FCC Fundamentally Revises How Broadband Is Classified, at Contentious Meeting

The order approved is for the most part the same as what was circulated by FCC Chairman Tom Wheeler three weeks ago (see 1502040055), FCC officials said. One change, pushed by Google and others, is that the agency revised in the late stages how the rules apply to the connections between edge providers and ISPs (see 1502250031), officials said. Commissioner Ajit Pai, who voted against the order, said in a news conference after the meeting that what Google asked for was a major change, taking out "an entire core part of the document."

The FCC didn't release the 317-page order itself. “Today, the Commission -- once and for all -- enacts strong, sustainable rules, grounded in multiple sources of legal authority, to ensure that Americans reap the economic, social, and civic benefits of an Open Internet today and into the future,” said an FCC news release. The order provides “bright line rules” against blocking, throttling and paid prioritization. But in other areas, such as zero rating, the FCC will look more closely at whether business plans are anticompetitive, officials said.

The vote came four years and two months after the FCC approved its first net neutrality rules, which stopped short of reclassification and with different rules for wireless than wireline. But the U.S. Court of Appeals for the D.C. Circuit rejected most of those rules in January 2014, setting up a policy fight that dominated the FCC’s time and attention for most of the past 11 months.

In many cases, the FCC still will have to determine whether industry practices are “just and reasonable” under the rules, Wheeler said during a news conference after the meeting. “What is just and reasonable is something that has developed over time and it is something that you build a record on and then you look at that record and you say, ‘OK, is this a just and reasonable activity? Is this an activity that unreasonably interferes? Is this an activity that unreasonable disadvantages?’” The FCC then must make a decision based on the record, he said.

Under the rules, there will be no rate regulation, no tariffing and no forced unbundling, Wheeler said.

Wheeler and the other FCC Democrats said repeatedly that the commission gave great weight to the more than 4 million Americans who weighed in on the proceeding. "Today is the proudest day of my public policy life," he said after the meeting. Wheeler stressed that a few ISPs, including Frontier, Google Fiber, Sprint and T-Mobile, had endorsed the FCC’s approach on net neutrality.

Wheeler told reporters the order will be released “quickly,” as soon as the two FCC Republicans file their dissents and the FCC majority has a chance to respond to those dissents. There's a good reason why the FCC didn't publish the order before a vote, he said. “It is rough draft,” he said. “It is a work in progress.”

Pai warned there are holes in the order that will lead to years of litigation. The text of the order offers only a few “stale” examples of why rules are needed, he said. “A small ISP in North Carolina allegedly blocked VoIP calls a decade ago,” he said. “Comcast capped BitTorrent traffic to ease upload congestion eight years ago. Apple introduced FaceTime over Wi-Fi first, cellular networks later.”

Pai said the FCC did a “flip flop” on net neutrality only after a push from President Barack Obama. “The commission’s decision to adopt President Obama’s plan marks a monumental shift toward government control of the Internet,” he said. “It gives the FCC the power to micromanage virtually every aspect of how the Internet works. It’s an overreach that will let a Washington bureaucracy, and not the American people, decide the future of the online world.”

“Every bad idea ever floated in the name of net neutrality has come home to roost in this item,” said Commissioner Mike O’Rielly. The FCC tried to hide the vast scope of the rules by declining to publish anything more than a brief fact sheet before the vote, he said. O’Rielly said there's no evidence of a problem the FCC needs to address: “Make no mistake, this is not some make-believe, modernized, Title II-lite that is somehow tailored to preserve investment while protecting consumers from blocking or throttling. It is full-bearance.”

Pai and O’Rielly said during a news conference the FCC majority was making changes to the order in the hours leading to a vote. "There were a number versions circulating in the last 24 hours and 12 hours, somewhere in that range; changes were being made," O'Rielly said.

Pai said under the rules many decisions on whether a company action is just and reasonable are delegated to the Enforcement Bureau for decision, without a full commission vote. “That is, in effect, substantive regulation being done at the bureau level,” Pai said.

But Commissioner Mignon Clyburn, who was a member of the FCC when the original order was adopted in 2010, said the rules approved Thursday are the ones it should have approved then. “This is more than a theoretical exercise,” she said. “Providers here in the United States have, in fact, blocked applications on mobile devices, which not only hampers free expression but also restricts competition and innovation by allowing companies, not the consumer, to pick winners and losers.”

Can't Have a Two-Tiered Internet

“We cannot have a two-tiered Internet with fast lanes that speed the traffic of the privileged and leave the rest of us lagging behind,” said Commissioner Jessica Rosenworcel. “We cannot have gatekeepers who tell us what we can and cannot do and where we can and cannot go online.”

