United States: With New Net Neutrality Rules, FCC Asserts Sweeping Jurisdiction Over Broadband Internet Access Services

On March 12, 2015, the Federal Communications Commission ("FCC" or "the Commission") released its Open Internet Order ("Order") and rules.1 Based on the FCC's finding that "broadband providers hold all the tools necessary to deceive consumers, degrade content, or disfavor the content that they don't like," the agency has fundamentally changed how Broadband Internet Access Service ("BIAS") will be regulated in the United States. The Order goes beyond so-called network neutrality requirements, however, reaching into areas such as privacy and interconnection, and asserting FCC authority over present and future Internet-related services and technologies, including any that employ "the North American Numbering Plan or public IP addresses."

Background/Legal Underpinning

The FCC adopted a first order and rules seeking to preserve an open Internet in December 2010.2 At that time, the FCC relied on Section 706 of the Telecommunications Act of 1996 (the "1996 Act") to: require all broadband providers to publicly disclose network management practices, restrict broadband providers from blocking Internet content and applications, and bar fixed broadband providers from engaging in unreasonable discrimination in transmitting lawful network traffic. The FCC opined that the new rules would ensure much-needed transparency and continued Internet openness, while making clear that broadband providers can effectively manage their networks and respond to market demands.

Next, in January 2014, the US Court of Appeals for the DC Circuit ("DC Circuit") largely struck down the rules established in the 2010 order.3 In Verizon, the DC Circuit interpreted Section 706, which directs the FCC to "encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans," to grant the FCC substantive authority to impose obligations on providers of BIAS to advance the section's broadband deployment goals. On the other hand, the DC Circuit held that the FCC could not regulate broadband providers as "common carriers" as long as the agency classified the provision of BIAS as "an information service."4

Against this backdrop, in the Order, the FCC finds that the Verizon case "made clear that section 706 affords the Commission substantive authority." The FCC also concludes, however, that "in light of Verizon, absent a classification of broadband providers as providing a 'telecommunications service,' the Commission could only rely on section 706 to put in place open Internet protections that steered clear of regulating broadband providers as common carriers per se." The FCC further describes its desire to "bring a decade of debate to a certain conclusion," and its opinion that the broadband Internet market today "is very different from" the market that supported the Commission's prior decisions to classify BIAS as an information service. Thus, while the FCC continues to rely on Section 706, it reclassified BIAS as a "telecommunications service" and grounded its authority to impose anti-blocking and discrimination rules on its authority in Title II of the Communications Act of 1934 ("the Act") over common carriers.

Moreover, the FCC cites Title III of the Act, which pertains to wireless services, as additional authority to regulate mobile BIAS providers. To overcome Section 332(c)'s prohibition on the imposition of common carrier obligations on private mobile services, the Commission reclassified mobile BIAS as an interconnected service, essentially by redefining the "public switched network" to include IP addresses.

In an effort to "establish a light-touch regulatory framework," the FCC invokes Section 10 of the 1996 Act, which applies only to telecommunications service providers, to "forbear" from imposing certain Title II requirements and conditions that have been historically applied to telecommunications carriers. The FCC does not forbear, however, from the foundational Title II provisions, including Section 201, which requires "[a]ll charges, practices, classifications, and regulations for and in connection with [common carrier] service" to be "just and reasonable;" Section 202, which prohibits common carriers from making "any unjust or unreasonable discrimination in charges, practices, [and] classifications;" and Section 208, which set forth the process for filing formal complaints against service providers. The FCC also subjects BIAS providers to Section 222's privacy5 and Section 255's disability access requirements. With respect to universal service contribution requirements (fees assessed on service providers to fund deployment of broadband to rural and low-income Americans), the FCC does not forbear from Section 254 of the Act. Rather, the agency temporarily forbears from assessing additional charges presumably until its work in a separate proceeding is completed sometime later this year.

Applicability: What is "Broadband Internet Access Service"?

The new rules define Broadband Internet Access Service (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 definition encompasses both fixed and mobile broadband Internet access service. The rules further state that BIAS "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." 

New Bright Line Rules Applicable to BIAS Providers

As an initial matter, the new rules bar fixed and mobile BIAS providers from "Blocking" or "Throttling" (each subject to "reasonable network management") and from offering "Paid Prioritization." In addition, the FCC expands the transparency requirements applicable to fixed and mobile BIAS providers. Finally, the new rules include a "catch-all" provision that governs future Internet-related conduct. 

