On May 7, 2024, the Federal Communications Commission ("FCC"), led by Democratic Chairwoman Jessica Rosenworcel, released a Declaratory Ruling, Order, Report and Order, and Order on Reconsideration (collectively, "Order") to classify and adopt "open Internet" rules for providers of mass-market retail broadband Internet access service ("BIAS").1 The Order was adopted by a 3-2 vote, with the Republican commissioners dissenting. The new rules will take effect July 22, 2024, except for certain changes to the transparency rule, which must first be approved by the Office of Management and Budget ("OMB").
These rules represent a reclassification of BIAS as a "telecommunications service" subject to Title II of the federal Communications Act of 1934, as amended ("Communications Act"). The FCC first took this step in 2015 when the FCC, led by then Chairman Tom Wheeler, adopted the 2015 Open Internet Order, which reclassified BIAS as a telecommunications service. This order included rules to prevent specific practices harmful to Internet openness (blocking, throttling, and paid prioritization), to implement a standard of conduct designed to prevent new practices that would harm Internet openness, and to make enhancements to the transparency rule. In 2016, the United States Court of Appeals for the District of Columbia Circuit ("D.C. Circuit") upheld the 2015 Open Internet Order in full.2
In 2018, the FCC, led by then Chairman Ajit Pai, eliminated the majority of the rules adopted in 2015. The 2018 Restoring Internet Freedom Order maintained the transparency rule but reclassified BIAS as an "information service." On review, the D.C. Circuit remanded certain aspects of the 2018 order to the FCC but upheld the classification of BIAS as an information service.3 In response to the remand, the FCC issued the 2020 Restoring Internet Freedom Remand Order, which found there were no grounds to depart from the determinations made in the 2018 order. Our firm memorandum dated October 31, 2023 provides more detail on the FCC's Notice of Proposed Rulemaking, the history of this proceeding, and the FCC's prior "open Internet" actions.4
The rules adopted in the Order will have a significant impact on all providers of BIAS. However, it is important to recognize that the FCC found that a number of requirements that typically apply to a telecommunications service are not appropriate or required when it comes to BIAS, so the regulatory implications are not quite as bleak as it might first appear. In addition, the rules will face inevitable and lengthy court challenges. Between that and a potential change in administration, it remains to be seen when - and if - the rules will actually take effect and, if they do take effect, whether they will endure
Ongoing monitoring of these developments will be required. For now, this memorandum outlines the actions taken by the FCC in the Order and its legal and regulatory rationale for those actions. For further information and clarification, please do not hesitate to contact the authors, whose contact information appears at the end of this memorandum.
Open Internet Rules
In the Order, the FCC finds open Internet rules are needed to: promote free expression; encourage innovation, competition, and consumer demand; and protect public safety. The FCC concludes BIAS providers have the economic incentive and technical ability to engage in practices that pose a threat to Internet openness, and because providers have engaged in such practices in the past, adoption of clear, bright-line rules is needed.
First, the FCC reinstates the rules prohibiting providers from blocking, throttling, or engaging in paid or affiliated prioritization arrangements. These rules prohibit providers from the blocking or throttling of lawful content, applications, services, or non-harmful devices. The rules also ban arrangements in which a provider accepts consideration (monetary or otherwise) from a third-party to manage its network in a manner that benefits particular content, applications, services, or devices. Providers may seek a waiver of the prioritization rule in certain circumstances, and the Order includes specific guidance on how it would evaluate such requests.
Second, the FCC reinstates the general conduct standard, which prohibits practices that cause unreasonable interference or unreasonable disadvantage to consumers or edge providers.5 The general conduct standard is necessary to ensure providers do not find a technical or economic means to evade the bright-line bans to wield their power as gatekeeper in a way that would compromise the open Internet. The FCC will enforce this standard on a case-by-case basis considering the totality of the circumstances and a review of certain factors. The FCC will assess zero-rating programs under the general conduct standard to determine whether such practices cause harm to the open nature of the Internet. The FCC also will evaluate data caps under the general conduct standard but makes no blanket determination regarding the use of data caps.
Third, the FCC reaffirms its transparency rule and disclosure requirements from 2015, which require providers to disclose information about performance characteristics, commercial terms, and network practices sufficient for consumers to make informed decisions. BIAS providers must maintain the accuracy of all disclosures and update the disclosure in a timely manner when there is a material change. The Order includes guidance on the items that providers should disclose: congestion management, user-based practices, prioritization, zero rating, application-specific behavior, device attachment rules, security, service description, impact of non-BIAS data services, pricing, privacy policies, and redress options. Such information must be disclosed on a publicly-available, easily-accessible website in a machine-readable format. Providers also are required to directly notify end users if their individual use of a network will trigger a network practice, based on their demand prior to a period of congestion, that is likely to have a significant impact on the end user's use of the service. However, providers that have 100,000 or fewer broadband subscribers (aggregated over all provider affiliates) have a temporary exemption from the direct consumer disclosure requirement.
Reasonable network management is not considered a violation of the open Internet rules. A network management practice is "reasonable" if it is primarily used for and tailored to achieving a legitimate network management purpose, taking into account the particular network architecture and technology of the service. Reasonable network management is a practice that has a primarily technical network management justification but does not include other business practices. The FCC will evaluate whether a practice is reasonable network management on a case-by-case basis.
BIAS Is a Telecommunications Service Once Again
The Order reinstates the telecommunications service classification of BIAS under Title II of the Communications Act ("Title II"). According to the FCC, classification of BIAS as a telecommunications service represents the best reading of the text of the Communications Act in light of how the service is offered and perceived today, as well as the factual and technical realities of how BIAS functions. The FCC determines reclassification is fully and sufficiently justified under the FCC's longstanding authority and responsibility to classify services subject to the FCC's jurisdiction, as necessary.
