On February 19, 2014 FCC Chairman Tom Wheeler announced that the FCC is going to rewrite its “Open Internet” rules recently rejected by the DC Circuit Court of Appeals on January 14, 2014. This decision means that the Commission recognized the legal and political reality it faces, and thankfully, will not appeal the decision, or try to reclassify broadband Internet access as a telecommunications service, thereby saving the industry from many more years of litigation. As we discuss below, any FCC rewrite is likely to fall short of the “common carrier” control net neutrality advocates seek for broadband Internet providers, but is much more likely to receive industry support and will provide for a stronger legal defense.

First let’s look at what the Commission is planning to do and how the industry is likely to react:   

In a statement that appeared on the FCC’s website on February 19, 2014 the Chairman wrote:

In its Verizon v. FCC decision, the United States Court of Appeals for the District of Columbia Circuit invited the Commission to act to preserve a free and open Internet. I intend to accept that invitation by proposing rules that will meet the court’s test for preventing improper blocking of and discrimination among Internet traffic, ensuring genuine transparency in how Internet Service Providers manage traffic, and enhancing competition. Preserving the Internet as an open platform for innovation and expression while providing certainty and predictability in the marketplace is an important responsibility of this agency.

In rewriting the open Internet rules the Commission will rely on section 706 of the 1996 Telecommunications Act which provides it with the authority to regulate advanced services. This authority was recognized by the DC Circuit in its January 14^th decision and it should permit the Commission to “encourage broadband deployment by…removing barriers to infrastructure, encouraging innovation and promoting competition.” 

Specifically, the FCC intends to do the following:

• Enforce and Enhance the Transparency Rule - Since the Court already agreed that Internet network operators must disclose how they manage Internet traffic, the Commission will try to make the rule more effective.  For example, by providing edge providers the technical information they need to create and maintain products this will help them assess the risks and benefits of new ventures.

• Fulfill the “No Blocking” Goal -  The Commission will try to develop a new legal argument to ensure that edge providers are not unfairly blocked from reaching customers as well as ensuring that consumers can continue to reach the content they choose.

• Fulfill the Goals of the Non-Discrimination Rule - The Commission will rely on section 706 to develop an enforceable legal standard that provides guidance and predictability to edge providers, consumers and broadband providers alike.  It will evaluate on a case-by-case standard whether that standard is met, and identify key behaviors by broadband providers that it would treat with skepticism.  

Chairman Wheeler also wrote that he will keep the option of reclassifying broadband as a telecommunications service on the table. But this was simply an attempt to mollify critics seeking such a classification. It is not going to happen.

Most importantly, Wheeler’s statement suggests that the Commission will be vigilant about stopping any ongoing anti-competitive behavior on the Internet but is likely to permit deals between Internet providers and content companies that allow content to be provided to consumers at higher speeds (at higher prices). This will please Internet service and some content providers but is likely to infuriate consumer advocates.

If the Chairman is clever, he will work with the industry to develop the new rules. Issues like “transparency” and “no discrimination” are likely to be supported by many and are not likely to be challenged in court.  Consumer advocates are almost certain to appeal any new rules they believe fall short of “common carrier” price controls.  However, it is extremely difficult to craft a legal argument that claims the Commission’s rules are “arbitrary and capricious,” because they do not go far enough. Thus, if the FCC works jointly with the industry they are likely to succeed in developing new “Open Internet” rules.

To get the process started, the Commission just opened a new docket called “Protecting and Promoting the Open Internet,” and will seek public comment. It hopes to develop the new rules by this summer. Stay tuned.

By Andrew Regitsky, President, Regitsky & Associates

Learn more about the FCC's Net Neutrality Decision in this free, on-demand webinar: