On March 12, 2015, the Federal Communications Commission (FCC) released the full text of its Open Internet Order (Order), which they adopted on February 26, 2015. Notwithstanding likely petitions and reconsideration and appellate review, absent a "stay" of the Order, these new regulatory requirements will become effective in the coming weeks.
Providers of Fixed and Mobile Broadband Re-classified as Common Carriers
The Order re-classifies broadband Internet access service (BIAS) as "telecommunications service" thereby subjecting BIAS providers to certain common carrier regulation under Title II of the Communications Act (Title II). In addition, the Order applies to both fixed and mobile BIAS.
While the re-classification gives the FCC additional power to regulate BIAS, the Order states the FCC's intention to take a "light touch" approach. The Order indicates that the FCC will refrain from enforcing many Title II provisions (i.e., rate regulation, cost accounting rules, and facilities maintenance requirements), which the FCC considers irrelevant to modern Internet service. Also as part of its light touch approach, the Order does not create any new federal taxes or fees, or allow states to charge fees or otherwise impose additional regulations on BIAS.
Scope of BIAS Definition and Application
The FCC's 2010 Order (and the Open Internet Order) define BIAS as follows:
"A mass-market retail service by wire or radio that provides the capability to transmit data to and receive data from all or substantially all Internet endpoints, including any capabilities that are incidental to and enable the operation of the communications service, but excluding dial-up Internet access service. This term also encompasses any service that the Commission finds to be providing a functional equivalent of the service described in the previous sentence, or that is used to evade the protections set forth in [these Regulations]."
The Order seeks to regulate Internet gatekeepers for the benefit of all Internet end-users. Accordingly, the definition of BIAS includes service provided to end-users and to "edge provider" consumers alike. End-users are generally content consumers, defined as "any individual or entity that uses a broadband Internet access service," whereas "edge providers" are a subset of end-users that provide content.
The Order names popular search engines and social media providers, along with other websites (e.g., Netflix, Wikipedia) as examples of edge providers, and defines edge providers as follows:
"Any individual or entity that provides any content, application, or service over the Internet, and any individual or entity that provides a device used for accessing any content, application, or service over the Internet."
Although the BIAS definition is broad in scope and application, the Order details significant carve-outs, including for enterprise service offerings, premises operators, Internet traffic exchanges, and non-BIAS data services. The Order suggests that some of these carve-outs are permanent and complete. For example, the FCC deems regulation inappropriate and unnecessary for coffee shops and universities, both "premises operators." For certain other provider categories, such as Internet traffic exchanges, the Order adopts a "wait-and-see" approach, declining to impose the blocking, throttling, and paid prioritization bans, and instead implementing a process to facilitate the FCC's consideration of claims of unfairness and unreasonableness against providers of such interconnection service.
With respect to all service providers, however, if they provide services that are "functionally equivalent" to BIAS services, they will be considered within the definition of BIAS and subject to the same regulations.
Prohibitions on Blocking, Throttling, and Paid Prioritization
Despite the "light touch" approach, the Order adopts the following "clear, bright line" prohibitions of practices that the FCC deems harmful to Internet openness:
The ban on blocking prohibits BIAS from preventing consumer access to any content that is lawful. The text of the blocking ban in the Order is as follows:
"A person engaged in the provision of broadband Internet access service, insofar as such person is so engaged, shall not block lawful content, applications, services, or non-harmful devices, subject to reasonable network management."
The ban on throttling prohibits BIAS from inhibiting or degrading consumer access to any content that is lawful. The text of the throttling ban in the Order is as follows:
"A person engaged in the provision of broadband Internet access service, insofar as such person is so engaged, shall not impair or degrade lawful Internet traffic on the basis of Internet content, application, or service, or use of a non-harmful device, subject to reasonable network management."
The throttling ban is intended to guard against BIAS that may degrade lawful content by rendering it effectively unusable. The throttling ban aims to address the FCC's concern that BIAS might single out and throttle Internet content from a third party that is competing with content provided as part of the BIAS' business model.
No Paid Prioritization
The ban on paid prioritization prohibits BIAS from favoring certain traffic, and thereby prevents BIAS from creating "fast and slow lanes" on their networks. The Order defines "paid prioritization" as follows:
"'Paid prioritization' refers to the management of a broadband provider's network to directly or indirectly favor some traffic over other traffic, including through use of techniques such as traffic shaping, prioritization, resource reservation, or other forms of preferential traffic management, either (a) in exchange for consideration (monetary or otherwise) from a third party, or (b) to benefit an affiliated entity."
The Order notes that some forms of paid prioritization could be beneficial, however it does not include an option for consumers to consent to such prioritization, citing the great threat of harm resulting from consumer deception and confusion about the terms buried in their service contracts.
Exception: Reasonable Network Management
Both the blocking ban and the throttling ban include an exception to allow these practices for "reasonable network management." The Order defines "network management" as follows:
"A network management practice is a practice that has a primarily technical network management justification, but does not include other business practices. A network management practice is reasonable if it is primarily used for and tailored to achieving a legitimate network management purpose, taking into account the particular network architecture and technology of the broadband Internet access service."
The Order states that the FCC will determine whether certain network management practices are reasonable on a case-by-case basis, with special consideration given to the dynamic and challenging conditions under which mobile networks operate. The Order suggests that the FCC would consider tailored network security practices reasonable and permissible, but would consider speed reduction applicable to an unlimited data plan unreasonable and prohibited.
The Order doesn't include an analogous exception to the paid prioritization ban because, according to the Order, paid prioritization is a business practice as opposed to a network management practice.
Additional Considerations: Transparency, Privacy, and Enforcement
The Order also addresses transparency, privacy, and enforcement in furtherance of the FCC's open Internet policy objectives.
The Order reaffirms and builds upon its 2010 transparency rule, requiring BIAS providers to disclose certain information (i.e., data allowances and packet loss metrics) to help end-users understand the service they are purchasing and to help edge users understand whether their content and other services will function as marketed. The Order addresses consumer privacy by extending to BIAS providers the Title II requirement that telecommunications providers protect the confidentiality of its customers' private information. The Order also outlines procedures and tools that the FCC intends to use to implement and enforce the blocking, throttling, and paid prioritization bans, as well as other regulations included in the Order. Such procedures and tools include FCC investigations, formal and informal complaint processing, the appointment of an ombudsperson, and the release of guidance documents such as enforcement advisories and advisory opinions.
As a result of the Open Internet Order, broadband providers, whether providing wireless or fixed service, and whether technically broadband Internet access service providers or functionally equivalent gatekeepers, will be required to comply with the FCC's bright line bans and other regulations.
Should you have any questions about the FCC's Open Internet Order, please contact Venable's Communications Practice Group.