2/4. The Federal Communications Commission (FCC) released a
document that contains a set of proposals for internet regulation on
February 4, 2015. The article summarizes that document.
The FCC has not released a draft of the Report and Order (R&O) that will implement these
proposals. It has not even released the proposed rules to be adopted by this R&O. The FCC
has scheduled a meeting on February 26 to adopt this R&O.
The FCC is stuffed with lawyers who are capable of drafting clear and comprehensive language
of a legislative nature, that provides guidance to regulated businesses, FCC regulators, and
courts. Also, they have had years to ponder this issue. But, this document does not reflect
the drafting capabilities and regulatory expertise that these FCC lawyers possess.
The just released document is also full of rhetoric, policy arguments, and metaphors about
an open internet, gatekeepers, and fast lanes. Metaphors, if drafted into statutes or rules,
create chaos rather than clarity. The document is also short on definitions and explanations.
One might infer that when this document uses a term, but does not define that
term, the definitions contained in the FCC's May 2014
Notice of Proposed Rulemaking (NPRM) and/or the FCC's December 2010
Order (R&O) will be adopted. Hence, this article includes numerous references to
that NPRM and R&O. However, since the just released document goes far beyond the NPRM
and R&O on many points, reliance upon them on other points may be misplaced.
It might be noted too that government officials sometimes deliberately employ muddled
language for the purpose of preserving future flexibility. Also, they sometimes draft language for
the purpose of affecting public opinion, rather than placing affected parties on notice.
Summary of This Article:
Who Is Regulated?
Reclassification and Its Consequences.
Additional Prohibitions: Blocking, Throttling and Paid Prioritization.
General Conduct Standard.
Regulation of Non-BIAS Services.
Reasonable Network Management.
Interconnection and Rate Regulation.
Universal Service Tax and Subsidy Programs.
Transparency and Mandatory Disclosures by BIAS Providers.
Who Is Regulated? The document just released by the FCC plainly
states that the rules to be adopted later this month will
affect broadband internet access service or BIAS. But, it contains no definition
of BIAS. Moreover, the document states that the forthcoming rules will extend beyond BIAS.
The FCC's May 2014 NPRM defined BIAS as "A 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, including any
capabilities that are incidental to and enable the operation of the
communications service, but excluding dial-up Internet access service. This term
also encompasses any service that the Commission finds to be providing a
functional equivalent of the service described in the previous sentence, or that
is used to evade the protections set forth in this Part."
At one place the just released document states that BIAS is "the retail
broadband service Americans buy from cable, phone, and wireless providers". This
is similar to the NPRM's definition. But, the document is also clear that the
proposal is also to regulate more than the BIAS provider's service to its retail
customers. There is also the proposal to regulate the business to business relation between
"edge providers" and some unspecified category of broadband providers.
The document states that "if a court finds that it is necessary to classify
the service that broadband providers make available to ``edge providers,´´ it
too is a Title II telecommunications service".
The document does not define "edge provider" either. However, the FCC's May
2014 NPRM defines "edge provider" very broadly as
"Any individual or entity that provides any content, application, or service
over the Internet, and any individual or entity that provides a device used for
accessing any content, application, or service over the Internet."
The document also proposes a new regulatory regime for internet
interconnection, which will affect far more that just BIAS service.
The document also proposes to regulate unspecified non-internet services,
which too will include services other than BIAS service.
Reclassification and Its Consequences. The key component of the just
released document is the statement that the FCC will reclassify BIAS "as a
telecommunications service under Title II". The document does not add that this
would likely be accomplished by including a declaratory ruling (DR) in the item
to be adopted at the February 26 meeting.
Title II is a reference to Title II of the original Communications Act of
1934. It was enacted to specify utility regulation of the then monopoly phone
industry. Title II of the 1934 Act provided for rate regulation. However, the
just released document states that the FCC will refrain from applying this
through the process called forbearance, which is codified at
47 U.S.C. § 160.
Sections 201, 202, and 208 are the core powers of Title II. The just released
document states that the FCC plans to apply all of these, and more.
47 U.S.C. § 201 treats service providers as common carriers, requires them
to provide service, requires interconnection, requires that all "charges ... be
just and reasonable", and authorizes the FCC to write "rules and regulations as
may be necessary in the public interest".
