FCC targets Title II regulation of Internet services with forbearances for Net Neutrality

Federal Communications Commission (FCC) Chairman Thomas Wheeler today unveiled his new attempt to implement Net Neutrality. As had been signaled for several weeks, the plan involves limited application of Title II reclassification of Internet service provision as a telecommunications service.

Reclassifying Internet service as a telecommunications service under the Communications Act and Section 706 of the Telecommunications Act of 1996 would give the FCC sweeping authority to regulate broadband service provision. However, in an attempt to survive expected court challenges from communications service providers as well as blunt expected criticism, Chairman Wheeler said he would only implement some aspects of Title II.

Chairman Wheeler and the FCC issued a fact sheet describing the new Net Neutrality policy ahead of a vote on it among FCC commissioners February 26. Key points of the strategy include:

• The initial target of the policy is Internet service provision, in a move designed to address concerns voiced by the D.C. Circuit in overturning the FCC's last attempt to enforce Net Neutrality in January 2014. But if a court finds it necessary to include peering agreements within the Net Neutrality framework, those services would fall under Title II as well.
• The FCC believes reclassification under both the Communications Act and Section 706 of the Telecommunications Act of 1996 strengthens its hand in court. The DC Court had suggested as much in its ruling against the previous policy.
• The approach should enable the FCC to regulate mobile broadband as well.
• The FCC chairman also believes Title II's "just and reasonable" standard and the DC Court's finding that Section 706 authorizes the FCC to protect the "virtuous circle" of network innovation and infrastructure development would enable the FCC to continue to enforce Net Neutrality "against new tactics that would close the Internet," in the words of the fact sheet.
  

However, the FCC would refrain (or "forbear") from implementing certain features of Title II. The following aspects of reclassification would be applied:

• "Core" provisions of Title II: Sections 201 and 202 (e.g., no "unjust and unreasonable practices"
• The ability to investigate consumer complaints under section 208 and related enforcement provisions, specifically sections 206, 207, 209, 216, and 217
• Consumer privacy protections under Section 222
• Enforcement of fair access to poles and conduits under Section 224
• Protection for people with disabilities under Sections 225 and 255
• Support of the use of the Universal Service Fund for broadband service in the future via partial application of Section 254.
  

Other aspects of Title II would not be applied:

• The FCC would not regulate rates or require unbundling or any other form of what the fact sheet termed "utility regulation"
• The FCC's order, if approved, would not require broadband providers to contribute to the Universal Service Fund under Section 254
• The order also would not "impose, suggest, or authorize" new taxes or fees; there will be no automatic Universal Service fees applied and the congressional moratorium on Internet taxation will apply to broadband.
  

Critics of the use of Title II had decried potential utility-style regulation of broadband services and stated that consumers should expect more taxes and fees if the FCC reclassified broadband service. The FCC chairman and the authors of the order therefore have gone out of their way to assert that such warnings would be baseless. The fact sheet emphasizes that the proposed order would not impose "utility-style rate regulation" -- specifically, no rate regulation or tariffs, last-mile unbundling, or what the sheet called "burdensome administrative filing requirements or accounting standards."

Aims of the proposed Net Neutrality order

At the heart of the proposed order are three "Bright Line Rules" that would forbid blocking of legal content services; bandwidth throttling based on content, applications, services, or non-harmful devices; and paid prioritization of service delivery or provisioning better speeds for the service provider's offerings than its competitors enjoy. The order also calls for creation of a general standard of open Internet conduct.

The order states that, while paid prioritization would be banned, operators could "engage in reasonable network management." Such actions must indeed be for management rather than commercial purposes, according to the fact sheet. "For example, a provider can't cite reasonable network management to justify reneging on its promise to supply a customer with ‘unlimited' data," the fact sheet adds.

Along these lines, the proposed order would give the FCC the authority to hear complaints and take action if necessary.

Communications industry groups were quick to condemn the Chairman Wheeler's proposal as either unnecessary, onerous, or both.

"Title II is the wrong approach for ensuring an Open Internet, particularly for smaller ISPs and their customers," stated American Cable Association President and CEO Matthew M. Polka by way of example. "Rather than doing the hard work required to examine individual markets and individual competitors, the FCC has taken the easy way out by treating all ISPs the same. Yet, as ACA has demonstrated to the FCC, smaller ISPs, including smaller cable operators, rural telcos, and municipal providers, do not have an incentive or ability to harm the openness of the Internet, and new Title II regulations will be disproportionately onerous for them. ACA and its members urge the FCC to address this error and grant relief for smaller ISPs to avoid harming them and their customers. Reduced investment in broadband and higher retail rates that would result from onerous regulation will benefit no one."

Meanwhile, other groups took note of the introduction of legislation in Congress meant to head off the FCC's order, as well as the expectation that at least one broadband services provider will challenge the order in court if it is approved February 26.

"While the FCC is staking out ground on the far end of the regulatory spectrum, we believe a much more balanced approach will eventually win the day. We will continue to lead an industry effort to make certain that innovation, jobs, and economic growth don't become casualties of the desire to tighten Internet regulations," said TIA CEO Scott Belcher in a prepared statement. "We're confident that, when this issue moves to Congress and the courts, utility-style government oversight will be rejected. Many policymakers share our understanding that the current light-handed regulatory approach has spurred tremendous private sector investment in infrastructure and technology. This has led to new jobs and economic growth, and to a flourishing Internet that offers greater access, more choice, and higher speeds."

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