On Oct. 19, the Federal Communications Commission (FCC) voted 3-2 to advance Chairwoman Jessica Rosenworcel’s proposal to once again adopt “net neutrality” rules. As it had in 2015, the FCC also proposes to classify broadband internet access service (BIAS) as a telecommunications service subject to common carrier regulation under Title II of the Communications Act. Net neutrality rules are designed to prevent broadband internet access service providers (ISPs) from discriminating against providers of internet content. The principle of net neutrality is that consumers should have unfettered access to lawful internet content. Net neutrality rules would bar ISPs from blocking, throttling or favoring some web content over others. The FCC argues that the classification of BIAS as a telecommunications service would provide the FCC with clear authority to impose those net neutrality rules.
Classifying BIAS, which is defined as a mass-market retail service offered to consumers to access the internet, as a telecommunications service would not only provide authority to impose net neutrality rules but would also subject BIAS to the entire regulatory framework applicable to voice services that are contained in Title II of the Communications Act. As it did in 2015, the agency stated it would not impose many of the requirements in Title II. This was done through a statutory process called forbearance. For example, the FCC has said it would not regulate broadband rates.
The current rulemaking proffers several justifications for Title II classification, including enhancing the agency’s ability to protect broadband networks from national security threats, enhance public safety, and create a national regulatory framework rather than a patchwork of state laws. As a result, broadband providers may be required to seek regulatory approval for mergers or could even be barred from providing service in the United States if owned or controlled by an adversarial country. Under the proposal broadband providers would not be required to contribute to the Universal Service Fund.
Episode V – Net Neutrality Strikes Back
The FCC’s advancement of the Notice of Proposed Rulemaking (NPRM) marks the fifth time the agency has attempted to implement net neutrality rules. The NPRM conforms closely to the FCC’s last advancement of net neutrality rules that occurred through the 2015 Open Internet Order, including by proposing to classify ISPs as a telecommunications service under Title II of the Communications Act and mobile broadband internet service as a commercial mobile service. The FCC indicated that reclassification provides them with the authority to “safeguard national security, advance public safety, protect consumers and facilitate broadband deployment.”
Aligned with the language of the 2015 Open Internet Order, the FCC’s NPRM includes provisions aimed at preventing blocking, throttling and paid or affiliated prioritization. The proposed language for the no-blocking provision reads, “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 NPRM defines the phrase “content, applications and services” as “all traffic transmitted to or from end users of broadband Internet access service, including any traffic that may not fit clearly into any of these categories.” This no-blocking provision would also “prohibit ISPs from charging edge provider’s end-user customers.”
The proposed no-throttling language states that “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 the use of a non-harmful device, subject to reasonable network management.” The FCC “intend[s] this rule to prohibit conduct that impairs or degrades lawful traffic to a non-harmful device or class of devices, which includes any conduct by an ISP to impair, degrade, slow down, or render effectively unstable particular content, services, applications or devices, that is not reasonable network management.” The no-throttling rule would also “prohibit ISPs from imposing a fee on edge providers to avoid having the edge providers’ content, service or application throttled.” However, the NPRM indicates that the no-throttling provision does not “address the practice of slowing down an end user’s connection to the Internet based on a choice clearly made by the end user.”
The no paid or affiliated prioritization language states that “A person engaged in the provision of broadband Internet access service, insofar as such person is so engaged, shall not engage in paid prioritization. “Paid prioritization” refers to the management of a broadband provider’s network to directly or indirectly favor some traffic over other traffic, including through the 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.” Notably, the NPRM includes a waiver provision for paid or affiliated prioritization that utilizes a balancing test, “the Commission may waive the ban on paid prioritization if the petitioner demonstrates that the practice would provide some significant public interest benefit and would not harm the open nature of the internet.” Furthermore, as it did in 2015, the FCC proposed to forbear from some Title II provisions, including rate regulation and the unbundling of services.