47 U.S.C. § 202 provides, in part, that "It shall be unlawful for any common
carrier to make any unjust or unreasonable discrimination in charges, practices,
classifications, regulations, facilities, or services for or in connection with
like communication service, directly or indirectly, by any means or device, or
to make or give any undue or unreasonable preference or advantage to any particular person,
class of persons, or locality, or to subject any particular person, class of persons, or
locality to any undue or unreasonable prejudice or disadvantage."
47 U.S.C. § 208 provides that
anyone may file a complaint against a common carrier, and that the FCC has adjudicatory
authority with respect to that complaint.
In addition, the just released document adds that the FCC will enforce
47 U.S.C. § 224, which pertains
to access to poles and conduits.
Forbearance. The just released document states that "broadband providers shall
not be subject to tariffs or other form of rate approval, unbundling ..."
47 U.S.C. § 251 mandates
unbundling. Sections 201 and 202 provide for price regulation.
But, Section 201 also mandates interconnection. And, the just released order
states the FCC will apply this mandate to the internet. It will be impossible to
both mandate interconnection and not regulate rates.
The document does not attempt to explain the discrepancy. Perhaps the FCC will
not regulate the prices that BIAS providers charge their retail customers, but
it will regulate the terms and rates in transit agreements. See also, subsection
below titled "Interconnection and Rate Regulation".
The document simply states that "The proposed Order ... forbears ..." from
applying certain provisions of Title II. However, the relevant statutory section
describes a more complex and longer process.
Subsection 47 U.S.C. § 160(c), provides in part that "Any telecommunications
carrier, or class of telecommunications carriers, may submit a petition to the
Commission requesting that the Commission exercise the authority granted under
this section with respect to that carrier or those carriers, or any service
offered by that carrier or carriers. ..."
Subsection 160(a) provides that "the Commission shall forbear from applying
any regulation or any provision of this chapter to a telecommunications carrier
or telecommunications service, or class of telecommunications carriers or
telecommunications services, in any or some of its or their geographic markets,
if the Commission determines that -- (1) enforcement of such regulation or
provision is not necessary to ensure that the charges, practices,
classifications, or regulations by, for, or in connection with that
telecommunications carrier or telecommunications service are just and reasonable
and are not unjustly or unreasonably discriminatory; (2) enforcement of such
regulation or provision is not necessary for the protection of consumers; and
(3) forbearance from applying such provision or regulation is consistent with
the public interest."
Moreover, forbearance orders are subject to judicial review. Parties that oppose FCC
forbearance of certain sections may ask the courts to vacate such orders. And, courts may
vacate. Thus, some of the just released document's promises to refrain from
regulation may prove illusory.
Additional Prohibitions: Blocking, Throttling and Paid Prioritization. The document
includes bans on blocking, throttling, and paid prioritization.
The FCC would adopt rules under Section 202's provision that "It shall be
unlawful for any common carrier to make unjust or unreasonable discrimination in
charges, practices, classifications, regulations, facilities, or service ..."
First, the just released document states, "No blocking: broadband providers may not
block access to legal content, applications, services, or non-harmful devices."
This is not new. The FCC's December 2010
Order (R&O) contained a ban on blocking. Although the ban for fixed BIAS was more
onerous than the ban for mobile BIAS. The Court of Appeals vacated that ban. But, the FCC's May 2014 NPRM proposed reinstating that same ban.
Second, the document states, "No Throttling: broadband providers may not impair or
degrade lawful Internet traffic on the basis of content, applications, services, or non-harmful
This is new. Throttling was not in the 2010 R&O. The May 2014 NPRM referenced throttling,
but only to require disclosure of data on throttling.
Also, there is no definition of the term in either the NPRM of the just released document.
Third, the document states, "No Paid Prioritization: broadband providers may not favor
some lawful Internet traffic over other lawful traffic in exchange for consideration -- in other
words, no ``fast lanes.´´ This rule also bans ISPs from prioritizing content and services of
This is new. Neither the December 2010 R&O nor the May 2014 NPRM's proposed
rules banning paid prioritization.
General Conduct Standard. The document also states that in addition to the bans on
blocking, throttling and paid prioritization, there is also a general conduct standard.
The document states that "there must be a known standard by which to determine whether
new practices are appropriate or not. Thus, the proposal would create a general Open Internet
conduct standard that ISPs cannot harm consumers or edge providers."
The terms "general Open Internet conduct standard" and "general conduct
standard" do not have a prior meaning. There is no existing "known standard".
And, the document fails to provide a "known standard".
