On April 27, 2017, FCC Chairman Ajit Pai released the draft text of a Notice of Proposed Rulemaking (the “Internet Freedom NPRM”) that would reverse the FCC’s 2015 Open Internet Order. The Open Internet Order, which has now been renamed the Title II Order, imposed a broad set of so-called “net neutrality” obligations on broadband ISPs on the theory that Internet access is “telecommunications service” subject to oversight by the FCC under the Title II / common carrier provisions of the Communications Act. The Open Internet Order / Title II Order, itself, reversed long-standing FCC precedent that Internet access is an information service and not a telecommunications service. So, the Internet Freedom NPRM is billed as a return to the status quo before the 2015 reclassification. The draft NPRM is scheduled to be voted on and adopted at the May 18, 2017 Open Commission Meeting.
Shortly after the draft NPRM was released, the U.S. Court of Appeals for the District of Columbia Circuit denied the petitions to rehear en banc its 2016 decision in U.S. Telecom Association v. FCC that affirmed the Open Internet / Title II Order. The en banc denial starts the 90-day clock for petitions seeking U.S. Supreme Court review, although it is unclear if any such petitions will be pursued in light of Internet Freedom NPRM’s stated intention to repeal the net neutrality rules imposed by the 2015 order. In fact, Chairman Pai released a statement shortly after the D.C. Circuit’s denial of the rehearing petitions in which he described that denial as confirming that “the FCC has the authority to classify broadband Internet access service as an information service,” as Pai proposes to do, and he confirmed that “the Commission on May 18 will begin the process of repealing the FCC’s Title II regulations.” (For more on the long history of the FCC’s attempt to craft workable and sustainable open Internet / net neutrality rules, we refer you to Davis Wright Tremaine’s Open Internet Law Advisor blog.)
The NPRM starts with the premise that re-reclassification of broadband Internet access is necessary because the regulatory burden imposed on ISPs by the Open Internet / Title II Order led to decreased investment and reduced innovation. It also considers the information service designation to be supported by the text of the statute, Commission precedent, and public policy considerations. Not shrinking from the about-face in policy the NPRM represents, the NPRM states (at ¶ 53) that, “[a]n agency is free to change its approach to interpreting and implementing a statute so long as it acknowledges that it is doing so and justifies the new approach.”
In addition to legal reclassification, the NPRM proposes re-evaluating the rules and regulations imposed on ISPs by the Title II Order. The NPRM proposes eliminating the Internet conduct standard (a vague rule of conduct that the FCC claimed was at issue while investigating zero-rated and “sponsored data” services), and it seeks comment on the usefulness and necessity of the no-blocking rule, the no-throttling rule, the no paid prioritization rule, and the transparency rule, which requires disclosure of providers’ network-management practices and performance data, as well as its authority to continue overseeing the business-to-business interconnection of broadband networks. The Notice also seeks comment on what an effective enforcement regime would look like if broadband Internet access service is classified as an information service.
Finally, the draft NPRM proposes to “return” authority to the Federal Trade Commission to “police the privacy practices of Internet service providers” – authority which had been stripped away along with 2015 reclassification. A potential complicating factor for this proposal is how the Ninth Circuit proceeds in the Federal Trade Commission’s “data throttling” enforcement action against AT&T. In a 2016 decision, a panel of the Ninth Circuit held that the FTC lacked authority to apply its Section 5 unfair and deceptive acts and practices enforcement authority to any activities of a “common carrier” – even those activities that are not common carriage. But on May 9, 2017 the Ninth Circuit agreed to review the panel ruling en banc and voided any precedential effect of the panel ruling. If the Circuit reverses the panel ruling it will be far simpler for the FTC to exercise authority over broadband services that are reclassified as information services.
Please do not hesitate to contact us if you would like more details. Comments would be due 30 days after publication in the Federal Register although, according to the draft, initial comments will be due July 17, 2017, and replies on August 16. We would be happy to assist you in participating in or monitoring this proceeding.