After the Federal Communications Commission (FCC) released its draft Order on Restoring Internet Freedom (RIF) on November 22, 2017, there are now two things related to this topic that are a virtual certainty. The first is that the Commission will approve this draft Order with no more than minor changes by a partisan 3-2 vote on December 14, 2017. The second is that the proponents of net neutrality will petition the courts for both an emergency stay as well as appeal the Commission’s decision in an attempt to restore the contours of the Title II Order.

The big question is what is around the corner after that? We offer some early observations, attempting to rise above the very partisan opinions available on both sides of the issue. The ultimate outcome of this decision impacts rural broadband carriers on several levels, both regarding the signature issue of net neutrality rules and several related impacts of Title I versus Title II designations.

Specific rules eliminated and transparency requirements adopted
The proposed RIF Order eliminates the rules related to blocking, throttling and paid prioritization, as well as the Internet Conduct standard. Instead, the FCC would maintain less burdensome transparency requirements that ISPs disclose information about their practices to consumers, entrepreneurs and the Commission. Paragraph 216 details eight areas of disclosure: blocking, throttling, affiliated prioritization, paid prioritization, congestion management, application-specific behavior, device attachment rules, and security.

If the courts allow the new rules to stay in place, you will need to review your disclosures concerning your practices before the effective date of the rules to ensure that they comply. If a stay is granted, current practices remain in effect.

Other Important issues
Privacy. At paragraph 177, the Commission states that: “By reinstating the information service classification of broadband Internet access service, we return jurisdiction to regulate broadband privacy and data security to the Federal Trade Commission (FTC), the nation’s premier consumer protection agency and the agency primarily responsible for these matters in the past.” As you recall, earlier this year Congress eliminated the privacy rules adopted by the Commission in 2016 by using the Congressional Review Act. However, as long as broadband Internet access service (BIAS) was a Title II service, the FTC could not exercise jurisdiction because it is not allowed to regulate common carrier services. That now changes as BIAS would no longer be classified as common carriage under the draft Order.

Preemption. At paragraph 190, the Commission concluded “that regulation of broadband Internet access service should be governed principally by a uniform set of federal regulations, rather than by a patchwork of separate state and local requirements.” Thus, the Commission repeals all state and local laws and regulations that impose rules inconsistent with the Order.

Hold Harmless. The Commission asserts that reclassification of broadband Internet access service as an information service will not affect access to infrastructure, federal high-cost support, and Lifeline.

Interconnection. The Commission indicates that Wheeler FCC erred in adopting one-sided interconnection obligations on what the draft Order calls “last mile ISPs,”, and leaves more faith in antitrust relief than our established industry advocacy position is comfortable with.

Optionality. At paragraphs 170 – 172, the Commission returns “to the pre-Title II Order status quo and allow providers voluntarily electing to offer broadband transmission on a common carrier basis to do so . . .”

Contribution Forbearance. At paragraph 175, the Commission seems to indicate progress is being made on the June, 2017 petition from NTCA and USTA seeking temporary forbearance from USF contribution obligations imposed on broadband internet transmission services provided by RLECs on a common carrier basis, pending comprehensive contribution reform. We are hopeful that the FCC will grant the petition by June 30, 2018.

Paid Prioritization. At paragraph 252, the Commission states that BIAS is a “two-sided market” which allows broadband ISPs to negotiate charges for edge providers. Paragraph 249 notes that “eliminating the ban on paid prioritization will help spur innovation and experimentation, encourage network investment, and better allocate the costs of infrastructure, likely benefitting consumers and competition.”

Please contact David Cohen on 202.236.3947 or Jeff Smith on 503.612.4409 if you have any questions. As you would expect, this is certainly not the final word on this important regulatory topic, and we will have additional information to share throughout this process.