With New Net Neutrality Rules, FCC Asserts Sweeping Jurisdiction Over Broadband Internet Access Services

On March 12, 2015, the Federal Communications Commission ("FCC" or "the Commission") released its Open Internet Order ("Order") and rules.1 Based on the FCC's finding that "broadband providers hold all the tools necessary to deceive consumers, degrade content, or disfavor the content that they don't like," the agency has fundamentally changed how Broadband Internet Access Service ("BIAS") will be regulated in the United States. The Order goes beyond so-called network neutrality requirements, however, reaching into areas such as privacy and interconnection, and asserting FCC authority over present and future Internet-related services and technologies, including any that employ "the North American Numbering Plan or public IP addresses."

Background/Legal Underpinning

The FCC adopted a first order and rules seeking to preserve an open Internet in December 2010.2 At that time, the FCC relied on Section 706 of the Telecommunications Act of 1996 (the "1996 Act") to: require all broadband providers to publicly disclose network management practices, restrict broadband providers from blocking Internet content and applications, and bar fixed broadband providers from engaging in unreasonable discrimination in transmitting lawful network traffic. The FCC opined that the new rules would ensure much-needed transparency and continued Internet openness, while making clear that broadband providers can effectively manage their networks and respond to market demands.

Next, in January 2014, the US Court of Appeals for the DC Circuit ("DC Circuit") largely struck down the rules established in the 2010 order.3 In Verizon, the DC Circuit interpreted Section 706, which directs the FCC to "encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans," to grant the FCC substantive authority to impose obligations on providers of BIAS to advance the section's broadband deployment goals. On the other hand, the DC Circuit held that the FCC could not regulate broadband providers as "common carriers" as long as the agency classified the provision of BIAS as "an information service."4

Against this backdrop, in the Order, the FCC finds that the Verizon case "made clear that section 706 affords the Commission substantive authority." The FCC also concludes, however, that "in light of Verizon, absent a classification of broadband providers as providing a 'telecommunications service,' the Commission could only rely on section 706 to put in place open Internet protections that steered clear of regulating broadband providers as common carriers per se." The FCC further describes its desire to "bring a decade of debate to a certain conclusion," and its opinion that the broadband Internet market today "is very different from" the market that supported the Commission's prior decisions to classify BIAS as an information service. Thus, while the FCC continues to rely on Section 706, it reclassified BIAS as a "telecommunications service" and grounded its authority to impose anti-blocking and discrimination rules on its...