FCC Releases Net-Neutrality Order

Calls ISPs' Power to Suppress Competition the Key Driver
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The Federal Communications Commission released its network-neutrality order Thursday (March 12), beginning the process that will include publishing it in the Federal Register (likely in the next week or so), with the rules going into effect 60 days after that, followed by the inevitable lawsuits against the decision to reclassify Internet access as a Title II common-carrier service.

The order provides more meat on the bone of the general conduct standard the FCC is adopting and makes clear that the FCC sees ISPs as the potential problem in the "virtuous cycle" that includes both consumers and edge providers like Google and Netflix. The FCC even quoted Ben Franklin (chairman Tom Wheeler is a history buff) to suggest ISPs need broad oversight of their broadband conduct.

It also uses over-the-top alternatives to traditional video -- like Netflix, and HBO and CBS's plans for streaming services -- that can deliver video "free of cable subscriptions" to argue that the rules are needed to allow those new services to flourish.

The document, including statements, came out to 400 pages, but most of those cover the legal defense of the move and statements of commissioners, with the actual rules plus introduction and executive summary only taking up the first 17 pages.

As already telegraphed and explained by the FCC both before and on the day (Feb. 26) of the party-line vote on the rules, the order adopts bright-line rules banning blocking, throttling and paid prioritization, the last which the FCC defines as "when a broadband provider accepts payment (monetary or otherwise) to manage its network in a way that benefits particular content, applications, services or devices."

The order also boosts the network management transparency requirement to "promotional rates, all fees and/or surcharges, and all data caps or data allowances," and adds "packet loss as a network performance measure that must be disclosed to users." It also requires "specific notification to consumers that a network practice is likely to significantly affect their use of the service."

The rules apply to both fixed and mobile broadband, also called BIAS, which sounds pejorative but stands for broadband Internet access service.

The order also finds that interconnection is a Title II service subject to case-by-case review of alleged violations, but not to the bright-line rules. "We find that broadband Internet access service is a 'telecommunications service' and subject to sections 201, 202 and 208 (along with key enforcement provisions)," the order states. "As a result, commercial arrangements for the exchange of traffic with a broadband Internet access provider are within the scope of Title II, and the commission will be available to hear disputes raised under sections 201 and 202 on a case-by-case basis."

But the FCC left open the possibility of applying bright-line regs to interconnection down the line, saying it would not intervene "now," and explaining thattt one reason it was not applying the bright-line regs was that it did not have the regulatory experience with such a regime.

"While we have more than a decade’s worth of experience with last-mile practices, we lack a similar depth of background in the Internet traffic exchange context," the order states. "Thus, we find that the best approach is to watch, learn and act as required, but not intervene now, especially not with prescriptive rules."

There is an exception to the rules for specialized services, which was in the 2010 Open Internet order, but the FCC makes clear that if those are used to end-run the new rules, the FCC will step in.

"The commission expressly reserves the authority to take action if a service is, in fact, providing the functional equivalent of broadband Internet access service or is being used to evade the open Internet rules."

In its suggestion that it is the ISPs who are the potential snake in the garden (perhaps they should be called ASPs), the FCC has adopted a general conduct standard, alleged violations of which it will investigate both in response to complaints and on its own initiative if need be. That case-by-case approach includes alleged suppression of free expression.

"The key insight of the virtuous cycle is that broadband providers have both the incentive and the ability to act as gatekeepers standing between edge providers and consumers," the order says. "As gatekeepers, they can block access altogether; they can target competitors, including competitors to their own video services; and they can extract unfair tolls.

"The bright-line bans on blocking, throttling, and paid prioritization will go a long way to preserve the virtuous cycle," says the FCC order, but not "all the way."

"Gatekeeper power can be exercised through a variety of technical and economic means, and without a catch-all standard, it would be that, as Benjamin Franklin said, 'a little neglect may breed great mischief,' " the order states in explaining its adoption of the standard, which follows:

"Any person engaged in the provision of broadband Internet access service, insofar as such person is so engaged, shall not unreasonably interfere with or unreasonably disadvantage (i) end users’ ability to select, access, and use broadband Internet access service or the lawful Internet content, applications, services, or devices of their choice, or (ii) edge providers’ ability to make lawful content, applications, services, or devices available to end users. Reasonable network management shall not be considered a violation of this rule. This 'no unreasonable interference/disadvantage' standard protects free expression, thus fulfilling the congressional policy that 'the Internet offer[s] a forum for a true diversity of political discourse, unique opportunities for cultural development, and myriad avenues for intellectual activity.' And the standard will permit considerations of asserted benefits of innovation as well as threatened harm to end users and edge providers."

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