Proponents of net neutrality, including U.S. President Barack Obama, scored a victory last week when the Federal Communications Commission (FCC) voted to adopt new rules expected to reclassify broadband Internet access as a telecommunication service. This will enable the FCC to regulate Internet service under Title II of the Communications Act.
Although the full text of the order has not yet been released, FCC Chairman Tom Wheeler previously released a fact sheet that outlines the key details, which we have summarized in our LawFlash on the topic.
Although net neutrality enjoys extensive support, critics of the rules, including the Republican commissioners who voted against the rules, warn of a shift toward government control of the Web that will impose “intrusive government regulations that won’t work to solve a problem that doesn’t exist using legal authority the FCC doesn’t have.”
From a contracting perspective, the rules create additional issues and risks. For example, Internet service providers (ISPs) should consider imposing warranty and indemnification obligations on IT outsourcing vendors that specifically relate to FCC regulatory compliance. Likewise, ISPs should add FCC regulatory compliance to their vendor diligence checklists.
The net neutrality saga is far from over as litigation from ISPs is expected. Meanwhile, ISPs, online content providers, IT outsourcing vendors, and other related market participants will be wading through this regulatory uncertainty.