The Never-Ending Legal Battle
Net neutrality rules have a long-winded legal history. In 2005, the FCC approved the Internet Policy Statement, the early beginnings of net neutrality. The Internet Policy Statement provided guiding principles to “preserve and promote the open and interconnected nature of the public internet.” In the ensuing years, the FCC used the Internet Policy Statement as the foundation to protect the “openness of the Internet.” From 2005 to 2011, the FCC conditioned several key mergers between telecommunications providers in compliance with the Internet Policy Statement. However, in 2010, in Comcast v. FCC, the Court of Appeals for the D.C. Circuit “rejected the Commission’s attempt to enforce open Internet principles based on the Commission’s Title I ancillary authority.”
As a response to Comcast, the FCC advanced the 2010 Open Internet Order that essentially codified the Internet Policy Statement. The key principles in the 2010 Open Internet Order included: (1) no blocking, (2) no unreasonable discrimination and (3) transparency. The 2010 Open Internet Order was, once again, challenged in Verizon v. FCC. In Verizon, the D.C. Circuit Court “vacated the no-blocking and anti-discrimination provisions of the 2010 Open Internet Order, concluding that the rules imposed de facto common carrier status on providers of broadband internet access service (BIAS) in violation of the Commission’s classification of those services as information services.”
To address the DC Circuit decision in Verizon, the commission adopted the 2015 Open Internet Order and classified BIAS as a telecommunications service. The court rejected arguments that (1) “Domain Name System (DNS) and caching required BIAS to be classified as an information service,” (2) “the grant of extensive forbearance demonstrated that Title II was a poor fit for BIAS,” and (3) all “challenges to the commission’s internet conduct rules.” However, in the most recent net neutrality battle, the FCC reclassified BIAS as an information service, effectively repealing the 2015 Open Internet Rules in 2018. The repeal of the 2015 Open Internet Order was challenged in Mozilla v. FCC, and this time the D.C. Circuit Court deferred to the agency and upheld the information services classification. The court, however, did identify several issues with the 2018 RIF Order and asked for the agency’s reconsideration of multiple provisions. The Commission responded to the three issues in the 2020 RIF Remand Order. Several petitions for reconsideration are pending and the agency is seeking comment on them as well.
It is worth noting that many observers believe that had Verizon not challenged the Open Internet Order in 2010, and the D.C. Circuit not sided with the carrier, we may well still be operating under those rules today. In fact, many parties strategically did not challenge the Commission in court at the time because, while they questioned the FCC’s authority, they also had little trouble operating in spite of it. The current regime is of course far more restrictive from a regulatory perspective.
Assuming the FCC adopts its newly issued proposals, the FCC is likely to again face legal challenges, including invocation of the “major questions doctrine, which holds that agencies seeking regulations that are economically and politically impactful must do so through explicit authority granted to them by Congress. This could potentially lead to more attention from, and possibly legislation governing, broadband internet services in Congress. FCC Commissioner Brendan Carr, one of the Republicans who voted against reinstating net neutrality, cites the major questions doctrine as one of the reasons the FCC lacks the authority to reinstate net neutrality provisions.
The End of the Internet As We Know It
When net neutrality rules were last repealed in 2018, some lawmakers and regulators predicted the “end of the internet as we know it.” Following the FCC’s vote to repeal the rule, then-FCC-Commissioner Rosenworcel said ISPs will “have the power to block websites, throttle services and censor online content.” She cautioned they “will have the right to discriminate and favor the internet traffic of those companies with whom they have pay-for-play arrangements and the right to consign all others to a slow and bumpy road.” Sen. Bernie Sanders (I-VT) expressed a similar sentiment, tweeting “this is the end of the internet as we know it. In Congress and the courts, we must fight back.” However, by and large, there appears to little evidence that the internet was affected substantially by the repeal of net neutrality in 2018.