The FCC finds BIAS connections are absolutely essential to modern day life, facilitating employment, education, healthcare, commerce, community-building, communication, and free expression. The FCC determines that the reclassification enhances the FCC's ability to address the following areas:
Internet Openness. The FCC finds reclassification enables the FCC to more effectively safeguard the open Internet, which protects free expression, encourages competition and innovation, and is critical to public safety.
Defending National Security and Law Enforcement. The reclassification enhances the FCC's ability to protect the nation's communications networks from entities that pose threats to national security and law enforcement. Reclassification enables the FCC to exercise its authority under Section 214 of the Communications Act with respect to BIAS providers (although the FCC forbears from entry certification requirements). The FCC grants blanket authority under Section 214 for the provision of BIAS (subject to some exceptions), while reserving power to remove such blanket authority. The FCC excludes from blanket Section 214 authority the provision of BIAS by those entities whose applications for international Section 214 authority were denied or revoked by the FCC based on national security and law enforcement concerns, i.e., China Mobile, China Unicom, China Telecom, and Pacific Networks. Reclassification also will allow the FCC to obtain information from BIAS providers and safeguard BIAS providers, networks, and infrastructure from equipment and services that pose national security threats.
Promoting Cybersecurity. The FCC has an important role in addressing cybersecurity in communications networks, and reclassification gives the FCC additional authority to address cybersecurity incidents and vulnerabilities in broadband networks. Reclassification also places the FCC in a stronger position to address vulnerabilities threatening the security and integrity of the Border Gateway Protocol. Although the FCC may not be able to address all significant cybersecurity vulnerabilities, the availability of Title II authority meaningfully enhances its ability to address significant cybersecurity threats.
Safeguarding Public Safety. Advancing public safety is one of the FCC's fundamental obligations. Reclassification allows the FCC to ensure BIAS meets the needs of public safety entities and individuals when they use those services for public safety purposes. Public safety officials' reliance on BIAS has become integral to their essential functions and services, including how they communicate with each other and how they convey information to and receive information from the public. Reclassification gives the FCC the ability to ensure that BIAS is reliable and secure during emergencies, and a lack of regulatory authority over BIAS would pose public safety risks.
Monitoring Network Resiliency and Reliability. Reclassification allows the FCC to take more effective regulatory actions to protect the resiliency and reliability of broadband networks and infrastructure, such as expanding the scope of outage reporting requirements to cover BIAS (similar to Title II-regulated voice service providers). The FCC currently is considering in another proceeding the extent to which outage reporting requirements should apply to BIAS providers.
Protecting Consumer Privacy and Data Security. Reclassification will support the FCC's efforts to protect consumers' privacy and data security. BIAS providers will now be under the privacy and data security framework of Section 222 of the Communications Act. Privacy and data security issues are discussed further below.
Supporting Consumer Access to Broadband. Reclassification will support the FCC's efforts to provide access to BIAS in three ways. First, reclassification improves the FCC's ability to foster investment in and deployment of infrastructure by restoring statutory protections for pole attachments for BIAS-only providers. The FCC finds that application of Sections 224, 253, and 332 of the Communications Act to BIAS-only providers will ensure those providers have the same statutory protections as providers of cable and telecommunications services. These statutory protections also give BIAS-only providers the ability to seek FCC assistance with state or local permitting processes that effectively prohibit the deployment of BIAS networks.
Second, reclassification allows the FCC to regulate BIAS-only providers that serve multi-tenant environments ("MTEs") to ensure they do not engage in unfair, unreasonable, and anticompetitive practices, such as exclusive contracts. The FCC will now have the authority to require BIAS-only providers to abide by the same rules that other telecommunications and cable providers must follow with respect to MTEs. The FCC gives BIAS-only providers 180 days to bring pre-existing contracts into compliance with the FCC's existing MTE rules.
Third, reclassification will put the FCC "on the firmest legal ground" to promote the universal service goals of the Communications Act and allow the FCC and the states to designate BIAS-only providers as eligible telecommunications carriers. Reclassification also will strengthen the FCC's policy initiatives to support the availability and affordability of BIAS through universal service fund programs. The FCC, however, declines to designate BIAS as a supported service at this time, finding the record is insufficient to properly and effectively address all of the concerns raised by designating BIAS as a supported service.
Improving Disability Access. Reclassification will enhance the FCC's authority and ability to ensure that people with disabilities can communicate using BIAS. The FCC will be able to use its authority under Sections 225, 251(a)(d), and 255 of the Communications Act, and the newly adopted open Internet rules, to ensure accessibility. The FCC will also be able to ensure equipment used for BIAS is accessible to and usable by people with disabilities. BIAS is not an "advanced communications service" and thus the FCC cannot rely on other statutory provisions to address disability access.
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Footnotes
1. WC Docket Nos. 23-320, 17-108, Safeguarding and Securing the Open Internet; Restoring Internet Freedom, Declaratory Ruling, Order, Report and Order, and Order on Reconsideration, FCC 24-52 (rel. May 7, 2024), https://www.fcc.gov/document/fcc-releasesopen-internet-order.
2. U.S. Telecom Ass'n v. FCC, 825 F.3d 674 (D.C. Cir. 2016), reh'g denied, 855 F.3d 381 (D.C. Cir. 2017), cert. denied, 139 S. Ct. 453 (2018).
3. Mozilla v. FCC, 940 F.3d 1 (D.C. Cir. 2019).
5. "Edge providers" offer information service platforms. BIAS is necessary for consumers to access the information services offered by edge providers.
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