The statement that "ISPs cannot harm consumers or edge providers" is not a standard.
Hypothetically, the statement "ISPs cannot harm competition" would be a standard. A competitive harm standard has
been around for a long time, and has meaning. But, businesses in a competitive marketplace
routinely make decisions that harm their suppliers, competitors or other businesses. Harm to
other businesses is a natural consequence of doing business. Companies also
cause harm to customers. They cut off service when bills are not paid. They
discontinue services. They raise prices. They report commercial copyright
infringers and child pornographers. They implement intercepts affecting their customers.
One issue that has been raised is that some edge providers provide a service,
such as streamed entertainment programming, which a BIAS provider also
providers. The BIAS provider is both in competition with the edge provider, and
provides BIAS service to its customers, which may have a choice between the edge
provider's programming service and the BIAS provider's programming service. The
argument, which is in the nature of competitive harm, is that the BIAS provider
might take actions of an anti-competitive nature to promote its programming
service. But, the proposed standard that "ISPs cannot harm consumers or edge
providers" would prevent them from making numerous routine decisions. If an ISP
improved its competing service, that would benefit consumers, but harm the
competing edge provider. If it raised prices for its competing service, that
would harm consumers, but benefit the competing edge provider.
The phrase "ISPs cannot harm consumers or edge providers" does not provide a
One might expect that the FCC will come up with a workable standard before it
releases its R&O. But, the FCC has not disclosed what that standard would be.
Regulation of Non-BIAS Services. The just released document proposes
regulation of unspecified other data services that do not use the public internet.
It does not provide a definition of services to be covered, or a list of
covered services. Nor does it state the legal authority for such regulation. Nor
does it state what requirements will be imposed on such services.
The document states only that "Some data services do not go over the public Internet,
and therefore are not “broad band Internet access” services subject to Title II oversight
(VoIP from a cable system is an example, as is a dedicated heart-monitoring service). The
Chairman's proposal will ensure these services do not undermine the effectiveness of the
open Internet rules." (Parentheses in original.)
There exists the argument that a company that provides a service that is a replacement for,
or the functional equivalent of, BIAS, but which is not BIAS, ought to be regulated as if it
were providing BIAS. But, the just released document does not state this argument, or that this
form of regulation would be applied to such replacement services.
This document, with the vaguest of language, states both that there will be a general
conduct standard (for ISPs rather than BIAS providers), and regulation of data services that do
not go over the internet. Either might be applied to regulate such replacement services.
Mobile BIAS. The document states that "mobile broadband" will also be
reclassified as a Title II telecommunications service. It adds that "This
proposal extends protection to consumers no matter how they access the Internet,
whether they on their desktop computer or their mobile devices."
The FCC previously attempted the regulate mobile BIAS less onerously than fixed BIAS.
Both the FCC's December 2010
Report and Order (R&O) and its May 2014
Notice of Proposed Rulemaking (NPRM) included different anti-blocking rules
for fixed and mobile BIAS.
First, the rule for fixed BIAS providers is as follows: "A person engaged in
the provision of fixed broadband Internet access service, insofar as such person
is so engaged, shall not block lawful content, applications, services, or
non-harmful devices, subject to reasonable network management."
Second, the rule for mobile BIAS providers is as follows: "A person engaged in the
provision of mobile broadband Internet access service, insofar as such person is so engaged,
shall not block consumers from accessing lawful websites, subject to reasonable network management;
nor shall such person block applications that compete with the provider’s voice or video telephony
services, subject to reasonable network management."
See also, February 4, 2014 piece by the CTIA's
Reasonable Network Management. The document states that "an ISP may engage in
reasonable network management", and that this "recognizes the need of broadband
providers to manage the technical and engineering aspects of their networks".
It should be recalled that the definition of "reasonable network management"
in the FCC's December 2010 R&O, and in its May 2014 NPRM, is as follows: "A network
management practice is reasonable if it is appropriate and tailored to achieving a
legitimate network management purpose, taking into account the particular
network architecture and technology of the broadband Internet access service."
However, this leaves much uncertainly.
The document does not either define
"reasonable network management", or provide enumerations of which practices
either do, or do not, constitute "reasonable network management".
For example, the document is silent regarding network management practices
instituted to protect intellectual property rights.
The December 2010 R&O and the May 2014 NPRM both provide that "Nothing in
this part prohibits reasonable efforts by a provider of broadband Internet
access service to address copyright infringement or other unlawful activity."