The FCC called in Etsy CEO Chad Dickerson and Veena Sud, creator of the TV drama The Killing, to testify about the importance of net neutrality at the beginning of the 90-minute net neutrality discussion. But snow forced the cancelation of a marching band at a pro-net neutrality rally outside FCC headquarters.

Official comments from both side started to flow hours before the vote. “It would be hard to overstate how big of a deal this is for consumers and the future of the Internet,” said Ellen Bloom, senior director-federal policy at Consumers Union. “After months and years of hard work and advocacy, today is a day to celebrate,” said Public Knowledge Senior Vice President Michael Weinberg.

“Today's vote is the biggest win for the public interest in the FCC’s history,” said Free Press President Craig Aaron. “It's the culmination of a decade of dedicated grassroots organizing and advocacy.”

But Title II was “not designed -- nor ever intended -- for the Internet,” said USTelecom President Walter McCormick. “History has shown that common carrier regulation slows innovation, chills investment, and leads to increased costs on consumers.” McCormick said the commission’s “overreach” is unnecessary: “Broadband service providers are operating in complete conformance with the open Internet standards advanced by the president, we agree with the standards, we support their adoption in regulation by the FCC under Section 706, and we support their enactment into law.”

Cable companies and the NCTA announced their disappointment with the commission's decision. “We are disappointed the Commission chose this route, which is certain to lead to years of litigation and regulatory uncertainty,” said Comcast Executive Vice President David Cohen in a blog post Thursday. “The legal reclassification of a service this critical to the economic and cultural fabric of our nation should not be left to three unelected government officials,” said Mediacom in an emailed statement. Mediacom, Charter and NCTA all indicated cable will pursue a legislative solution to the FCC's order. “With years of uncertainty and unintended consequences ahead of us, it falls to Congress to step in,” said NCTA President Michael Powell in a press release. Many of the cable interests indicated they also expect court challenges to the new rules. “We must now look to other branches of government for a more balanced resolution,” Powell said. “We fully embrace the open Internet principles that have been laid out by President [Barack] Obama and Chairman [Tom] Wheeler and that now have been adopted by the FCC,” said Comcast. “We just don’t believe statutory provisions designed for the telephone industry and adopted when Franklin D. Roosevelt was president should be stretched to govern the 21st century Internet.”

'Disappointing and Unnecessary'

CTIA President Meredith Baker, who voted against the earlier order as a member of the FCC in 2010, questioned the need for the rules to apply to mobile. “The FCC’s Net Neutrality decision was disappointing and unnecessary: consumers across the U.S. have -- and will always have -- access to an open mobile Internet,” she said in a news release. CEA President Gary Shapiro said net neutrality is a good thing, but reclassification “takes us in the wrong direction on the information superhighway.”

PCIA, which had withheld comment in the past, expressed concerns Thursday. “PCIA is deeply concerned about the impact of the Open Internet Order on investment, capital expenditures and the deployment of wireless infrastructure, and we are reviewing it from that perspective,” the group said in a news release. TechFreedom President Berin Szoka said the win for net neutrality advocates is likely a hollow victory. “The FCC is bound to lose in court on much or all of its plan to remake broadband into a heavily regulated service -- or, even better, a government-run monopoly,” Szoka said in a news release.

Embracing Ma Bell

“We have never argued there should be no regulation in this area, simply that there should be smart regulation,” said AT&T Senior Executive Vice President Jim Cicconi in a blog post. “What doesn't make sense, and has never made sense, is to take a regulatory framework developed for Ma Bell in the 1930s and make her great grandchildren, with technologies and options undreamed of eighty years ago, live under it.”

Verizon released a news release that looked like it had been written on a typewriter and carried a 1934 date. “Today (Feb. 26) the Federal Communications Commission approved an order urged by President Obama that imposes rules on broadband Internet services that were written in the era of the steam locomotive and the telegraph,” Verizon said.

“Today's FCC action will lead to government regulation of the Internet in a way that is simply not warranted,” said Free State Foundation President Randolph May. “There is no evidence of present market failure or consumer harm justifying this government intervention in the marketplace for Internet services.”

Richard Bennett, visiting fellow at the American Enterprise Institute, offered his take on Wheeler’s net neutrality stance in a tweet: “Screw the law, I’m for the people!” Former FCC Commissioner Michal Copps, now at Common Cause, tweeted: “The @FCC has never done a better job of serving the public interest.” The FCC “dealt a major blow to the forces of Big Cable and Big Telecom,” he said.

Sprint supported the order, saying the FCC had taken “a thoughtful, measured approach” in arriving at new rules.