The Report and Order in the Open Internet docket on so-called “net neutrality” (Order) was released on December 23, 2010.

As we noted in the Legal Alert released on December 21 after the Order was adopted by 3-2 vote, the Order adopts Transparency, No Blocking, and No Unreasonable Discrimination rules for wireline broadband providers, and Transparency and No Blocking rules for wireless broadband providers. Para. 2. The Order is available here.

The rules apply to “broadband Internet access service,” defined as

A mass-market retail service by wire or radio that provides the capability to transmit data to and receive data from all or substantially all Internet endpoints, including any capabilities that are incidental to and enable the operation of the communications service, but excluding dial-up Internet access service. This term also encompasses any service that the Commission finds to be providing a functional equivalent of the service described in the previous sentence, or that is used to evade the protections set forth in this Part.

Para. 44. This definition does not include “specialized services” which the Commission will “closely monitor and proceed [with] incrementally … rather than adopting policies specific to such services at this time.” Para. 113.

RULES FOR WIRELINE PROVIDERS

For wireline broadband providers, the Transparency rule requires that

A person engaged in the provision of broadband Internet access service shall publicly disclose accurate information regarding the network management practices, performance, and commercial terms of its broadband Internet access services sufficient for consumers to make informed choices regarding use of such services and for content, application, service, and device providers to develop, market, and maintain Internet offerings.

Para. 54. The Order lists several types of information that should be disclosed, including congestion management practices, expected application-specific performance, security measures, and pricing information. Para. 56. The information must be posted on an easily accessible public website and the Commission may require broadband providers to report their disclosures directly to the Commission. Para. 57.

The No Blocking rule requires that

A person engaged in the provision of fixed broadband Internet access service, insofar as such person is so engaged, shall not block lawful content, applications, services, or nonharmful devices, subject to reasonable network management.

Para. 63. Broadband providers may block “unlawful content”, but the rules does not impose any obligation on the broadband provider to determine the legality of content. Para. 64.

The No Unreasonable Discrimination rule requires that

A person engaged in the provision of fixed broadband Internet access service, insofar as such person is so engaged, shall not unreasonably discriminate in transmitting lawful network traffic over a consumer’s broadband Internet access service. Reasonable network management shall not constitute unreasonable discrimination.

Para. 68. The factors by which discrimination will be reviewed for reasonableness include whether the practice was disclosed, the degree of end user control, whether the discrimination was use-agnostic, and whether an action comports with industry standard practice. Paras. 70-75. Paid prioritization would likely be unreasonable discrimination. Para. 76.

These rules are all be subject to the “reasonable network management” caveat, described as

A network management practice is reasonable if it is appropriate and tailored to achieving a legitimate network management purpose, taking into account the particular network architecture and technology of the broadband Internet access service.

Para. 82. Whether a particular network management is reasonable will be evaluated on a case-by-case basis, although broadband providers may seek advance rulings from the Commission before deploying a particular practice. Para. 84.

RULES FOR WIRELESS PROVIDERS

For mobile broadband providers, the Commission cited the rapidly changing nature of the technology as well as the competitive marketplace as reason not to impose the same rules on mobile networks that apply to wireline broadband. Paras. 94-95.

As to Transparency, wireless broadband providers must follow the same Transparency rule as wireline broadband providers, but they must also comply with added requirements to disclose their criteria for restricting third-party devices or applications. Para. 98.

The No Blocking rule is similar to the fixed broadband rule, but is separately stated as

A person engaged in the provision of mobile broadband Internet access service, insofar as such person is so engaged, shall not block consumers from accessing lawful websites, subject to reasonable network management; nor shall such person block applications that compete with the provider’s voice or video telephony services, subject to reasonable network management.

Para. 99. This rule will not, however, apply to “application stores” offered by the wireless provider, and it expressly allows wireless providers to “curate” their app stores just as other unregulated companies, such as Nokia, Apple, and RIM, are allowed to do. Para. 102. The Commission will continue to monitor mobile broadband to determine whether additional rules are necessary, and stated that it does not intend to condone practices by mobile broadband providers that would violate the Open Internet rules for wireline broadband. Paras. 104-105.

ENFORCEMENT, EFFECTIVE DATE, AND REVIEW

Enforcement of these rules will occur by private agreement, informal and formal complaints, and Commission action. Informal complaints will not carry a filing fee, and the Commission will monitor trends in informal complaints to determine whether investigations are necessary. Para. 153. Formal complaints will operate under the Part 76 rules for cable access complaints and can be filed by any aggrieved party. Paras. 155-156. Complainants must provide an affidavit describing the alleged rule violation, and the broadband provider must answer the allegations and show why the challenged practice was reasonable. Paras. 157, 159. Complainants nonetheless bear the burden of proving that a violation occurred by a preponderance of the evidence. Para. 157. Enforcement actions by the Commission could lead to forfeiture penalties. Para. 160.

The Order creates an “Open Internet Advisory Committee” that will hold public meetings and aid the Commission “in tracking developments with respect to the freedom and openness of the Internet, in particular with respect to issues discussed in this Order, including technical standards and issues relating to mobile broadband and specialized services.” Para. 162.

The Commission will review and consider adjustments to the rules within two years of the effective date of the rules. Para. 163. The Order becomes effective 60 days after the Federal Register publishes the decision of the Office of Management and Budget regarding approval of the information collection requirements contained in the rules; this delayed effective date was adopted in order to give broadband providers adequate time to develop cost-effective methods of compliance. Paras. 13, 173.