Democrats are applauding the FCC’s decision to reinstate net neutrality rules. Rep. Anna Eshoo (D-CA), a strong voice on telecommunications policy from the House Energy and Commerce Committee, said when speaking about the FCC’s repeal of net neutrality in 2018 that “consumers have borne the brunt of this decision as Internet Service Providers (ISPs) slowed data speeds for people everywhere.” She also stated that she is “pleased that the FCC has followed the lead of California, which has enforced net neutrality across the state since 2021 and is now taking steps to revive these protections which drive innovation, expand our economy, and promote free speech and our democracy.” Sens. Ed Markey (D-MA) and Ron Wyden (D-OR) released a statement together following the FCC’s vote on Oct. 19 saying that “these rules will protect the free and open internet, create a level playing field for all businesses, and help to ensure a just broadband future.” In September, Sens. Markey and Wyden also spearheaded a letter to Chair Rosenworcel calling on her to reinstate net neutrality rules. The letter was signed by over 20 other Senate Democrats.
Republican lawmakers have remained highly critical of net neutrality rules, with Senate Commerce, Science and Transportation Committee Chair Ted Cruz (R-TX) stating that “FCC Democrats are laughably plowing ahead even though their histrionic predictions of doom and gloom after the repeal of Obama-era rules in 2017 turned out to be completely bogus. Rather than give legitimate reasons for another policy reversal, it’s clear FCC Democrats simply want control. They desperately want to micromanage providers’ pricing and terms of service and collect billions in new [Universal Service Fund (USF)] taxes at the expense of investment, economic growth, and consumer choice.” In the House, top Energy and Commerce Committee Republicans, Chair Cathy McMorris Rodgers (R-WA) and Communications and Technology Subcommittee Chair Bob Latta (R-OH) sent a letter to Chair Rosenworcel writing that “heavy-handed, utility-style regulation is not meant for today’s broadband market.” The lawmakers write in the letter that the FCC’s “decision to forebear from twenty-seven provisions in Title II and over 700 regulations underscores that the Title II regime is not appropriate for broadband.”
Brownstein’s Outlook
The FCC’s latest net neutrality rulemaking provides the public an opportunity to submit comments on the host of specific issues raised, including the scope of Title II regulation and its implications. This includes comments on the “benefits and burdens” of the FCC’s proposed classification framework, national security impacts and the potential discretion for broadband providers to block traffic on national security grounds, and the impact on small ISPs. Comments to the net neutrality notice are due Dec. 14, 2023, and reply comments are due Jan. 17, 2024.
There is little doubt the FCC will adopt its proposals and classify BIAS as a telecommunications service. One key difference between the current proposal and the net neutrality order of 2015 is the scope of Title II provisions that would apply to BIAS. The FCC has always stated it would not seek to regulate rates for BIAS, and that it would exclude other Title II provisions by exercising its forbearance authority. The current proposal, however, would apply more Title II regulations to a reclassified BIAS than it did in 2015. The FCC rationale also emphasizes the need for the agency to have authority to regulate some aspects of broadband given its central role in the economy. Following the public comment period, the FCC will release a final rulemaking that the commission is expected to vote on in the spring.
THIS DOCUMENT IS INTENDED TO PROVIDE YOU WITH GENERAL INFORMATION REGARDING THE FCC'S ACTIONS AROUND TITLE II REGULATIONS. THE CONTENTS OF THIS DOCUMENT ARE NOT INTENDED TO PROVIDE SPECIFIC LEGAL ADVICE. IF YOU HAVE ANY QUESTIONS ABOUT THE CONTENTS OF THIS DOCUMENT OR IF YOU NEED LEGAL ADVICE AS TO AN ISSUE, PLEASE CONTACT THE ATTORNEYS LISTED OR YOUR REGULAR BROWNSTEIN HYATT FARBER SCHRECK, LLP ATTORNEY. THIS COMMUNICATION MAY BE CONSIDERED ADVERTISING IN SOME JURISDICTIONS.