Net Neutrality has received more publicity over the last few years than any other FCC action in recent history. However, with the FCC’s Open Internet Order now in effect, the reporters and the TV stories have melted away, as most people have little day-to-day interest in the ongoing court battles or Congressional debates that usually lead nowhere.

For the industry, however, the implications of the Open Internet Order are just beginning. The regulatory costs of Title II for broadband Internet service providers (ISPs) have been well documented and will increase if ISPs are required to contribute to the Connect America Fund (CAF). 

Reclassification as Title II, while a costly change for the industry, is relatively easy to plan for. What is not so easy to anticipate is how the Commission’s new “future conduct” standard will affect ISPs.   

The future conduct standard was created in the Open Internet Order and is officially called the “No Unreasonable Interference/Disadvantage” rule. It states that:

Any person engaged in the provision of broadband Internet access service, insofar as such person is so engaged, shall not unreasonably interfere with or unreasonably disadvantage (i) 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 (ii) edge providers’ ability to make lawful content, applications, services, or devices available to end users.

The rule is very concerning to ISPs because it means that each time an ISP chooses to offer a new or unique service, it is subject to a case-by-case review by the Commission. At its very best, it will slow market entry of new services that could benefit consumers and allow competitors time to offer duplicate services. At its worst, it will harm investment and innovation as ISPs choose to stick with the “same old same old” rather than have their business practices subject to an intrusive government review.

The future conduct standard has not been tested yet so we don’t know precisely how intrusive or thorough the FCC review will be. We have received the first clue, however. In the Open Internet Order, the Commission adopted a process for companies to utilize to obtain advice regarding the legality of the new business practice they are considering. This new process involves requesting and receiving an advisory opinion on the specific proposal. On July 2, 2015 the FCC’s Enforcement Bureau provided specific information about these advisory opinions and the process companies must follow to initiate the process. Here are the important details:

• What are Open Internet advisory opinions? - Advisory opinions are a tool available to companies that are concerned about whether a potential activity or new business practice they are considering will comply with the Open Internet rules. Companies may request an advisory opinion from the Bureau regarding such proposed conduct. The opinions will provide guidance about how the Bureau will evaluate the conduct and the factors that will be considered in determining whether the conduct would be consistent with the Open Internet rules.
• What is the purpose of advisory opinions? - Advisory opinions are intended to promote legal certainty, so that broadband providers can plan their activities based on clear guidance. Advisory opinions will allow companies to seek guidance on the propriety of certain Open Internet practices before implementing them, enabling them to be proactive about compliance and avoid enforcement actions later. Because advisory opinions will be publicly available, they should reduce industry disputes and future complaints.
• Who can request an advisory opinion? – Any company subject to the FCC’s jurisdiction.
• Are advisory opinions required - No company is required to seek an advisory opinion and there are no penalties for not doing so.
• What are the proper subjects for advisory opinions? - Requests for advisory opinions must relate to prospective or proposed conduct that the requesting party intends to pursue and which may implicate the Open Internet rules. A proposed course of conduct for which an advisory opinion is sought must be sufficiently concrete and detailed so as to be more than merely hypothetical; it must be sufficiently defined to enable the Bureau to conduct an in-depth evaluation of the proposal. In addition, the Bureau will not respond to requests for opinions that relate to ongoing or prior conduct. The Bureau also will not respond to requests if the same or substantially the same conduct is the subject of a current government investigation or proceeding, including any ongoing litigation or open rulemaking at the Commission.
• How do I request an advisory opinion? – Requests for advisory opinions must be filed via the FCC’s website or with the Office of the Secretary and also must be submitted to the Chief of the Enforcement Bureau and the Chief of the investigations and Hearings Division of the Enforcement Bureau.
• What information do I need to include in my request for an advisory opinion? - Requests for advisory opinions must be accompanied by all material information needed for the Bureau to make a determination regarding whether the proposed conduct would comply with the Open Internet rules. As examples, a company may submit documents describing the program; disclosures, advertisements, or other consumer-facing materials; engineering analyses; rollout plans and schedules; and analyses of the potential effects on consumers.
• How Long will it take the Enforcement Bureau to issue an advisory opinion? - The Bureau will attempt to respond to requests for advisory opinions expeditiously, but there are no firm deadlines to rule on them or issue response letters.

The one advantage of these advisory opinions is that they will reduce the number of formal complaints the FCC will have to deal with. However, this single advantage is dwarfed by the disadvantages. First, since the specific company proposals are made public, anyone can offer a copycat service. Second, since there is no time limit for these reviews, they are likely to take months, providing ample time for competitors to match the proposals. Last, but most egregiously, the advisory opinions places the government in the position of reviewing the business plan of each ISP, and giving each plan the thumbs up or thumbs down. In my opinion, the government has no business picking the winners and losers in the free market as will occur here. 

In theory, seeking an advisory opinion is voluntary, however, as the FCC seems so eager to demonstrate its power over the Internet, you can bet that a proposal without an advisory opinion attached to it, will face a formal complaint from a competitor or consumer advocate, which will require a complete examination by the FCC anyway. 

Unfortunately, once the government is involved in an area it tends to become more intrusive not less, and the government now seems to have the Internet as its target.

By Andy Regitsky, CCMI