Net Neutrality

FCC Adopts Title II Rules

In a historic move, the FCC has decided to reclassify US broadband service as a telecom service under Title II of the Communications Act, making broadband potentially subject to utility-style regulations for the first time.

By a 3-2 vote conducted along strictly partisan lines, the Democratic-led Federal Communications Commission (FCC) approved the Open Internet order proposed by Commission Chairman Tom Wheeler early Thursday afternoon. The 317-page order attempts to establish long-sought tough net neutrality rules for the Internet by banning such practices as traffic blocking, throttling and paid prioritization and enforcing those restrictions by applying the much stricter regulatory regime used for telecom services.

Flanked by his two Democratic colleagues in blue, FCC Chairman Tom Wheeler (third from right) shepherded tough net neutrality rules through a sharply divided Commission.
Flanked by his two Democratic colleagues in blue, FCC Chairman Tom Wheeler (third from right) shepherded tough net neutrality rules through a sharply divided Commission.

The move by the FCC, which was widely expected following earlier public statements on the issue by both President Obama and FCC Chairman Tom Wheeler, will apply a specially streamlined Title II regulatory regime to both fixed wireline and mobile broadband service. Thus, both types of broadband service will be regulated in the same fashion for the first time.

In a related action just before adopting the new net neutrality rules, the FCC voted by a similar 3-2 margin to pre-empt state laws in North Carolina and Tennessee that restrict municipal broadband network builds. We'll have more on that in a separate story later.

Read more about Gigabit Cities and the potential impact of regulation in our Gigabit Cities section here on Light Reading.

As spelled out by Wheeler earlier, the new Open Internet order, while calling for a utility-style regulatory regime for broadband providers, would exempt them from rate regulations, tariffs, last-mile network unbundling and other types of pricing restrictions that they have long dreaded and opposed. Following through on his earlier comments on the order, Wheeler said today that the mandate would take "a modernized regulatory approach" to the Internet, applying "21st century," not utility-style, rules to the medium. (See The Sound of One Hand Clapping.)

Most major broadband providers, however, are very uneasy at best about the idea because of the potential for rate regulations and other restrictions to be imposed down the line. "Nothing in this order alters the economic model for network expansion," Wheeler said, seeking to re-assure the anxious providers, some of which have already threatened to sue the Commission. "Nothing we do today changes the equation for consumer revenues to ISPs tomorrow."

Likening the new net neutrality rules to the Bill of Rights in the US Constitution, Wheeler forcefully disputed the notion advanced by critics that the new rules will strangle the Internet or impose federal government control over it. "The action we take today is about the protection of Internet openness," he said, arguing that the Internet is "simply too important to be left without rules or a referee." He added that the web is also "too important to allow broadband providers to be the ones to make the rules."

Just as forcefully, Republican commissioners Ajit Pai and Michael O'Rielly fiercely opposed the measure passed by their Democratic colleagues, contending that the Title II reclassification is unnecessary and will do far more harm than good. They also contended that the FCC is overreaching its legal authority, reversing decades of a bipartisan "hands off" approach to the Internet and flouting the will and intent of Congress, as expressed in the 1996 Telecom Act, among other things.

Terming the new rules "a Kingsbury Commitment for the digital age," Pai argued that they will lead to higher broadband rates, worse consumer service, less investment and innovation and less competition, not the reverse. "If you loved Ma Bell in the 20th century, you will love Pa Broadband in the 21st," he declared.

O'Rielly and Pai also predicted that the rules will be overturned by the federal courts, Congress or a future Commission, just as the last set of weaker net neutrality rules were thrown out by a federal court four years ago. "I do believe its days are numbered," Pai said.

Naturally, reactions to the FCC's action are now pouring in from all sectors. We'll have more on that in stories later today.

— Alan Breznick, Cable/Video Practice Leader, Light Reading

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