The Latest on 'Net Neutrality': The FCC's Open Internet Rules
by Susan H. Stephan
Mansfield, Tanick & Cohen, P.A.
On December 21, 2010, the Federal Communications Commission (FCC) issued a Report and Order adopting “Open Internet Rules” that it says “will empower and protect consumers and innovators while helping ensure that the Internet continues to flourish, with robust private investment and rapid innovation at both the core and the edge of the network.” (See, FCC Report and Order, FCC 10-201, Section I, available at: http://www.fcc.gov/Daily_Releases/Daily_Business/2010/db1223/FCC-10-201A1.pdf). The Order is based on a process that the FCC began in 2009 to determine whether or not it would take actions to attempt to preserve “Internet openness” (also commonly referred to as the concept of “Net Neutrality”.) According to the FCC, this process included several public workshops as well as input from more than 100,000 individuals and organizations. After its public input process, the FCC created the proposed rules that it adopted in last month's Order.
A major concern expressed by the FCC is that, without sufficient rules, broadband providers might accept payments from third parties in exchange for degrading their competitors' Internet traffic or that broadband providers might block access or interfere with download quality when it comes to their own competitors' services. The FCC also expresses its support for continuing innovation in services, as well as affordability and growth capacity, and it intends that its new Rules foster those goals. The concerns and goals set forth by the FCC within their recent Report and Order are helpful in understanding the background to the Net Neutrality debate that has been receiving a fair amount of media attention in recent months. While Net Neutrality is an issue with many more than two sides, there certainly are proponents and opponents of the basic concept of Internet openness.
Many supporters of Net Neutrality feel very strongly that there should be no restrictions on or preferred treatment of Internet content, websites, or the types of communication that Internet service providers/broadband network providers manage. Many who favor Net Neutrality believe that a provider should be detached from the information on its network and that no information should be prioritized over another. This concept's supporters maintain that a shared information network is most efficient and fostering of innovation when it does not favor some users over others but is neutral to the needs of all its users. An open Internet, they might say, will support the most diverse marketplace of ideas.
Many opponents of Net Neutrality, on the other hand, feel that a mandated neutral environment is adverse to the values of a free and open marketplace, where broadband service providers should have the right to do business as they feel is most beneficial. If a service provider can make more profit by accepting payment from one Internet search engine to slow down the search results of another, many opponents of Net Neutrality feel that is the provider's prerogative. And if the provider wishes to block or degrade the download speed of a video service that is the provider's direct competitor or only provide information from one news source (maybe the highest bidder or an advertiser), that is a business decision that provider should be able to make, according to an individual or group that opposes a regulated open Internet.
In its recent Order, the FCC seems to have taken a middle ground in the Net Neutrality debate. Generally, its new Rules 1) require all broadband providers (any providers of access to the Internet, including cable companies, telephone companies or other carriers) to be “transparent” with the public regarding their network management practices and terms of service, 2) prohibit fixed broadband providers from blocking lawful content, applications, services, or “non-harmful devices,” and 3) bar fixed broadband providers from unreasonably discriminating in the transmission of lawful network traffic over a consumer’s broadband Internet access service. The Order includes in its discussion regarding unreasonable discrimination that an agreement between a broadband provider and a third party “to directly or indirectly favor some traffic over other traffic in the connection to a subscriber of the broadband provider (i.e.,'pay for priority')” is likely to be deemed unreasonable as well as harmful to non-commercial end users of the provider's network. Exactly what would be considered “reasonable” as opposed to “unreasonable” discrimination remains to be seen.
The Order distinguishes between “fixed” providers and wireless “mobile” providers (providers of Internet access over cellular or “smart” phones.) Mobile broadband providers must comply with the transparency rule and the “no blocking” rule with regard to lawful websites and applications that compete with providers’ voice and video services, but they are exempt from the discrimination provisions. The Order indicates that the FCC will “closely monitor” the development of the mobile market and potentially will adjust the framework as it sees fit. But for now, mobile carriers may, for example, charge customers extra to view online videos from some providers but not others.
The FCC's Open Internet Rules have been criticized by some as too restrictive of business interests because of the regulations that providers may not do, and by others as insufficient to protect consumers' interests in a neutral Internet environment because they leave open many areas that providers could still exploit. There also is support for the Rules; the large telecommunications union, Communications Workers of America (CWA), issued a statement indicating that the FCC's Open Internet Rules, “create the stable conditions necessary for critical investment and quality job creation in broadband networks.” (See, “CWA: FCC Vote Moves U.S. Forward on Broadband,” December 21, 2010, available at http://www.cwa-union.org/news/entry/cwa_fcc_vote_moves_u.s._forward_on_broadband).
Under the new FCC Order, anyone can now file a complaint claiming that a provider is in violation of the Rules. Individuals or businesses can file an informal complaint to initiate an FCC investigation free of charge, or a formal complaint that will result in a full hearing process for a $200 filing fee. The FCC also has the right to initiate an investigation on its own.
We all have an interest in the rules of the road as we depend more and more on the Internet's “information superhighway;” the terms of Internet access and level of its openness are two of the major issues we will face online in the coming years. The debate over the Net Neutrality issue and the sufficiency of the Rules will likely continue as the FCC begins to investigate complaints and enforce its new Rules. The outcome of the FCC's enforcement actions and any potential revisions to the Open Internet Rules are of interest to the Internet service/broadband providers who are directly regulated as well as to individual consumers and businesses with an online presence.
The FCC's Report and Order involves much more detail than this brief overview provides, and this article does not set forth legal advice or opinion to any extent. Please contact an attorney familiar with the FCC's procedures if you have a legal question about the Open Internet Rules or any other matter.
