What are the key concerns for ISPs (BIAS providers)? 

• Eliminates the small provider exemption as well as the safe harbor broadband disclosure (aka nutrition) labels;
• Restores the previous classification of wireless broadband service as an information service;
• Reverses the FCC’s prior assertion of jurisdiction over Internet traffic exchange;
• Preempts any state or local measures that would impose rules or requirements that the FCC has (1) repealed or declined to impose; or (2) that would impose more stringent requirements for any aspect of broadband service addressed in the Order;
• Repeals the enforcement mechanisms adopted in the 2015 Order (Ombudsperson, formal complaint rules, and advisory opinions); and
• Returns jurisdiction to regulate broadband privacy and data security to the Federal Trade Commission (FTC).

In anticipation of the effective date, here are answers to some questions that ISPs may have about the new rules.

Since BIAS is an information service, it's no longer regulated, right?

No, not really.  In fact, reclassification may result in more regulatory confusion as it will subject BIAS providers to the jurisdiction of both the FCC and the FTC. 

What is the difference between the FCC and the FTC then?

The FCC is a policy-making entity.  Once it sets a policy, it adopts generally applicable rules to implement that policy.  In other words, you know what you need to do to be compliant.  Rule violations are handled internally through the FCC’s Enforcement Bureau.  If a violation is found, the FCC has the authority to assesses fines and require other remedial actions.  There is a one-year statute of limitations for enforcement actions and fines are payable to the US Treasury.

In contrast, the FTC is an enforcement agency whose staff is mostly litigators.  The FTC will initiate an enforcement action if it has reason to believe that the law is or has been violated.  It may challenge a provider’s actions through an administrative complaint initially but must go to a federal district court to obtain civil penalties, consumer redress or a cease and desist order.  For the most part, there are no rules to follow.  You need to understand the case law precedent to judge whether your conduct is likely to be lawful.  Unlike the FCC, there is no statute of limitations on when the FTC can take action for a violation of the FTC Act and it usually focuses on obtaining consumer redress (refunds).

What are the FCC rules now?

The only rule that will be left at the FCC on June 11 is a revised version of the current transparency rule.  The rule requires BIAS providers to publicly disclose accurate information about their network management practices and the performance and commercial terms of their services.  The rule lists thirteen specific items that must be disclosed.  Disclosures must be made via a publicly available, easily accessible website.

What are the FTC rules?

The FTC has no BIAS-specific rules.  Instead, its reports and best practice-type guidelines apply to all industries.  Since the FCC has specifically stated that it will rely on the FTC to regulate broadband privacy and data security, the most pertinent source of authority appears to be a 2012 “Report on Protecting Consumer Privacy in an Era of Rapid Change.”  This report provides a framework for developing best practices for companies that collect and use consumer data.   

Are these the same as my CPNI procedures?

No.  The FCC’s CPNI rules only apply to telecommunications services and VoIP services. Since BIAS will be an information service those rules will not apply.  However, companies that offer both telecom and BIAS services and that have a single set of customer service representatives, will probably want to develop best practices that will comply with both sets of requirements to the extent possible.

Does this mean that both the FCC and the FTC can come after my company?

Yes.  The two agencies have entered into a Memorandum of Understanding outlining the way they will work together to protect consumers effective June 11, 2018.  The MOU delineates which agency will the lead for which types of violations.

What about the States?

As described above, the FCC’s order is intended to preempt state action to reimpose so-called net neutrality requirements.  So far, however, the states don’t seem to be willing to go along.  Several states have already taken action aimed at requiring adherence to net neutrality provisions.  Dozens of other states have pending legislation on this subject.  We expect the issue of preemption will ultimately have to be decided by the courts.

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