Legitimate purposes would include, for example, ensuring network security and integrity and reducing or mitigating the effects of congestion on the network. Further development of the “reasonable network management” standard will be on a case-by-case basis. A practice is more likely to be considered reasonable if it is transparent, controlled by the end-user, and is use- (or application-) agnostic. A provider in doubt as to a particular practice may seek a declaratory ruling.

Mobile broadband providers are subject, for now, to a “lite” no-blocking rule: they may not block any websites and they may not block applications that compete with the provider’s voice or video telephony services. (In contrast, fixed broadband providers may not block any applications).“Blocking” includes degrading to the point of unusability. This rule is subject to reasonable network management, which does take into account the nature of the network. It does not apply to management of applications stores.

Discrimination. Fixed broadband providers may not unreasonably discriminate among lawful network traffic. In the FCC’s view, transparency would tend to make differential treatment more reasonable, as would end-user control. Differential end-user pricing for heavy use is permitted, and differential treatment of traffic that does not discriminate among specific uses would likely be considered reasonable. An arrangement between a broadband provider and another party to “pay for priority,” on the other hand, would likely be seen as unreasonable discrimination. The Commission will be paying particular attention to practices that:

  • harm an actual or potential competitor (such as an ISP/telephone provider degrading VoIP);
  • harm end users (by inhibiting them from accessing the content, applications, services, or devices of their choice); and
  • impair free expression (such as slowing traffic from a particular blog because the broadband provider disagrees with the blogger’s message).

For the time being, the discrimination rule will not apply to mobile networks, although the Commission intends to “closely monitor” the mobile broadband market and adjust the rules as it sees fit.

Jurisdiction

Section 706. In an earlier post, we noted that the Commission’s then-rumored Section 706 argument raised some eyebrows here at CommLawBlog. (Section 706 directs the Commission to encourage the deployment of advanced telecommunication capability to all Americans.) After a close reading of the order, we still have qualms about the rules’ ultimate durability if – when – they end up in court.

In the Comcast decision last April, readers may remember, the D.C. Circuit tossed out Section 706 as a source of net neutrality jurisdiction. The FCC, said the court, was bound by its own 1998 holding that Section 706 conferred no independent authority. Now the FCC makes the argument that its 1998 holding was limited to forbearance authority, leaving it free to pursue other actions under Section 706. That’s not a bad argument –except that the Commission already tried it in the Comcast case, where the court thoroughly rejected it.

In the midst of regurgitating its Comcast brief, however, the Commission may have actually done what the D.C. Circuit said it needed to do – that is, expressly overrule its 1998 determination that Section 706 did not confer independent authority. Having arguably done so now, the Commission will have at least one new argument when it defends the new rules in court.

Titles II, III, and VI. The Commission also finds authority over broadband providers in its existing authority over services functionally similar to those now delivered over IP networks. So, since interconnected VoIP is a substitute for traditional voice, Internet access that delivers VoIP can be regulated as “contribut[ing] to the market discipline” of a Title II regulated service. Furthermore, the order explains, if calls to and from VoIP customers are not delivered efficiently and reliably by broadband providers, all users of the public switched telephone network would be limited in their ability to communicate. Finally, blocking VoIP could interfere with the interconnection requirement among telecommunications carriers.

Similarly, because the Internet is an increasingly important medium for radio and television programming, the Commission reasons that it can regulate the provision of Internet access under its Title III broadcasting authority. It likewise claims authority under Title VI to protect competition in the provision of multichannel video programming distributor (MVPD) services, such as cable and satellite television, by preventing cable operators and telephone companies from hindering delivery of competitive video service.

Wireless.The Commission’s authority over wireless services is quite broad. Wireless licenses are granted when the “public interest, convenience, and necessity” warrants, and may be modified after grant. From there, with little further explanation, the FCC asserts its right to impose net neutrality on wireless broadband providers.

First Amendment. Lastly, the Commission asserts that broadband providers are without First Amendment rights because they are mere conduits of speech, not speakers. There is no evidence, it claims, that providers use editorial discretion (such as cable providers have in the choice and arrangement of programming). Bolstering this conclusion are the arguments advanced by broadband providers themselves to deflect liability for transmitting unlawful materials.

Complaint Procedures

The order adapts the Commission’s Part 76 cable access complaint rules to net neutrality complaints. Basically, anyone may file a complaint with prior notice to the defendant. Upon a prima facie showing that an open Internet rule has been violated, the burden to show reasonableness will shift to the defendant.   In addition, the public can file informal complaints using the FCC website (which we are pretty sure the broadband Internet providers will not try to block). If used, these complaint procedures will bulk up the record of recorded instances of “abuse”, retroactively bolstering the Commission’s analysis that a problem exists.

Committee

A new regime requires a new committee; in this case, the Commission has created an “Open Internet Advisory Committee.”

Oh, and the FCC will review all of this within two years, and adjust the rules as appropriate. Assuming the D.C. Circuit lets them live that long.