FCC Votes to Issue Network Neutrality Rules

December 21, 2010

Today the Federal Communications Commission voted to approve rules aimed at “preserving the open Internet.” While the final order has not yet been released, the FCC voted to release rules that will apply to wireline and wireless broadband Internet access services in different ways.

Wireline Broadband Rules

As expected, the FCC voted to transition the existing four Internet policy principles into enforceable rules, and to add several additional rules aimed to prevent blocking, discrimination as well as to promote transparency. The FCC also clarified that the open Internet rules are subject to “reasonable network management.” 

The four policy principles in the FCC’s Notice of Proposed Rulemaking read as follows:

  • Subject to reasonable network management, a provider of broadband Internet access service may not prevent any of its users from sending or receiving the lawful content of the user’s choice over the Internet.
  • Subject to reasonable network management, a provider of broadband Internet access service may not prevent any of its users from running the lawful applications or using the lawful services of the user’s choice.
  • Subject to reasonable network management, a provider of broadband Internet access service may not prevent any of its users from connecting to and using on its network the user’s choice of lawful devices that do not harm the network.
  • Subject to reasonable network management, a provider of broadband Internet access service may not deprive any of its users of the user’s entitlement to competition among network providers, application providers, service providers, and content providers.

The rules announced today add a non-discrimination component that will require broadband service providers to treat lawful content in a “nondiscriminatory” manner. The rules will prohibit “unreasonable” discrimination when transmitting lawful network traffic. Likewise, service providers will be prohibited from blocking legal content, applications, services, and non-harmful devices (subject to reasonable network management as discussed further below). The rules will also bar broadband providers from charging content service providers to enable access to that content.

Broadband service providers will also be required to disclose their network management, performance characteristics, and commercial terms of their offerings. This rule is intended to provide users and content, application, and service providers the enjoyment of the open Internet rules.

The rules are subject to “reasonable network management,” which the FCC noted were management practices with a legitimate purpose. The rules will not prohibit broadband Internet access service providers from taking reasonable action to prevent the transfer of unlawful content, such as the unlawful distribution of copyrighted works, or to take action necessary to deliver emergency communications or to address the needs of law enforcement, public safety, or national or homeland security authorities, consistent with applicable law.

The FCC will not seek to regulate “specialized services” at this time, but rather will monitor market developments. Further details concerning what constitutes “specialized services” may be forthcoming in the to-be-published order. The rules apparently do not specifically ban the practice of paid prioritization, but the forthcoming order is expected to state that the practice is not likely to be considered “reasonable” by the FCC. The FCC will consider that practice, and others, on a case-by-case basis, with the burden on the service provider to prove that the practice is “reasonable.” Likewise, the rules do not appear to prohibit tiered pricing for consumer broadband access, but the FCC intends to monitor the practice. The order also does not appear to deal with ongoing IP backbone peering disputes. Further, the FCC has modified the proposed definition of “broadband Internet access service” to clarify that it includes anchor institutions such as schools, libraries and businesses.  Finally, the order will provide for enforcement mechanisms including the use of informal and formal complaints as well as the authority for the FCC to initiate investigations absent a specific consumer complaint.

Wireless Broadband Rules

While not treated identically to wireline services, wireless broadband services will be subject to several open Internet rules.  These will require wireless service providers to disclose network management practices, including device and application certification procedures and the criteria for placing restrictions on services or applications.  They will prohibit the blocking of websites as well as access to applications that compete with the broadband provider’s voice or video services.  The non-discrimination rule (which prohibits carriers from discriminating among types of traffic on their network) will not be applied to wireless services at this time, but the order is expected to include a provision requiring the FCC to review the status of wireless broadband services in two years, which would potentially give it a chance to modify the rules it imposes on wireless service providers.

While the order will provide additional background on the FCC’s authority to establish these new rules, the Commissioners stressed today that the order does not classify broadband services under Title II of the Communications Act.  Instead, the order will ground the FCC’s authority to impose rules based on Section 706 of the Telecommunications Act of 1996, which directs the FCC to promote broadband deployment and telecommunications competition.  Other sources of authority for the FCC’s jurisdiction announced today include the FCC’s authority to safeguard interconnection between telephone and VoIP users, promote competition to traditional voice services, oversee broadcasting, advance video competition, and condition the use of spectrum.

The FCC’s Authority and Other Issues

Chairman Genachowski was the only Commissioner to vote to approve the rules in full.  Commissioner Copps voted to “concur” with the order, and Commissioner Clyburn voted to concur in part and approve in part. Both argued that the rules do not go far enough to preserve the open Internet and protect consumers, with Copps specifically noting that he pushed to have broadband services regulated under Title II of the Communications Act and to include a ban on paid priority. As expected, Commissioners McDowell and Baker both voted against the rules, stating that the rules will harm the market and competition, are not supported by law, and will not ultimately benefit consumers.

A number of members of Congress have announced their opposition to the new rules. Most recently, Senator Kay Bailey Hutchinson introduced an amendment to the Department of Defense and Department of Veterans Affairs appropriations bill that would prohibit the FCC from adopting or implementing any open Internet rules or standards. Among other things, it would prevent the FCC from imposing any rules or standards regulating the behavior of broadband Internet access service providers with respect to discrimination of broadband traffic, network management practices, or specialized services. A number of Democratic Senators, on the other hand, have supported the FCC’s adoption of the rules.

If you have any questions, or would like to discuss the potential impact of these new rules on your company, please do not hesitate to contact the following TMT attorneys:

Andrew D. Lipman, Partner, 202.373.6033

William B. Wilhelm, Partner, 202.373.6027

Ronald W. Del Sesto, Jr., Of Counsel, 202.373.6023

This article was originally published by Bingham McCutchen LLP.