As promised, Chairman Pai released the text of the Notice of Proposed Rulemaking he is asking his fellow Commissioners to adopt to reverse the classification of broadband Internet access service (BIAS) as a regulated telecommunications service under Title II of the Communications Act. My curiosity was immediately peaked, and I had to read it to see how the FCC was going to rationalize this change and for more details on the fate of the existing Open Internet rules. It’s an interesting read that is sure to solicit heated comment -- both pro and con. Here’s a high level summary of what I found notable.
By contrast, the Notice concludes that Internet service providers “do not appear to offer telecommunications” because . . .
(1) broadband Internet users do not typically specify the “points” between and among which information is sent online; and
(2) Internet service providers routinely change the form or content of the information sent over their networks.
The Notice discusses at length the “negative consequences” of the treatment of BIAS as a regulated telecommunications service, relying heavily on various sources that indicate a reduction in broadband investment since reclassification. The discussion is particularly interesting in its noticeable emphasis on the harms experienced by small BIAS providers “many of whom lack the dedicated compliance staffs and financial resources of the nation’s largest providers.”
Significantly for competitors, the Notice also proposes to reverse the classification of Internet traffic exchange (interconnection) as a telecommunications service. The Notice says that “[w]e believe Internet traffic exchange, premised on privately negotiated agreements or case-by-case basis, is not a telecommunications service. Moreover, we find nothing in the Act that would extend our jurisdiction as previously suggested by the Title II Order. We further do not believe there exists any non-Title II basis for the Commission to exercise ongoing regulatory oversight over Internet traffic exchange. We accordingly propose to relinquish any authority over Internet traffic exchange.”
The Notice also proposes to reinstate the determination that mobile BIAS is a private mobile service, not a CMRS service. As part of this reinstatement, the Notice proposes to restore the previous definitions of “public switched telephone network” and “interconnected service” that had to be revised in order to justify the prior decision to treat mobile BIAS as a telecommunications service.
Likewise, the FCC's notice discusses how the new classification would operate in relation to other, related FCC rules that were deemed to apply to BIAS when it was a telecommunications service. For example, the Notice suggests that once BIAS is reclassified Section 222 of the Communications Act (aka the CPNI rules) would no longer apply and, therefore, privacy regulation would be returned to the FTC. Interestingly, the Notice proposes to maintain support for broadband service as part of the federal Lifeline program but seeks comment on rule changes necessary to continue such support. The Notice also recognizes that reclassification may have implications for pole attachments and efforts to expedite broadband deployment through preemption. The FCC seeks comment on these issues.
Looking at the existing Open Internet rules themselves, the Notice proposes to eliminate the so-called general conduct rule and not adopt any alternative conduct rule. The fate of the three bright line rules (no-blocking, no throttling, and no paid prioritization) is uncertain. Here, the FCC does not propose outright elimination, but poses a series of questions as to the continuing need for each of the three rules, including whether, if retained, any or all of them should be revised. The Notice once again demonstrates special concern for small providers asking “should any approach we adopt—whether ex ante rules, expectations regarding industry self-governance, or ex post enforcement practices—vary based on the size, financial resources, customer base of the broadband Internet access service provider, and/or other factors? Specifically, we seek comment on whether rules are necessary for or burdensome on smaller providers.” The Notice also seeks comment on whether mobile broadband should be treated differently than fixed broadband for purposes of any rules that are retained.
Chairman Pai’s speech was notably silent on the fate of the transparency rule (and I must admit this omission was the source of a great deal of my curiosity). As it happens, the Notice tees this rule up for comment as well. The Notice agrees that “effective disclosure of Internet service providers’ network management practices, performance, and commercial terms of service promotes competition, innovation, investment, end-user choice, and broadband adoption,” but asks if “the existing transparency rule is the best way to accomplish them, or if there are other methods we can employ to achieve the goals of competition, innovation, investment, end-user choice, and broadband adoption.” In particular, the Notice takes aim at the enhanced disclosure requirements adopted in 2015, asking if the “additional reporting obligations from that rule remain necessary in today’s competitive broadband marketplace."
The FCC asks:
- What are the benefits and drawbacks of those additional reporting obligations?
- Is the length of time necessary to obtain approval of these rules, (first adopted in February 2015 and yet not going into effect until nearly two years later) illustrative of just how burdensome the new enhancements are in comparison to the 2010 rule?
- Would the original transparency rule, which has been continuously operational since it came into effect following adoption of the Open Internet Order, be sufficient to protect consumers?
- Is there merit in continuing to promote the broadband consumer labels that provided ISPs with a safe harbor—or do those standardized notices harm consumers by preventing them from obtaining additional information?
The Notice also proposes to conduct a full-blown Cost Benefit Analysis to compare the costs and benefits of maintaining the current telecommunications classification of BIAS with those that would be incurred if it were reclassified. Specifically, “the benefits and costs of the FCC maintaining Title II jurisdiction over broadband Internet access service should be calculated with FTC enforcement as the appropriate baseline. In this example, the benefits of maintaining the Commission’s Title II classification are those benefits that exist over and above the “baseline” scenario of FTC jurisdiction (and FCC Title I protections). Likewise, the costs of maintaining Title II should be estimated as those costs of ex ante FCC regulation relative to FTC ex post regulation.”
Of course, the Notice also contains questions regarding the FCC’s legal authority to make the changes it suggests and adopt and enforce any rules at all under an information service classification.
The item is on the agenda for the FCC’s May 18, 2017, Open Meeting. I think we can safely assume it will generate a lot of interest. There may be protestors! The FCC even took the unusual step of issuing a Public Notice providing guidance on how to file comments specifically in this matter, anticipating “significant public engagement and a high volume of filings.” In the meantime, you can read the text as circulated here.