  • No Blocking. Finding that consumers of retail broadband Internet access service have a right to "access to all (lawful) destinations on the Internet," the rules provide, "A person engaged in the provision of 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."
  • No "Throttling." Described as "the degradation of lawful content, applications, services, and devices"), the rules provide, "[a] person engaged in the provision of broadband Internet access service, insofar as such person is so engaged, shall not impair or degrade lawful Internet traffic on the basis of Internet content, application, or service, or use of a non-harmful device, subject to reasonable network management."
  • Reasonable Network Management. A network management practice is "reasonable if it is primarily used for and tailored to achieving a legitimate network management purpose, taking into account the particular network architecture and technology of the broadband Internet access service."
  • No paid prioritization. To protect against so-called "fast lanes" or "paid prioritization," the rules bar "the management of a broadband provider's network to directly or indirectly favor some traffic over other traffic," including through such techniques "as traffic shaping, prioritization, resource reservation, or other forms of preferential traffic management, either (a) in exchange for consideration (monetary or otherwise) from a third party, or (b) to benefit an affiliated entity."
  • Greater Transparency. BIAS providers must "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." This requirement includes disclosing prices, other fees, data caps and allowances, and providing notice of network management practices that can affect service. The rules prescribe a "safe harbor" process for the format and nature of the required disclosure to consumers. To take advantage of the safe harbor, BIAS providers must "provide a consumer-focused, standalone disclosure." The FCC granted a temporary exemption from the transparency enhancements for fixed and mobile BIAS providers with 100,000 or fewer subscribers.
  • Catch-all Standard of Future Conduct. The rules include a "catch all" standard, under which BIAS providers may not "unreasonably interfere with or unreasonably disadvantage" end users' "ability to select, access, and use broadband Internet access service or the lawful Internet content, applications, services, or devices of their choice," or edge providers' "ability to make lawful content, applications, services, or devices available to end users." The rule further states that "[r]easonable network management shall not be considered a violation of this rule." (Emphasis added.)

Expanded FCC Authority: New Definitions and Case-by-Case Analysis

The Order spells out new, expanded definitions and explains that application and interpretation of the rules will occur through case-by-case analysis by the FCC's Enforcement Bureau.

New Definitions

Public Switched Network ("PSN"). As set forth in the Order, the FCC augmented the longstanding definition of "Public Switched Telephone Network." Now, the "Public Switched Network" is "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 uses the North American Numbering Plan, or public IP addresses in connection with the provision of switched services." This change appears to capture any present or future technology that employs either a unique number or public IP address.

  • Interconnection. The new rules define "Interconnection Service" as a service that "is interconnected with the public switched network, or interconnected with the public switched network through an interconnected service provider, that gives subscribers the capability to communicate to or receive communication from other users on the public switched network[.]" The new definition includes not just services that interconnect with the PSN directly, but also those that interconnect with the PSN indirectly, and, by implication, confers interconnection negotiation rights and obligations on service providers that have no direct connection to the PSN.  

Case-by-Case Enforcement

The FCC adopts a "case-by-case" approach to further refine and enforce the new rules, explaining that this method is the "appropriate vehicle for enforcement where disputes are primarily over commercial terms and that involve some very large corporations." More generally, the FCC may enforce the rules "through investigation and the processing of complaints (both formal and informal)" and may provide additional guidance through advisory opinions. In addition, the rules permit "[a]ny person claiming to be damaged by any" BIAS provider to "bring suit for the recovery of the damages" in any federal district court.

What's Next?

Severability. As a preliminary matter, we note that the FCC included a severability clause in the Order. Specifically, the FCC asserted that if the Order is appealed and a court finds any one rule or other policy invalid, the court may strike down only that provision. The FCC intends that whatever other provisions remain in the rule, unaffected by the court's decision, will survive and remain in effect. 

Appeal. Under the Act, an appeal must be filed within 60 days of the rule's publication in the Federal Register and may be filed in any US court of appeals. If multiple petitions for review are filed in different circuit courts of appeals within the first ten days of this 60-day window, a lottery will decide the venue for the appeal, though the prevailing court may transfer the case to another circuit.6

Learn more about our Government Relations and Technology, Media & Telecommunications practices.

1 Protecting and Promoting the Open Internet, GN Docket No. 14-28, Report and Order on Remand, Declaratory Ruling, and Order, ___ FCC Rcd ___, FCC 15-24 (rel. Mar. 12, 2015).

2 Preserving the Open Internet, Broadband Industry Practices, GN Docket No. 09-191, WC Docket No. 07-52, Report and Order, 25 FCC Rcd 17905 (2010).

3 See Verizon v. FCC, 740 F.3d 623 (DC Cir. 2014) ("Verizon").

4 See Verizon, 740 F.3d at 653 (holding that the no blocking and no unreasonable discrimination rules impermissibly "obligated [BIAS] providers to act as common carriers"). 

5 Providers of BIAS will now be subject to Section 222's requirements that telecommunications carriers protect certain customer information from unauthorized disclosure and use. While the Commission subjects BIAS providers to Section 222, however, it declines to subject such providers to the Commission's specific Customer Proprietary Network Information rules.

6 See FCC's Office of General Counsel Updates Requirements and Guidance For Litigants Seeking to Invoke the Judicial Lottery System, Public Notice, DA 11-63 (rel. Jan. 13, 2011); See also 47 C.F.R. § 1.3(b)(1), Example 1. 

Visit us at mayerbrown.com

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2015. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions