Consumer Groups Decry FCC's Net Neutrality Proposal

In January, the U.S. Court of Appeals for the D.C. Circuit struck down FCC rules barring Internet service providers from discriminating against or blocking network traffic. See, “D.C. Circuit Voids FCC 'Net Neutrality' Order,” The American Lawyer'(registration required). Rather than appealing the ruling, the FCC in February opened a new docket “to consider the court's decision and what actions the commission should take.” See, “FCC To Craft New Net Neutrality Rules,” Internet Law & Strategy, March 2014 (subscription required).

In the FCC blog, Wheeler said the proposed rulemaking “does not change the underlying goals of transparency, no blocking of lawful content, and no unreasonable discrimination among users,” he wrote. “To be very direct, the proposal would establish that behavior harmful to consumers or competition by limiting the openness of the Internet will not be permitted.”

He also said that the FCC will set a will set a “high bar” for what is commercially reasonable and “will seek ideas on other approaches to achieve this important goal consistent with the court's decision.”

Still, consumer advocates were not mollified. “Standards like 'commercial reasonableness' will never serve the public interest, instead it allows corporations to pay more, for better access, creating an Internet that is separate and unequal,” Amalia Deloney, policy director at the Center for Media Justice (CMJ), said in a written statement.

Jessica Gonzalez, general counsel to the National Hispanic Media Coalition (NHMC), added that Internet fast lanes “would be out of reach for non-profits, independent creators and small businesses who have thrived under fair rules of the road. There are countless stories of Latinos and other people of color ' who have long faced marginalization from and discrimination in the traditional media system ' using the Internet to organize, produce news and entertainment content, and make a living.”

Free Press policy director Matt Wood in an interview said the proposed rule would likely face the same obstacles before the court as the FCC's most recent failed attempt to regulate the Internet. In 2010, the FCC asserted authority under Section 706(a) and 706(b) of the Telecommunications Act of 1996. The provisions direct the agency to “encourage the development ' of advanced telecommunications” services and empower it to take steps to accelerate broadband deployment.

But the D.C. Circuit found it was impermissible for the FCC to impose common carrier type regulations on Internet service providers while classifying them as “information service” providers.

The New Proposed Rules

The latest proposal still imposes some common carrier-type obligations ' a ban barring Internet service providers from blocking content or favoring traffic from an affiliated entity. “To the extent that the [new net neutrality] rules are effective, they will be invalid,” Wood said. He argued that the only solution is for the FCC to reclassify broadband as a Title II service, like common carriers. “It's politically difficult but legally correct,” he said.

Wheeler left the possibility open, writing that Title II reclassification “remains a clear alternative.”

Still, in some ways, the proposed rule is not so different from the status quo. Netflix Inc. already has struck deals to pay Internet service providers for faster and more reliable service. But in comments filed with the FCC in March, the company made it clear that it did so under duress “to ensure a high quality member experience.”

Internet service providers “sometimes point to data showing that Netflix members account for about 30% of peak residential Internet traffic, so the ISPs want us to share in their costs,” Netflix said. “But they don't also offer for Netflix or similar services to share in the ISPs revenue, so cost-sharing makes no sense. When an ISP sells a consumer a 10 or 50 megabits-per-second Internet package, the consumer should get that rate, no matter where the data is coming from.”

The FCC plans to conclude the proceedings and have rules in place by the end of the year.

Jenna Greene is a Senior Reporter with the National Law Journal, an ALM affiliate of e-Commerce Law & Strateg. She can be reached at [email protected]. Follow her on Twitter @JgreeneJenna.

Consumer advocates reacted with dismay to reports that the Federal Communications Commission (FCC) plans to allow Internet service providers to charge companies a toll for faster access, while FCC Chairman Tom Wheeler defended the proposed rules as consistent with the underlying goals of net neutrality.

“This approach is almost certain to be rejected by the courts,” said Free Press'president Craig Aaron in a written statement. “This is not net neutrality. It's an insult to those who care about preserving the open Internet to pretend otherwise.”

Wheeler, in a blog post on April 24, stressed that any tolls must be “commercially reasonable” and called allegations that new rules will result in “anti-competitive” price increases for consumers unfounded. “That is exactly what the 'commercially unreasonable' test will protect against: harm to competition and consumers stemming from abusive market activity,” he wrote. See, “Setting the Record Straight on the FCC's Open Internet Rules,” FCC.gov.

In January, the U.S. Court of Appeals for the D.C. Circuit struck down FCC rules barring Internet service providers from discriminating against or blocking network traffic. See, “D.C. Circuit Voids FCC 'Net Neutrality' Order,” The American Lawyer'(registration required). Rather than appealing the ruling, the FCC in February opened a new docket “to consider the court's decision and what actions the commission should take.” See, “FCC To Craft New Net Neutrality Rules,” Internet Law & Strategy, March 2014 (subscription required).

In the FCC blog, Wheeler said the proposed rulemaking “does not change the underlying goals of transparency, no blocking of lawful content, and no unreasonable discrimination among users,” he wrote. “To be very direct, the proposal would establish that behavior harmful to consumers or competition by limiting the openness of the Internet will not be permitted.”

He also said that the FCC will set a will set a “high bar” for what is commercially reasonable and “will seek ideas on other approaches to achieve this important goal consistent with the court's decision.”

Still, consumer advocates were not mollified. “Standards like 'commercial reasonableness' will never serve the public interest, instead it allows corporations to pay more, for better access, creating an Internet that is separate and unequal,” Amalia Deloney, policy director at the Center for Media Justice (CMJ), said in a written statement.

Jessica Gonzalez, general counsel to the National Hispanic Media Coalition (NHMC), added that Internet fast lanes “would be out of reach for non-profits, independent creators and small businesses who have thrived under fair rules of the road. There are countless stories of Latinos and other people of color ' who have long faced marginalization from and discrimination in the traditional media system ' using the Internet to organize, produce news and entertainment content, and make a living.”

Free Press policy director Matt Wood in an interview said the proposed rule would likely face the same obstacles before the court as the FCC's most recent failed attempt to regulate the Internet. In 2010, the FCC asserted authority under Section 706(a) and 706(b) of the Telecommunications Act of 1996. The provisions direct the agency to “encourage the development ' of advanced telecommunications” services and empower it to take steps to accelerate broadband deployment.

But the D.C. Circuit found it was impermissible for the FCC to impose common carrier type regulations on Internet service providers while classifying them as “information service” providers.

The New Proposed Rules

The latest proposal still imposes some common carrier-type obligations ' a ban barring Internet service providers from blocking content or favoring traffic from an affiliated entity. “To the extent that the [new net neutrality] rules are effective, they will be invalid,” Wood said. He argued that the only solution is for the FCC to reclassify broadband as a Title II service, like common carriers. “It's politically difficult but legally correct,” he said.

Wheeler left the possibility open, writing that Title II reclassification “remains a clear alternative.”

Still, in some ways, the proposed rule is not so different from the status quo. Netflix Inc. already has struck deals to pay Internet service providers for faster and more reliable service. But in comments filed with the FCC in March, the company made it clear that it did so under duress “to ensure a high quality member experience.”

Internet service providers “sometimes point to data showing that Netflix members account for about 30% of peak residential Internet traffic, so the ISPs want us to share in their costs,” Netflix said. “But they don't also offer for Netflix or similar services to share in the ISPs revenue, so cost-sharing makes no sense. When an ISP sells a consumer a 10 or 50 megabits-per-second Internet package, the consumer should get that rate, no matter where the data is coming from.”

The FCC plans to conclude the proceedings and have rules in place by the end of the year.

Jenna Greene is a Senior Reporter with the National Law Journal, an ALM affiliate of e-Commerce Law & Strateg. She can be reached at [email protected]. Follow her on Twitter @JgreeneJenna.