Release of Net Neutrality Order Reveals More Detail

Telecom attorneys were still sifting through the mammoth long-awaited document. It supplied greater detail about the policy and legal thinking behind the order and responded to criticisms from Commissioners Mike O’Rielly and Ajit Pai, and others. The order reclassifies broadband under Communications Act Title II and creates “bright line” rules against paid prioritization, blocking and throttling in the last-mile by ISPs and mobile providers. One provision raising eyebrows is paragraph 391, in the section on mobile broadband, revising the FCC definition of “public switched network.” The change effectively asserts FCC authority over IP addresses, said former Commissioner Robert McDowell, now at Wiley Rein, who called it a “policy blunder.”

O’Rielly and Pai, who voted against the order at the Feb. 26 commission meeting (see 1502260043) criticized the order in long dissents and a fact sheet released by Pai. The agency released its own fact sheet purporting to dispel "myths" about the order. The order also drew criticism from industry and other Title II opponents who predicted the debate will continue in Congress and the courts. The order “begins a period of uncertainty that will damage broadband investment in the United States,” AT&T Senior Executive Vice President-External and Legislative Affairs Jim Cicconi said in a statement. He expressed confidence “the issue will be resolved by bipartisan action by Congress or a future FCC, or by the courts.”

Though the commission has focused in public statements on protecting an open Internet, both the order and the agency officials on a media call speaking on condition they not be identified stressed that the order strives to balance Internet protections with promoting the continued deployment of broadband by forbearing from 27 Title II provisions and more than 700 commission rules. “This is a Title II tailored for the 21st century, and consistent with the ‘light-touch’ regulatory framework that has facilitated the tremendous investment and innovation on the Internet,” the order said.

The order will essentially take effect 60 days after publication in the Federal Register, one senior official said. The transparency requirements take effect after Office of Management and Budget approval. The Consumer and Governmental Affairs Bureau is supposed to decide whether to make an interim exemption from the transparency requirements for small broadband providers permanent by Dec. 15, the order said.

The officials and the order took pains to deny it will lead to rate regulation, as critics including the Free State Foundation charged. “We expressly eschew the future use of prescriptive, industry-wide rate regulation,” the order said. The “careful approach to the use of Title II will not impede investment,” the order also argued in response to a frequent criticism, citing the growth of mobile voice services under similar rules.

The order left in place Section 254, which authorizes the USF to collect payments from carriers, but forbore from Section 254(d), which requires every “telecommunications carrier that provides interstate telecommunications services” to contribute to the fund, the order said. An agency joint federal-state board is charged with recommending by April 7 whether broadband should pay into USF, though a footnote in the order said the recommendation may be slightly delayed. Asked during the media call whether the agency under the order could regulate rates in response to a Section 201(b) consumer complaint, an agency official said the FCC has never exercised the ability for wireless voice.

A question left unanswered by the order is how the agency will go about protecting consumers’ information. The order did not forbear from Section 222, which deals with privacy protections, but did forbear, for ISPs, provisions dealing with customer proprietary network information. CPNI rules were written for the phone age and were not “well suited to broadband Internet access service,” the order said, noting it does not deal with such private information held by ISPs as Web browsing history. The order leaves CPNI protections in place for phone service. An agency official said the commission is still grappling with how to deal with broadband privacy issues and noted Chairman Tom Wheeler said Tuesday night the agency will convene a workshop of privacy stakeholders in April (see 1503110041). Broader Section 222 provisions would remain in place before new rules are implemented, though the agency has wanted specific CPNI rules on the books, the official said.

As the agency has said, the net neutrality rules are based on both Title II and Section 706 authority. Going further, the order argued that times have changed since the commission in 2002 classified broadband as a Title I information service. The agency said it's exercising “delegated authority to interpret ambiguous terms in the Communications” to conclude “the facts in the market today are very different from those that guided the 2002 decision.” At that time, the order noted that consumers would use home pages supplied by their broadband providers, which could be seen as information services. Now, customers view broadband Internet access as a “transmission platform through which consumers can access third-party content, applications, and services of their choosing,” the order said. Broadband service is made up of two parts, a transmission piece and an information service piece of apps, content and other services. The order also cited the evolving market in subjecting mobile broadband to the same rules as wireless. Consumers must still be protected “from mobile commercial practices masquerading as ‘reasonable network management,’” the order said.

The order also went into greater detail than in past agency statements about new enhanced transparency requirements. In addition to the requirements in the 2010 open Internet order for broadband providers of network speed and latency, the new order also requires disclosure of packet loss. The order also clarified that the 2010 rules require notification of network practices aimed at a particular user or application. It also required ISPs to notify customers if their use will trigger a network practice that is likely to have a significant impact. An example is if a customer is about to exceed a usage limit that would trigger slowing the customer's service, an agency official said.

In their dissents, O’Rielly and Pai argued among other things that the order violates the Administrative Procedure Act’s notice and comments requirements for reclassifying broadband because last year’s NPRM focused on basing rules on Section 706. “Hardly anyone at the time thought that the Commission would seriously consider applying Title II,” O’Rielly’s dissent said. The legal authority section of the NPRM contained five paragraphs on Section 706 and eight asking questions about Title II, a senior FCC official responded to reporters.

One part of the order getting particular attention Thursday was paragraph 391, in the text on mobile broadband. It revises the FCC definition of “public switched network,” which has been used by the agency since 1998. Under the new definition, it includes “the network that includes any common carrier switched network, whether by wire or radio, including local exchange carriers, interexchange carriers, and mobile service providers, that use[s] the North American Numbering Plan, or public IP addresses, in connection with the provision of switched services.”

That section of the order effectively asserts FCC authority over IP addresses and will go down as “one of the biggest policy blunders in FCC history,” McDowell said. “By grabbing hold of IP addresses, the commission is tossing aside 30 years of bipartisan policy and fueling the ambition of international regulators who want intergovernmental institutions to do the same. Worse, it could trigger existing treaty language that would swallow the Internet of everything and suffocate its development. Practically speaking, this order is not limited to broadband, as advertised. It thrusts the FCC's hand all the way to the edge of the edge."