FCC Launches Bid to Restore Open Internet Rules Amid Broad Opposition

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By Bryce Baschuk  

May 15 — The steady drumbeat of opposition to the Federal Communications Commission's latest net neutrality proposal reached a fever pitch as the agency disclosed its plan to consider prioritized connections between some web sites and broadband providers.

Commissioners voted 3-2 along party lines to approve a notice of proposed rulemaking (NPRM) at the agency's May 15 meeting to seek comment on ways the agency can replace and potentially strengthen the vacated portions of the FCC's 2010 Open Internet Order.

Also at the meeting, the FCC voted to approve rules to govern the world's first spectrum incentive auctions, set new spectrum aggregation limits, and expand wireless microphone license eligibility rules (see related stories in this section).

The nation's top Internet service providers—Comcast Corp., Time Warner Cable Inc., Verizon Communications Inc. and AT&T Inc.—stand to benefit if the agency's final rules permit them to enter into paid-prioritization deals with content companies like Netflix Inc., Google Inc. and Amazon.com Inc. On the flip side, the ISPs stand to lose the most if the agency ultimately decides to regulate their networks like public utilities or explicitly ban paid-prioritization deals, something the NPRM also considers.

The vote sets in motion a four-month comment and reply period with the ultimate goal of implementing final rules before 2015.

No Current Rules

The FCC's third attempt to enact open Internet regulations stems from a January decision by the U.S. Court of Appeals for the District of Columbia Circuit, which overturned FCC rules barring broadband ISPs from blocking or discriminating against Internet content transmitted across their networks Verizon Commc'ns Inc. v. FCC, (D.C. Cir., No. 11-1355, 1/14/14). The court struck down the FCC's net neutrality rules because they too closely resembled common carrier regulations under Title II of the Communications Act of 1934.

FCC Chairman Tom Wheeler said the lack of non-discrimination and no-blocking rules has motivated his push to quickly re-implement net neutrality protections.

“Today there are no rules on the books from stopping broadband providers from acting on clear economic incentives to limit Internet openness,” Wheeler said.

“The prospect of a gatekeeper choosing winners and losers on the Internet is unacceptable,” Wheeler added. “I will not allow the national asset of an open Internet to be compromised.”

‘Too Fast to Be Fair.'

The FCC's other two Democratic commissioners reluctantly endorsed the proposal and said they would have done things differently.

Commissioner Mignon Clyburn said she would have preferred to make portions of the draft “more neutral.” She said she would have employed a stronger legal justification, applied the rules equally to wireless and fixed broadband providers, prohibited paid-priority agreements, and limit any exceptions to the rule.

Commissioner Jessica Rosenworcel said the nation “cannot have a two-tiered Internet, with fast lanes that speed the traffic of the privileged and leave the rest of us lagging behind.”

“I support network neutrality,” Rosenworcel said. “But I believe the process that got us to this rulemaking today is flawed. I would have preferred a delay. I think we moved too fast to be fair.”

Republicans Dissent

The FCC's two Republican Commissioners dissented, as was expected.

Commissioner Ajit Pai said the FCC should first seek input from Congress before it seeks to re-implement the agency's net neutrality rules. “A dispute this fundamental is not for us, five unelected individuals, to decide. Instead, it should be resolved by the people's elected representatives,” Pai said.

“The premise for imposing net neutrality rules is fundamentally flawed and rests on a faulty foundation of make-believe statutory authority,” said Commissioner Michael O'Rielly. “Congress never intended Section 706 to be an affirmative grant of authority to the Commission to regulate the Internet,” said O'Rielly a former Capitol Hill aide who previously said he was in the room when the Section 706 provision was first considered.

No Blocking

The NRPM proposes to reinstate and legally reinforce the commission's vacated “no-blocking” rule using its authority under Section 706 of the Telecommunications Act of 1996. The no-blocking rule prohibits fixed and mobile broadband providers from blocking “lawful content, applications, services, or non-harmful devices, subject to reasonable network management.” The D.C. Circuit Court vacated the rule because it said the FCC had not provided a sufficient legal rationale to support it.

The commission seeks comment on whether and how the commission should establish definitions for a minimum level of broadband access under the no-blocking rule. The FCC could establish a baseline threshold for broadband service without running afoul of the court's common carrier prohibition in order to deter carriers from degrading their bandwidth to the point that they prevent consumers from accessing Internet content.

Pay for Priority

The NPRM seeks comment on whether the FCC should permit or explicitly ban paid prioritization deals that could benefit ISPs if they pursue alternate revenue streams from edge content providers.

