FCC Deregulates DSL Service But Warns Against Restricting Internet Access
In a move widely anticipated after the United States Supreme Court issued the Brand X decision affirming the FCC’s declaratory ruling that cable-provided Internet access is an information service (see Update dated June 28, 2005), the Federal Communications Commission announced last week that ILEC-provided DSL Internet access service is also an information service. Prior to the FCC’s announcement, DSL service had been regulated as a telecommunications service subject to common carriage and nondiscriminatory access requirements. The FCC’s latest ruling means that ILECs, in approximately one year, will no longer have to allow competing ISPs access to ILEC DSL platforms or the resale of DSL service. However, in a separate “Net Neutrality” statement released concurrently with the DSL announcement, the FCC advised that ILECs must nonetheless not block DSL subscribers from accessing competing ISPs’ content or websites.
In response to heavy lobbying by an alliance of the “High Tech Coalition” (including Amazon.com, Microsoft, the Consumer Electronics Association, Google, Vonage, and certain public interest groups), the FCC issued a non-binding “Net Neutrality” statement that provides:
(1) consumers are entitled to access the lawful Internet content of their choice;
(2) consumers are entitled to run applications and services of their choice, subject to the needs of law enforcement;
(3) consumers are entitled to connect their choice of legal devices that do not harm the network; and
(4) consumers are entitled to competition among network providers, application and service providers, and content providers.
This “Net Neutrality” statement arises in response to the removal of carrier obligations on DSL providers, but is also a caution to cable operators. The cable industry has been successful in resisting the imposition of formal access requirements on cable modem service. Brand X was the most recent affirmation that Internet access over cable is not subject to Title II common carriage obligations. Now that DSL service will enjoy the same deregulatory treatment as cable, the FCC is putting all providers on notice that “Net Neutrality” principles will inform Commission’s “ongoing policymaking activities.” However, net neutrality advocates will likely move quickly to leverage the FCC’s policy statement into new rules that would formally impose common carrier-like obligations on high speed data providers. Congressman Rick Boucher (D-VA) has also announced that Congress should adopt legislation codifying net neutrality principles. Indeed, elements of net neutrality (such as not blocking content, VoIP, or consumer chosen equipment and applications) have already found their way into proposed legislation introduced by Senator Ensign that would substantially rewrite federal communications laws governing video, Internet and telecommunications services and providers.
We anticipate considerable debate over how far net neutrality principles should be legislated, rather than left to the market, and how they should be balanced against principles of “reasonable network management,” which the policy statement recognizes, and against principles of protecting consumer privacy interests and investment incentives, which the policy statement does not appear to recognize.
Although the text of the Commission’s Net Neutrality Statement has been released, the text of the FCC’s DSL order has not yet been released.
If you have any questions or would like to review the implications, please contact us.