It seems fitting that the Federal Communications Commission took advantage of yesterday’s winter solstice to shine new light on its plans to regulate the “Open Internet.” By a 3-2 vote along party lines, the FCC adopted “net neutrality” rules that will govern how fixed and mobile broadband providers do business with their subscribers and others that use the Internet. Only Chairman Julius Genachowski seemed happy about the rules, calling them a “strong and balanced” approach to Internet governance that avoided the extremes of his colleagues.
At first blush, the rules appear to strike a balance between two extremes – intrusive government micromanagement and toothless requirements that have little practical effect. There are, however, open issues that give rise to concern.
Once it became clear that net neutrality rules would be adopted and the government would be involving itself in Internet access, some fixed wireless broadband providers (WISPs) feared that their small, capacity-constrained networks would buckle under the strain of the same rules that would apply to Comcast, Verizon and other large ISPs operating on high-capacity wired platforms. As a general matter, broadband providers will not be permitted to block consumers’ access to lawful content, applications and devices and cannot engage in “unreasonable discrimination.” These rules are subject to “reasonable network management,” a key phrase for any ISP and small WISPs in particular.
As with any regulation, words matter. And in this case, how the FCC defines “reasonable network management” is especially crucial. Providers will be given “meaningful flexibility” to manage network issues such as congestion and security. “Reasonable” is defined generally along the lines of what is appropriate and tailored to achieving a legitimate network management purpose, taking into account such factors as network architecture and technology. Examples of legitimate network management purposes include ensuring network security and reducing the effects of network congestion. In this regard, the rules may be interpreted to recognize the unique challenges that WISPs face in operating small businesses in small communities with small networks.
Not only do words matter, but how the FCC will enforce its rules and applies its definitions will be important to watch. Given the FCC’s decision to allow consumers to file informal complaints, broadband providers hopefully will not be required to respond to ongoing, time-consuming complaints that may force ISPs to be overly cautious in the way they manage legitimate network issues. It would not be surprising to see consumer groups spearheading enforcement efforts that create uncertainty in network management.
This is not the last we will hear of net neutrality and the Open Internet. Some have raised serious questions about the legality of the new rules and about whether the FCC has sufficient authority to adopt them. Republican Commissioners Robert McDowell and Meredith Attwell Baker issued strenuous oppositions in line with their recent statements in the press. Calling the FCC's failure to learn from the past as “regulatory hubris,” McDowell sharply criticized the majority's reliance on Section 706 of the Communications Act as a legal authority and essentially laid out an analytical roadmap to overturn the rules in court. Baker also stated that unelected officials should not be making decisions with such far-reaching consequences. Echoing concerns from House Republicans, McDowell and Baker accused the majority of acting where no competitive harm is present--a position set forth by AT&T. One Republican Senator has already introduced an amendment to an appropriations bill that would strip the FCC of funding for anything related to implementing and enforcing the net neutrality rules.
It will likely be a long time before the full impact of the FCC’s rules can be assessed. In the meantime, Internet businesses of all kinds will need to account for the potential new costs and the regulatory burdens that may follow.