FCC Opens Net Neutrality Rulemaking; Considers “Fast Lanes”


On May 15, 2014, the FCC launched a rulemaking seeking comment on how best to protect and promote the open Internet. In its January decision in Verizon v. FCC, the D.C. Circuit struck down the FCC’s then-existing restrictions on online blocking and discrimination. However, it also upheld the FCC’s authority to promote broadband deployment to all Americans under Section 706.

The Verizon decision left the FCC with no rules on so-called “net neutrality.” The May 15 Notice of Proposed Rulemaking seeks comment on whether and how the FCC should replace and reformulate its open Internet rules using section 706 authority in light of the Verizon decision. It also seeks comment on whether reclassifying broadband service under Title II of the Communications Act, as amended, would offer a more effective means of keeping the Internet open.

The Commission premises the NPRM on the idea that an open Internet promotes innovations, competition, free expression, and infrastructure deployment. It cites the rapid growth in broadband enabled technologies in the past five to ten years. It also cites the significant investment in broadband deployment over that same time, but the Commission also suggests that a growing digital divide – the tendency for many rural and some urban areas to lag behind in the deployment of advanced networks – indicates a need for Commission action.

With regard to the current Internet ecosystem, the Commission seeks comment on the role of openness in facilitating innovation, economic growth, free expression, civic engagement, competition, and broadband investment and deployment. The Commission asks if the open Internet rules have had an impact in investment in the broadband marketplace or whether the rules play a part in promoting competition or identifying barriers to infrastructure investment. Finally, the Commission seeks comment on whether the openness of the Internet impacts free expression and civic engagement.

The Commission also finds that broadband providers have an incentive and ability to limit openness. The Commission cites its 2010 Open Internet Order, the findings of the Body of European Regulators for Electronic Communications, and the Commission’s 2012 settlement with Verizon regarding tethering of apps on Verizon smartphones to support its assertion. The Commission seeks to update the underlying record on whether and how broadband providers have incentives and the economic ability to limit Internet openness, and it asks how the marketplace and technology has changed the incentives and economic ability of these providers to limit Internet openness since 2010.

The Commission also seeks comment on broadband providers’ technical ability to limit Internet openness. The Commission notes that the D.C. Circuit agreed with the findings in the Open Internet Order that broadband providers have the technological ability to distinguish between and discriminate against certain types of Internet traffic. The Commission seeks comment on that general conclusion. It also seeks comment on what tools broadband providers use to distinguish between Internet traffic and asks for further examples to supplement the record or open Internet violations it cited in the Open Internet Order.

In the 2010 Open Internet Order, the Commission defined broadband Internet access as “mass-market retail service by wire or radio that provides the capability to transmit data to and receive data from all or substantially all Internet endpoints…”  In the NPRM, the Commission seeks comment on what the scope of its proposed rules should be. It asks whether it should continue to exclude from the definition of broadband Internet access certain categories of services. Specifically, it asks:

  • Whether dial-up Internet access and MVPDs should continue to be excluded (NPRM at para. 57);
  • Whether enterprise services and virtual private networks (“VPN”) should be excluded (NPRM at para. 58);
  • Whether the Commission should expand the scope of its rules to cover traffic exchange, including peering, paid peering, and content delivery networks (NPRM at para. 59);
  • Whether the Commission should include “specialized services” offered by broadband providers under its open Internet rules and how it should define those services (NPRM at 60);
  • Whether the changing its definition of reasonable network management could help the Commission ensure providers can engage in reasonable network management but not circumvent the open Internet protections (NPRM at para. 61); and
  • Whether the Commission should continue to distinguish between fixed and mobile broadband providers in the unreasonable discrimination rule context (NPRM at para. 62).

NPRM Proposals

A.  Transparency

?The Commission proposes to retain the transparency rules it announced in its Open Internet Order, which was affirmed by the D.C. Circuit in Verizon. The transparency rule requires broadband providers to disclose information regarding network management practices, performance, and commercial terms of its broadband Internet access services. The Commission seeks comment on how well the existing transparency rule is working. It also seeks comment on whether and how the rule should be changed if it is not working. Specifically, the Commission asks if tailored disclosures (for example, requiring that broadband providers send different disclosures to end users and edge providers) would enhance the transparency rule. The Commission also seeks comment on whether the existing rule is effectively informing end users and whether content or format changes could make disclosures more accessible. Finally, the Commission asks about what impact an enhanced transparency rule would have on broadband providers.

With respect to end users, the Commission asks whether the transparency disclosures regarding data caps should identify application- or device specific usage to allow end users to better monitor their data use. The Commission also asks if the disclosures should notify end users about exemptions on data caps for some types of traffic or restrictions on use that impact data caps, such as restrictions on tethering. The Commission asks if it should expand its transparency rule to include measurements such as packet loss, packet corruption, latency, and jitter. Finally, the Commission asks if its current method of allowing broadband provider to provide point-of-sale direction to online disclosures adequately serves the Commission’s purposes.

With respect to edge providers, the Commission seeks comment on whether the transparency rule provides useful information. It also asks whether providers who seek to exchange traffic with broadband provider networks, such as CDNs, should be required to disclose any information and if so what kind of information. Finally, the Commission asks if edge providers that also provide their own CDN or cloud service, such as Google or Amazon, have distinguishable needs for information that could be provide through disclosure.

