Net Neutrality Developments: FCC Approves ISP Regulations

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On February 26, 2015, the US Federal Communications Commission (FCC) voted to reclassify broadband Internet service as a telecommunications service. This ruling, which allows the FCC to implement and enforce open Internet protections, is a significant development in the net neutrality debate.

Net neutrality is the principle that Internet Service Providers (ISPs) and governments should treat all content on the Internet equally. According to this principle, ISPs like Comcast, Verizon, and AT&T must provide access to all content, regardless of its source. This effectively means that ISPs would be prevented from prioritizing a provider’s content in exchange for payment. Otherwise, ISPs would be able to create a tiered system in which they charged providers like Netflix and Amazon more money for better, faster Internet connections.

The FCC’s Rulings

A federal appeals court previously ruled that the FCC was unable to issue rulings regarding ISP behavior since ISPs were not defined as public utilities. In response, the FCC redefined ISPs as public utilities, putting them squarely under their jurisdiction. The FCC was then able to establish four rules prohibiting ISPs from taking certain actions.

The first rule refers to blocking, and states that broadband providers cannot block access to any legal content, applications, services, or devices. The second rule bans throttling, or ISPs’ deliberate attempts to slow down or impair legal Internet traffic on the basis of its content, applications, services, and devices. The third rule states that ISPs cannot use systems of paid prioritization, e.g., charging to prioritize content provider’s Internet traffic in exchange for payment.

Finally, the FCC also ruled that it has the authority to hear complaints and take appropriate action if an ISP’s conduct is suspected of being unreasonable or illegal. This empowers the FCC to monitor and regulate the actions of individual ISPs.

The Two Sides of the Argument

Net neutrality opponents – namely ISPs and their supporters – say that the new rules stifle the free market and are based on outdated legal arguments. These opponents also claim that the FCC’s rules will lead to new taxes and fees, though a document explaining the FCC’s viewpoint explicitly rules this out.

Net neutrality advocates – namely content providers and their supporters – say that without the new legislation, ISPs would be able to extort money out of content providers. In essence, they claim that without net neutrality rules in place, ISPs would limit innovation, hurt small businesses, and monopolize the Internet.

Many civil advocacy groups have also defended net neutrality, saying that it protects free speech. Without net neutrality, ISPs would be able to slow down or block the connections of political opponents. These groups claim that net neutrality stimulates competition, prevents unfair pricing practices, drives entrepreneurship, and promotes the spread of ideas.

Ongoing Debate

The FCC vote was a close call, with 3 in favor, 2 against. In early March, Rep. Marsha Blackburn introduced a bill in the House of Representatives that calls for reversing the FCC’s reclassification efforts. The Tennessee representative’s bill has 43 co-sponsors, but is not expected to be enacted.

The FCC’s rules are also being challenged in court. On March 23, a Texas-based ISP filed suit against the FCC. The industry trade group USTelecom is also suing the agency. The group claims that the FCC’s actions violated the Constitution and were “arbitrary, capricious, and an abuse of discretion.” Verizon, AT&T, and other telecommunications companies are all members of USTelecom.

The Future of the Internet

The decision to classify the Internet as a utility represents an unprecedented shift on the part of the FCC. In all likelihood, this ruling will have some unintended consequences, the least of which will be ongoing court cases.

The ongoing debate has created an environment full of uncertainty; uncertainty regarding what the FCC intends to do, how courts will react, and what private investors will do in response. For now at least, the principles of net neutrality are in place.