FCC Extends Small Business Net Neutrality Reporting Exemption

The Telecommunications Law Resource Center is the most comprehensive reference and news platform for communications law, covering broadcasting, cable, broadband, telephony and wireless;...

By Lydia Beyoud

Dec. 16 — Small broadband Internet service providers will get another year's reprieve from the Federal Communications Commission's enhanced net neutrality transparency provisions, but industry groups, lawmakers and practitioners are criticizing the agency for not making the exemption permanent.

A report and order issued late Dec. 15 by the agency's Consumer and Governmental Affairs Bureau extended a temporary exemption from the new reporting rules included in the 2015 Open Internet order for broadband Internet access service (BIAS) providers with 100,000 or fewer connections. The enhanced requirements include disclosure of commercial terms for prices, fees and data caps, as well as network management practices and other information.

The bureau said the extension was necessary to allow time for the Office of Management and Budget to complete the Paperwork Reduction Act (PRA) approval process for the information collection and disclosure requirements under the enhanced transparency rules.

“At the heart of this issue is the right of broadband customers, including the nearly 7 million customers of these exempt providers, to have access to essential information about their service— while at the same time ensuring the Bureau is able to conduct a thorough fact-based review,” FCC Chairman Tom Wheeler said in a Dec. 15 statement.

An agency official told Bloomberg BNA on background that the order had undergone major substantive changes since it was circulated to the commissioners on Dec. 11.

The bureau said it expects the FCC to release a public notice “in the near future” interpreting the transparency requirements to provide “greater certainty as to the enhanced disclosure obligations and alleviate commenter concerns regarding potential liability for inadvertent noncompliance.”

The order also indicated the full commission would vote on whether to modify or retain the exemption by Dec. 15, 2016, rather than making a decision at the bureau level.

Compliance Costs

While the extension provides some temporary relief, the FCC has no basis on which to do anything other than to make the exemption permanent, a wireline attorney who represents small broadband providers told Bloomberg BNA on background.

Republican FCC Commissioner Michael O'Rielly also criticized the order for not making the exemption permanent. “We all know that smaller providers never had the imaginary market power envisioned by the Commission, and they shouldn’t have to comply now or in the future with burdensome requirements that divert limited resources from broadband deployment and provide no real value to consumers,” he said in a statement.

Some net neutrality transparency rules have been in place since the commission's 2010 order, and were the only part of those rules not remanded by the U.S. Court of Appeals for the District of Columbia Circuit in 2014. Small ISPs viewed those rules as manageable, the wireline attorney said.

The enhanced requirements, however, represent “another order of magnitude of potential burden,” the attorney said.

Small, rural broadband providers say they're already feeling the impact of the Open Internet rules. Insurance companies are raising rates for BIAS providers to cover new potential liabilities under the Open Internet order in case customers file a net neutrality complaint, Alex Phillips, president of the Wireless ISP Association (WISPA) and owner of Harrisonburg, Va.-based broadband provider Highspeedlink.net LLC, told Bloomberg BNA.

Those are costs that companies like High Speed Link hadn't expected, Phillips said.

Additionally, increasing demand for data-hungry video streaming services has become a key driver for BIAS providers to accurately disclose their network speeds and practices to avoid consumer complaints, he said. However, the FCC’s enhanced disclosure rules could put small providers at further risk of liability, resulting in more expenditures on attorney consultation fees and compliance costs, Phillips said.

The enhanced transparency arguments are intended for large BIAS providers like Verizon Communications Inc. and Comcast Corp., not for smaller companies, the wireline attorney said. No party commenting in the docket defended the need for enhanced transparency for small providers, the attorney said.

The attorney questioned whether the information required under the new transparency provisions was truly of value to consumers. Neither the FCC nor the bureau have evidence that there would be a tangible benefit to consumers by requiring the information of small ISPs, the attorney said.

Republican Criticism

The Republican leaders of the House Energy and Commerce and Small Business Committees expressed their disappointment with the order in a Dec. 16 statement.

“Permanent protection should have been an easy call, but the FCC fumbled it,” House Energy and Commerce chairman Fred Upton (R-Mich.) said. Upton and Communications and Technology Subcommittee Chairman Greg Walden (R-Ore.) and Small Business Committee Chairman Steve Chabot (R-Ohio) called for the agency to make the exemption permanent.

Though concern over the small business exemption is but a minor part of congressional Republicans' broader concerns with the FCC's Open Internet order, the joint statement and a November letter to the FCC in which 35 House members called for a permanent extension indicate that Congress has its eye on the issue.

Upton's committee will likely take the issue up again in 2016, a committee staffer told Bloomberg BNA.

To contact the reporter on this story: Lydia Beyoud in Washington at lbeyoud@bna.com

To contact the editor responsible for this story: Keith Perine in Washington at kperine@bna.com

Text of the report and order is at http://transition.fcc.gov/Daily_Releases/Daily_Business/2015/db1215/DA-15-1425A1.pdf.

Text of O'Rielly's statement is at http://transition.fcc.gov/Daily_Releases/Daily_Business/2015/db1215/DOC-336869A1.pdf.

Text of Wheeler's statement is at http://transition.fcc.gov/Daily_Releases/Daily_Business/2015/db1215/DOC-336878A1.pdf.