“Nothing in this proposal authorizes paid prioritization,” Wheeler said. “The potential for there to be some kind of fast lane only available for a few, has many people concerned. Personally, I don't like that the Internet can be divided into haves and have-nots and I will work to see that that does not happen.”

Broadband providers have long sought the freedom to charge Internet content providers, called edge providers, for prioritized treatment as a means to pull value from wealthy Internet businesses. Under the FCC's now-vacated anti-discrimination rule, fixed ISPs previously couldn't “discriminate in transmitting lawful network traffic” or charge content providers for improved access to their customers.

Enforcement Rules

The proposal seeks to adopt a new three-part legal precedent that would consider, on a case-by-case basis, any disputes that the FCC considers harmful to competition and consumers.

Under this new rule the commission would:

  •  bar ISPs from “commercially unreasonable” practices in the way they transmit Internet traffic between edge providers and consumers;
  •  define which practices the FCC would consider to be commercially reasonable or unreasonable; and
  •  establish a process that enables case-by-case adjudication and informal resolution of any such disputes.

    Rule Violation Examples

    “Simply put, when a consumer buys a specified bandwidth it is commercially unreasonable and thus a violation of this proposal to deny them the full connectivity and the full benefits that connection enables,” Wheeler said.

    Wheeler outlined five examples of ISP actions that would run afoul of the agency's proposed rules:

  •  Network operators cannot slow broadband speeds below that which consumers have purchased.
  •  Networks cannot block access to Internet content.
  •  ISPs cannot charge content providers like Netflix Inc. to use the bandwidth for which a consumer has already paid.
  •  Network providers cannot prioritize a consumer's broadband capacity for their own profit purposes.
  •  ISPs cannot prioritize content in a way that deprives the consumer of what the consumer paid for.

    Ombudsman Role, Transparency

    Under the FCC's new proposal anyone could file an informal or a formal complaint with the commission to allege net neutrality violations.

    The agency seeks to create an ombudsman position that would act as a watchdog to monitor the marketplace for problems. The ombudsman would use its enforcement capabilities to assist small businesses and entrepreneurs to help resolve disputes among stakeholders.

    The proposal seeks to expand the agency's transparency rule to disclose any practices that could change a consumer's or content provider's relationship with the network, Wheeler said. The rule, which was upheld by the D.C. Circuit, required fixed and mobile broadband providers to “disclose the network management practices, performance characteristics, and terms and conditions of their broadband services.”

    Title II

    The proposal asks whether the FCC should use its Section 706 authority to re-implement its no-blocking and non-discrimination rules or reclassify broadband Internet service under Title II of the Communications Act of 1934, which gives the FCC the express and expansive authority to regulate common carrier services. Broadband Internet services are currently categorized under Title I of the Communications Act as “information services” that are subject to less stringent regulations.

    “We are seeking input on the prospect of rules under title II and we are specifically asking for comparative input between Title II and Section 706 as to which might be preferable to the other,” Wheeler said. “Where we end up on this depends on what we learn in the coming months.”

    Wheeler's decision to revise his proposal to include stronger language regarding Title II reclassification was aimed at alleviating Clyburn's concerns, sources told Bloomberg BNA.

    The FCC proposal further seeks comment on whether regulatory forbearance rules should be applied to some of the agency's Title II rules as they relate to broadband services, the commission official said.

    ISPs Loudly Oppose

    The Title II provision is far and away the most controversial element of the proposal and one that is likely to reverberate on Capitol Hill in the coming weeks and months.

    The cable industry will oppose any proposals that “attempt to reclassify broadband services under the heavy-handed regulatory yoke of Title II,” said Michael Powell, the president of the National Cable and Telecommunications Association. “Treating broadband as a utility-like Title II service would reverse years of settled precedent, dry up investment in broadband deployment and network upgrades, and result in protracted litigation and marketplace uncertainty.”

    Wheeler, the former chief executive officer of NCTA from 1979 to 1984, knows better than most the powerful influence of the cable and broadband industry.

    White House Watches

    The White House will carefully review the FCC's proposal, said press secretary Jay Carney in a news release. “The President is looking at every way to protect a free and open Internet, and will consider any option that might make sense.

    “Chairman Wheeler has said his goal is to preserve an open Internet, and we are pleased to see that he is keeping all options on the table. We will be watching closely as the process moves forward in hopes that the final rule stays true to the spirit of net neutrality.”

    To contact the reporter on this story: Bryce Baschuk in Washington at bbaschuk@bna.com

    To contact the editor responsible for this story: Heather Rothman at hrothman@bna.com

    Read the NPRM here: http://www.fcc.gov/document/protecting-and-promoting-open-internet-nprm

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