United States: No Neutrality Here — Thursday's FCC Vote Highlights The Enduring Struggle Between Tech Companies And ISPs Over "Net Neutrality"

The tech industry's divide over "net neutrality" deepened when the FCC voted this past Thursday to suspend key Obama-era net neutrality requirements for broadband internet service providers ("ISPs"). The FCC's net neutrality rules required ISPs with more than 100,000 subscribers to be transparent with consumers concerning network performance, fees, and data caps. However, the FCC vote broadens the number to ISPs with greater than 250,000 subscribers.1

Consumers and tech companies like Netflix and Google worry that Thursday's FCC vote will allow more ISPs to manipulate how quickly (or rather, slowly) websites are transmitted in the networks. On the other hand, large ISPs such as Comcast, AT&T, and Verizon worry that net neutrality regulations create an undue burden on competition in the industry and threaten innovation.

The term "net neutrality," sometimes called the "open Internet," refers to the idea that ISPs should be required to treat all data traffic equally on their networks – this means no favoring tech companies' content and applications while blocking others, no charging tech companies for quicker delivery of their content, and no deliberate slowing of content from tech companies that may compete with ISPs.

Net neutrality has been a championed topic for quite some time for both Republicans and Democrats. Both parties understand the value of net neutrality, especially as consumers move from cable-TV subscriptions to streaming services. The divide over net neutrality is more of a tech industry struggle, rather than a party-line struggle.

For example, the George W. Bush-era FCC addressed net neutrality in March 2002 when it voted to classify the Internet as an information service. In classifying the Internet as an information service, the FCC was able to exert jurisdiction over the Internet and regulate it with the hopes of promoting "broad deployment, which should result in better quality, lower prices and more choices for consumers."

The concept was also championed by George W. Bush-era FCC Chairman Michael Powell back in February 2004 when he challenged the broadband network industry to preserve the " four Internet freedoms." Powell called for consumers to (1) have access to their choice of legal content, (2) be able to run applications of their choice, (3) be permitted to attach any devices they choose to the connection in their homes, and (4) receive meaningful information regarding their services plans. Powell's four freedoms were reflected in the FCC's adoption of a Policy Statement in August 2005.

The Obama-era FCC invoked net neutrality when it voted in August 2008 to order Comcast to stop interfering with peer-to-peer traffic on its broadband network. Comcast appealed the FCC's order, arguing that the FCC did not have rules governing Comcast's network management practices. The U.S. Court of Appeals for the District of Columbia Circuit agreed with Comcast when the Court overturned the FCC's ruling in April 2010.

Following the D.C. Circuit's ruling, the Obama-era FCC voted in December 2010 to approve net neutrality rules in the Open Internet Order, where wireline-based ISPs were prohibited from blocking consumer access to tech companies' content. The rules did not apply to mobile broadband providers and included an exception for managed services separate from the public Internet. Verizon challenged the FCC's authority to enforce the Open Internet Order. The D.C. Circuit agreed with Verizon when it struck down a provision of the FCC's Order. The Court reasoned that the FCC failed to establish that the Order's anti-discrimination and anti-blocking rules did not impose per se common carrier obligations given that the FCC exempted ISPs from treatment as common carriers in its March 2002 order, supra.

The Obama-era FCC then tried again to bring ISPs under net neutrality regulation in February 2015. There, the FCC transparency rules were imposed when the Obama-era FCC voted to regulate the Internet under Title II of the 1934 Communications Act. Under Title II, ISPs were treated as common carriers along with utility services, railroads, and the postal service, rather than as an information service. Classifying ISPs as carriers allowed the FCC to exert regulatory power over ISPs and impose the transparency rules that were rolled back by Thursday's FCC vote.

Experts largely expect that Thursday's FCC vote is the beginning of a regulatory pushback on net neutrality. Given that both Republican and Democratic administrations have supported net neutrality over the course of several years, it is hard to say if the current FCC will completely do away with net neutrality. In any case, both tech companies and ISPs will need to monitor FCC rules and developing case law addressing the FCC's authority to regulate the Internet.


1.  The FCC's resulting order applies retroactively, becoming effective on January 17, 2017, and lasts for five years.

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