In a 3-2 vote, the Federal Communications Commission (FCC) today adopted Open Internet, or so-called “net neutrality”, rules, citing the need to foster the cycle of investment and innovation in Internet services and to protect consumers. The Order has not been released as of the time of this Legal Alert. Upon release of the full text, Arent Fox will release an additional Alert providing a summary and analysis.

According to the presentations of FCC Staff, the FCC adopted “three basic rules” for wireline-based broadband Internet service:

• Transparency – Broadband providers must disclose their network management practices, performance characteristics, and commercial terms on their websites and sales material.
• No blocking – Broadband providers may not block lawful content, applications, services, or nonharmful devices.
• No unreasonable discrimination – Broadband providers may not discriminate unreasonably against lawful content, services, or applications in transmitting traffic.

All of these rules are subject to reasonable network management practices which must be “appropriate and tailored.” Notably, the FCC has not adopted rules for so-called “specialized services”, and instead will observe those services as they develop to determine whether they promote investment and benefit consumers, or are being used to circumvent open Internet rules. Paid prioritization of traffic is, however, expressly prohibited according to the remarks of Chairman Julius Genachowski and Commissioner Michael Copps.

Recognizing the fact that mobile broadband is an emerging technology and that “consumers are using mobile broadband at an accelerating pace,” the FCC adopted just two rules for mobile broadband Internet access service:

• Transparency – This rule is analogous to the rule applied to wireline-based services, but also requires mobile broadband providers to reveal their policies regarding third-party applications and devices.
• No blocking – Wireless broadband carriers may not block “lawful” websites and applications that compete with their own telephony and video services. According to the statement of Ruth Milkman, Chief of the Wireless Telecommunications Bureau, the “no blocking” rule does not apply to mobile broadband providers in their operation of applications stores.

These rules are also subject to reasonable network management practices.

The Order provides three enforcement mechanisms: informal complaints; formal complaints; and Commission investigation. It expressly empowers consumers to file informal complaints via the FCC website without incurring a filing fee. Formal complaints require ten days’ prior notice to the broadband provider and will be administered under the Commission’s so-called “Rocket Docket” procedures.

According to the statement of Austin Schlick, FCC General Counsel, the Order relies on the authority of Section 706 of the Telecommunications Act of 1996 as it operates through several existing statutory mandates, including the FCC’s obligations to promote competition, safeguard interconnection, and advance video competition.

Commissioner Copps noted in his remarks that he considered dissenting from the Order “very, very seriously,” and characterized the order as a “major flip-flop” in Commission policy. He nonetheless voted in favor of the Order, though not “wholeheartedly”. Predictably, Commissioners McDowell and Attwell Baker dissented on the ground that the Commission lacks authority to adopt Open Internet rules and has failed to explain why such rules are necessary.