The document is also silent regarding network management practices instituted to protect
against cyber threats. President Obama is seeking to regulate the business practices of BIAS
providers, without a specific statute, via the FCC. President Obama is separately seeking
to regulate the cyber security related business practices of private sector
businesses, without a specific statute, by not via the FCC.
(Perhaps its is noteworthy that one Executive Office of the President (EOP)
staffer, David Edelman, has been involved in both matters.)
The document is also silent regarding myriad surveillance related practices, including
intercepts, data retention, access to stored data, location surveillance, and network design
and management to facilitate the 1994
for Law Enforcement Act (CALEA) and CALEA like demands of government.
The December 2010 R&O and the May 2014 NPRM both provide that "Nothing in
this part supersedes any obligation or authorization a provider of broadband
Internet access service may have to address the needs of emergency
communications or law enforcement, public safety, or national security
authorities, consistent with or as permitted by applicable law, or limits the
provider's ability to do so."
The CALEA, by it plain terms, applies to a "telecommunications carrier", but
not to information services. Reclassification of BIAS from information service to Title II
would bring it within the reach of the CALEA. However, a decade ago the FCC concluded, by
stretching the language of the statute beyond reason, that BIAS is covered by the CALEA.
See, stories in TLJ Daily E-Mail
Alert 960, August 17, 2004, and stories in
TLJ Daily E-Mail
Alert 1,191, August 9, 2005
The just released document does state that it "Protects consumer privacy under Section
222". This section merely pertains to customer proprietary network information (CPNI).
See, 47 U.S.C. § 222.
The document is otherwise silent on protecting consumer privacy on the internet.
Interconnection and Rate Regulation. The document contains a short and
vaguely worded statement about regulating interconnection. It states that the
FCC will "hear complaints and take ... enforcement action ... if ... the
interconnection activities of ISPs are not just and reasonable".
The document states that the FCC will "address issues that may arise in the
exchange of traffic between mass-market broadband providers and edge providers".
Section 251 provides that "each incumbent local exchange carrier has the
following duties: ... The duty to provide, for the facilities and equipment of
any requesting telecommunications carrier, interconnection with the local
exchange carrier’s network ... (A) for the transmission and routing of telephone
exchange service and exchange access; (B) at any technically feasible point
within the carrier's network; (C) that is at least equal in quality to that
provided by the local exchange carrier to itself or to any subsidiary,
affiliate, or any other party to which the carrier provides interconnection; and
(D) on rates, terms, and conditions that are just, reasonable, and
nondiscriminatory, in accordance with the terms and conditions of the agreement
and the requirements of this section and section 252 of this title." See,
47 U.S.C. §§ 251 and
Internet and telecommunications business have long operated under vastly
different business models, practices, cultures and regulatory regimes.
Subjecting internet service providers to interconnection mandates of Sections
251 and 252 would be radical departure from longstanding practice.
The originators of the internet developed interconnection without any
statutory mandate or heavy handed regulatory regime. It was accomplished by
cooperation and free markets. The internet is made up of networks, with
different owners, which exchange traffic pursuant to peering and transit
agreements. In a peering agreement the parties agree to exchange traffic at no
charge; an FCC lawyer or lobbyist might call this "bill and keep". In a transit
agreement one party sells access to its network.
Interconnection in the internet is market driven, unregulated, and global.
And, it has accomplished much -- arguably vastly more than the FCC has
accomplished through its regime of mandates and regulation.
In telecommunications interconnection is a government mandate, enforced by
the iron fist of the FCC. Moreover, once the government has removed
interconnection from the market, and mandated interconnection, it follows that
it must also mandate the terms and prices of each interconnection transaction.
The FCC is very good at mandating interconnection, but woefully incapable of
handling the regulation of prices.
When the FCC initiated the present rulemaking proceeding in May of 2014, it
sought comments, but proposed no rules, regarding this issue. See,
Notice of Proposed Rulemaking (NPRM) adopted on May 15, 2014
See also, stories titled "Wheeler Describes Draft Open Internet NPRM" and
"Wheeler Says NPRM Will Seek Comments But Not Propose Rules on Internet Peering" in
TLJ Daily E-Mail Alert No. 2,649,
April 29, 2014, "FCC Adopts Net Neutrality NPRM", "Summary of the FCC's Proposed
Net Neutrality Rules" and "Net Neutrality NPRM and Pay for Priority Agreements"
in TLJ Daily E-Mail Alert No.
