FCC Approves and Releases Net Neutrality Proposal

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On Thursday, May 15, the Federal Communications Commission (FCC) voted 3 to 2 in favor of Chairman Tom Wheeler’s (D) proposal to create a new, albeit more limited, net neutrality rule to protect the open Internet.  Commissioners voted along party lines, with the two Republicans dissenting.  As previously reported, the D.C. Circuit Court of Appeals this January struck down several main components of the FCC’s original 2010 Open Internet Rule. The new proposal includes the provisions largely upheld by the court while also instituting new regulations under a different source of legal authority.

The new proposal would allow broadband providers to negotiate individual agreements with edge providers (e.g., Netflix, Hulu) for priority delivery of content so long as doing so does not degrade the minimum level of service the FCC plans to require for delivery of other content. The agency plans to scrutinize individual agreements on a case-by-case basis and prohibit those practices that are not “commercially reasonable.” In order to better define what constitutes “commercially reasonable,” the Commission has asked for comments detailing which specific practices and/or general concepts it should prohibit.

The agency is also seeking comments on how it should define the required minimum level of service, including whether the level should be dynamic, and if so, how the agency can write the rules to prevent degradation of service over time as technology progresses. One definition suggested by the FCC involved a “best effort” standard, where broadband providers would be required to give their “best effort” to deliver content in a timely manner. This level of service would then be considered the minimum standard, and anything less would be considered a degradation of service and would violate the open Internet rules.

The FCC cites Section 706 of the Telecommunications Act of 1996 as legal justification for the agency’s proposal. Section 706 gives the Commission the authority to regulate Internet service providers in a manner that encourages and protects deployment of broadband services. The FCC is considering using an alternative source of legal authority as well, Title II of the Act. This would allow the Commission to reclassify broadband providers’ services as common carrier services, allowing the agency to fully regulate broadband providers as a public utility. One other possibility the FCC is considering involves dividing broadband providers’ services into two categories – services between broadband providers and edge providers and those between broadband providers and end users - and regulating them separately. The agency could then classify and regulate the former under Title II while maintaining the status quo on the latter, leaving these services under Title I of the Act.

In order to protect small- and medium-sized entities, the proposal includes provisions specifically designed to protect the ability of all companies and individuals to access the FCC to file complaints about unreasonable practices. The Commission suggested creating an ombudsperson whose “duty will be to act as a watchdog to protect and promote the interests of edge providers, especially smaller entities.” The agency also seeks input on other options, such as the use of arbitration agreements or mediation by third-parties.

Throughout the proposal, the FCC raises the issue of whether enforcement of open Internet rules should apply to mobile as well as fixed broadband providers. In the 2010 order, the FCC did not include mobile providers in many of the rules. The agency is now seeking comments on whether that is the correct approach given the increased use of mobile broadband.

The FCC is also considering altering the disclosure rule from the 2010 order. While the DC Circuit upheld the 2010 provisions on such transparency, the agency is considering whether it should require broadband providers to submit separate disclosures to consumers, content providers, and the agency in order to best address each entity’s concerns and provide the most relevant and comprehensible information to each.

EDUCAUSE, along with the Association of Research Libraries and the American Libraries Association, submitted a letter to the FCC prior to release of the proposal. The letter was mentioned twice in the draft order (see Footnotes 77 and 250). The three organizations and possibly other higher education associations will be submitting joint principles and formal comments to the agency in the near future.