The Commission currently applies the same transparency rule for mobile broadband providers and fixed providers. In the NPRM, it seeks comment on how it should assess the effectiveness of the transparency rule in the mobile context. It also asks if mobile broadband users have an enhanced need to understand their networks’ management and operations, and if so, how the Commission can craft enhanced transparency requirements. However, the Commission also recognizes the many operational factors that influence performance of mobile broadband networks, and it seeks comment on how it should take those factors into consideration. Finally, the Commission asks if customer disclosures for mobile networks differ based on whether the wireless service is an explicit substitute for copper-based, traditional service, including voice and DSL.

Finally, the Commission asks a number of general questions about its transparency rule and how it can provide relevant information to the Commission and serve the Internet ecosystem as a whole. The Commission seeks comment on the effectiveness of the Measuring Broadband America (“MBA”) program, and it asks whether MBA participation should continue to satisfy the requirement that actual speeds be disclosed. The Commission also asks what performance metrics most accurately measure upload and download speeds. With respect to congestion, the Commission recognizes that congestion management may be a reasonable network management practice. However, it also suggests that disclosure of congestion management practices, including “indicators of congestion” and “the typical frequency of congestion,” is important for consumers. In light of these congestion and performance issues, the Commission asks how it can best implement its transparency rule to provide meaningful information to all stakeholders.

B.  No-Blocking Rule

The Commission proposes to adopt the text of the no-blocking rule it adopted in the Open Internet Order. The Commission supports its decision by clarifying that the no-blocking rule would allow individualized bargaining and would scrutinize practices under the commercially reasonable rule. The Commission also suggested that preserving end users’ ability to access content of their choice would increase demand for broadband services.

In Verizon, the D.C. Circuit suggested that a no-blocking rule could require broadband providers to “furnish… access to their subscribers generally” while “establishing a lower limit on the forms that broadband providers’ arrangements with edge providers could take.”  The Commission seeks comment on what this minimum level of access would look like for both end-users and edge providers. The Commission also asks whether it could, consistent with the Verizon decision, require broadband providers to treat edge providers as a whole similarly or, alternatively, require broadband provider to treat similarly-situated edge providers the same way.

The Commission also seeks comment on how it should define a “minimum level of access” under its no-blocking rule. It addresses three possible definitions specifically: Best effort, minimum quantitative performance, and a “reasonable person” standard. Best effort routing is the traditional norm for Internet routing. The Commission seeks comment on how a “best effort” would be measured against the technical capacity of a broadband provider’s network capacity and characteristics. Minimum quantitative performance would define minimum access through specific technical parameters, such as a minimum speed. The Commission seeks comment on whether such technical parameters could feasibly provide a minimum access definition across broadband technologies. It also seeks comment on what technical parameters should be used and how the Commission should implement a minimum quantitative performance access rule if it adopts one. Finally, a reasonable person standard would adopt a minimum access level based on the reasonable expectations of a typical end user. The Commission suggests such a rule might be more flexible, but it also could provide less certainty to broadband providers. The Commission seeks comment on whether and how it should define a reasonable person standard. It also asks how it would enforce such a standard.

The Commission also seeks comment on whether it should apply its no-blocking rule to mobile broadband and devices. The Commission notes that its 2010 rule did prohibit fixed broadband providers from blocking non-harmful end-user devices. The Commission seeks comment on whether it should interpret its proposed no-blocking rule similarly. It also seeks comment on whether it should expand its 2010 no-blocking rule for mobile broadband providers. The Commission proposes to adopt the same interpretation of its 2010 no-blocking rule for mobile broadband providers, but it asks how continuing to treat mobile providers differently from fixed providers affects consumers. It also asks whether it should maintain its distinction.

C.  No Commercially Unreasonable Practices

The Commission concludes that an enforceable legal standard for broadband provider practices is necessary to preserve Internet openness. It acknowledges that it cannot craft a rule that imposes per se common carriage requirements on broadband providers, but it suggests that is can adopt a legally permissible rule by prohibiting only commercially unreasonable practices. The Commission also tentatively concludes that its commercially reasonable standard should operate separately from its no-blocking rule, which means that actions that are acceptable under the no-blocking rule could still be commercially unreasonable.

With respect to its commercially reasonable standard, the Commission seeks comment on whether there are analogous or alternative legal standards the Commission should consider. It also asks whether the Commission can modify its “reasonable network management” rule in a way that gives enough legal flexibility to avoid applying per se common carriage rules. The Commission also seeks comment on how commercially reasonable practices should apply when no individualized negotiation occurs between the edge provider and the broadband provider (for example, start-up VoIP service or a politically oriented website with an audience of fewer than 100 unique visitors per day). The Commission also asks how, if it ultimately adopts a Title II approach, the Commission should define an unreasonable discrimination rule in light of section 201 and 202 requirements.

The Commission also asks questions on the general legal standard it should apply to its commercially unreasonable rule. It tentatively concludes that it should adopt a totality of the circumstances standard. The Commission also seeks comment on the impact of present and future competition on its proposed commercially unreasonable rule. Specifically, it asks what role competition-based factors should play in its analysis. Finally, the Commission ask generally how it should ensure parties are acting in a commercially reasonable manner without foreclosing pro-competitive opportunities.

The Commission does propose several safe harbors to its commercial reasonableness rule. It proposes not to apply the rule to mobile broadband providers, which it did in its 2010 rules. The Commission also seeks comment on whether it should, as AT&T suggested, exclude non-exclusive, non-affiliated agreements from its commercial reasonableness review.

If you have any questions about the NPRM or would like to file comments, please contact Jonathan S. Marashlian at 703-714-1313 or by email: jsm@commlawgroup.com.

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