2,659, May 19, 2014, and "Wheeler Addresses Regulation of Exchange of Traffic Between
Networks" and "TLJ Commentary: Peering and Transit Agreements" in
TLJ Daily E-Mail Alert No. 2,669,
June 23, 2014.
See also, story titled "Commentary: Interconnection and Compensation Regimes
on the Internet and in Telecommunications" in
TLJ Daily E-Mail
Alert No. 2,001, October 12, 2009.
Netflix has long sought to have interconnection addressed as a network neutrality issue.
It wrote in a January 5, 2015 statement that "It
is at these points -- where our traffic enters an ISPs network -- where Netflix and others
have been forced to pay Comcast, Verizon, AT&T and Time Warner access fees to reach our
mutual customers. Without those payments, ISPs allowed these connection points to congest,
resulting in a poor video streaming experience for Netflix users on those networks. While
Netflix was able to meet the demand for payments, we continue to believe this practice
stands in contrast to an open Internet and all its promise."
Universal Service Tax and Subsidy Programs. The just released document contains
statements regarding the FCC's universal service tax and subsidy programs.
First, it states that the yet to be released order "Bolsters universal
service fund support for broadband service in the future through partial
application of Section 254". It also states that the order does not "require
broadband providers to contribute to the Universal Service Fund under Section 254".
Finally, it states that "there will be no automatic Universal Service fees applied
and the congressional moratorium on Internet taxation applies to broadband".
Transparency and Mandatory Disclosures by BIAS Providers. The just released
document states that "The proposal enhances existing transparency rules".
The rules adopted by the 2010 R&O provided that "A person engaged in the
provision of broadband Internet access service shall publicly disclose accurate
information regarding the network management practices, performance, and
commercial terms of its broadband Internet access services sufficient for
consumers to make informed choices regarding use of such services and for
content, application, service, and device providers to develop, market, and
maintain Internet offerings."
The Court of Appeals did not vacate this rule.
The rules proposed by the May 2014 NPRM expand this rule. They state that
BIAS providers "shall publicly disclose accurate information regarding the
network management practices, performance, and commercial terms ... in a manner
tailored (i) for end users to make informed choices regarding use of such
services, (ii) for edge providers to develop, market, and maintain Internet
offerings, and (iii) for the Commission and members of the public to understand
how such person complies with the requirements described in" the proposed rules
regarding "No Blocking" and "No Commercially Unreasonable Practices".
More specifically, the proposed rules require BIAS providers to disclose
"meaningful information regarding the source, timing, speed, packet loss, and
duration of congestion". Moreover, BIAS providers must disclose "in a timely
manner ... when they make changes to their network practices as well as any
instances of blocking, throttling, and pay-for-priority arrangements, or the
parameters of default or ``best effort´´ service as distinct from any priority
The proposed rules add the requirement that BIAS providers disclose "timing, speed,
packet loss, and duration of congestion" data. The new rules also add references to
"edge providers", "throttling", "pay-for-priority arrangements",
or "default" or "priority service". However, the proposed rules do not define
the term "throttling".
The FCC is proposing broad transparency mandates for BIAS providers while it
is conducting the present proceeding with the greatest of intransparency.
The FCC adopted an NPRM that contained proposed rules, and it sought comment
on those rules. But, now it is to adopt a vastly different set of rules upon
which it did not request comment. Moreover, the FCC has not released the new proposed
rules. Perhaps, it has not yet written them.
The FCC has followed a rulemaking process. But, the effective decision maker has not been
the FCC. Rather, the EOP has conducted a secretive process that has operated as a replacement
for, or the functional equivalent of, the FCC rulemaking process. The transparency requirements
of the Administrative Procedure Act (APA), which apply to the FCC, are minimal. But, the EOP
has not even complied with these.
As this article has attempted to demonstrate, the FCC released a document that describes
its forthcoming rules. But, on point after point, this document fails to put interested parties
on notice of what the forthcoming rules will do.
Members of Congress and affected parties are thus prevented from effectively participating
in the ongoing political processes. FCC staff and Commissioners are deprived of input that they
would thereby receive. Reporters are precluded from writing effectively about this process.
The just released document "recognizes the critical role of transparency in a
well-functioning broadband ecosystem". Now, neither the FCC nor the EOP
recognize the critical role of transparency in this governmental process.