The FCC s 2015 Open Internet Order. What You Need to Know and What s Next

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1 The FCC s 2015 Open Internet Order What You Need to Know and What s Next John Heitmann Steve Augustino Tom Cohen Hank Kelly Chip Yorkgitis Jameson Dempsey Robyn Mohr March 24, 2015

2 Topics History of the Open Internet Proceedings Overview of the 2015 Open Internet Order Net Neutrality Provisions Title II Reclassification and Forbearance Unanswered Questions and Future Proceedings 2

3 An (Abridged) History of the Open Internet: BIAS as an Information Service 1960s-1980s: FCC Computer Inquiries distinguish between basic transmission and enhanced (i.e., data) services 1996 Telecommunications Act delineates between telecommunications services and information services In 2002, the FCC classifies cable modem broadband Internet access services as an information service under the Communications Act Rationale: BIAS is a service that inextricably intertwines telecommunications with information services, such as DNS, caching, , and web hosting. Therefore, the entire service is an integrated information service The Supreme Court upheld the Commission s classification in NCTA v. Brand X Internet Servs. (2005) The FCC extends this rationale to wireline, wireless, and broadband-over-powerline (BPL) BIAS 3

4 An (Abridged) History of the Open Internet: Commission Actions and Court Challenges 2005 Four Open Internet Principles Comcast v. FCC (D.C. Cir. 2010): FCC does not have authority to enforce the 2005 principles against cable broadband providers 2010 Open Internet Order Verizon v. FCC (D.C. Cir. 2014): The FCC does not have the authority to implement common-carrier-like restrictions on non-common carrier broadband providers. Section 706 is a substantive grant of authority (transparency rules upheld) 2014 Open Internet NPRM 3.7 million comments Three approaches: Section 706, Title II, or a hybrid? 4

5 The 2015 Open Internet Order Adopted on February 26, 2015; released March 12, vote on party lines Strong dissents from Commissioners Pai and O Rielly The Order Establishes strong open Internet rules Three bright-line rules A general future conduct standard Enhanced transparency rule Reclassifies BIAS as a telecommunications service under Title II of the Communications Act, as amended Imposes some rules Forbears from others 5

6 Three Bright-Line Open Internet Rules (1/3) Rule 1: No blocking. A person engaged in the provision of broadband Internet access service, insofar as such person is so engaged, shall not block lawful content, applications, services, or non-harmful devices, subject to reasonable network management. 6

7 Three Bright-Line Open Internet Rules (2/3) Rule 2: No throttling. A person engaged in the provision of broadband Internet access service, insofar as such person is so engaged, shall not impair or degrade lawful Internet traffic on the basis of Internet content, application, or service, or use of a non-harmful device, subject to reasonable network management. 7

8 Three Bright-Line Open Internet Rules (3/3) Rule 3: No paid prioritization. A person engaged in the provision of broadband Internet access service, insofar as such person is so engaged, shall not engage in paid prioritization. A waiver may be granted if the practice: 1. Has a significant public interest benefit and 2. Does not harm the nature of the open Internet 8

9 No Unreasonable Interference/Disadvantage Standard The no unreasonable interference/disadvantage standard: BIAS providers shall not unreasonably interfere with or unreasonably disadvantage (i) end users ability to select, access, and use broadband Internet access service or the lawful Internet content, applications, services, or devices of their choice, or (ii) edge providers ability to make lawful content, applications, services, or devices available to end users. Reasonable network management shall not be considered a violation of this rule. Factors to guide case-by-case application of the rule: End-user control Competitive effects Consumer protection Free expression Application agnostic Standard practices Effect on innovation, investment, or broadband deployment 9

10 An Enhanced Transparency Rule Enhanced Transparency Rules Retains existing transparency rules from 2010 Open Internet Order Requires additional enhanced disclosures Commercial terms Actual, localized, technology-specific performance characteristics, including packet loss User- or user-group-specific network practices Establishes a Safe Harbor Temporary Exemption until December 15, 2015 Applies to small BIAS providers (< 100k customers) Only extends to enhanced transparency rules Exemption automatically expires unless CGB extends it 10

11 Scope of the Open Internet Rules Applies to fixed and mobile BIAS Fixed: wired broadband, fixed wireless broadband Mobile: smartphones, tablets, mobile satellite Does not apply to: VPNs, CDNs, hosting, data storage, backbone services, and special access services Premises operators (e.g., coffee shops, airlines, or libraries) Non-BIAS data services (e.g., fixed VoIP, IP video, or smart meters) 11

12 Enforcement of the Net Neutrality Rules Baseline enforcement avenues Formal complaints Informal complaints Self-initiated investigations Additional procedures Advisory opinions Enforcement advisories Open Internet ombudsperson Outside technical expertise 12

13 Roundtable 1: The New Net Neutrality Rules Participants: John Heitmann Chair Steve Augustino Partner Tom Cohen Partner Chip Yorkgitis Partner Hank Kelly Partner 13

14 Reclassification of BIAS as a Title II Telecommunications Service FCC classifies fixed and mobile BIAS as a telecommunications service Mobile BIAS is a commercial mobile service (or its functional equivalent) under Title III FCC states that its classification is prospective only FCC asserts jurisdiction over derivative services (i.e., the link to edge providers) Non-mass-market services are not BIAS Preempts inconsistent state regulation over BIAS 14

15 Title II Provisions That Will Apply Provisions that will apply: Sections 201 and 202: no unjust or unreasonable practices, regulations, and classifications Sections , 216, and 217: enforcement provisions Section 222: privacy and data security Section 224: pole attachments Sections 225, 255, and 251(a)(2): disabilities access Sections 214(e) and 254: universal service 15

16 Sections 201 and 202: Unjust and Unreasonable Practices; Nondiscrimination Section 201: No unjust or unreasonable practices (a) BIAS providers must (1) provide BIAS service upon reasonable request, (2) establish physical connections with other carriers (3) establish through routes and charges applicable thereto and the divisions of such charges, and (4) provide facilities and regulations for operating such through routes (b) All charges, practices, classifications, and regulations for and in connection with such communication service, shall be just and reasonable, and any such charge, practice, classification, or regulation that is unjust or unreasonable is declared to be unlawful Section 202: Nondiscrimination Unlawful for a BIAS provider to make any unjust or unreasonable discrimination in charges, practices, classifications, regulations, facilities, or services... or to make or give any undue or unreasonable preference or advantage... or... any undue or unreasonable prejudice or disadvantage But the FCC forbears from applying Sections 201 and 202 to the extent they would authorize rate regulation of BIAS providers (with the exception of the no paid prioritization rule). 16

17 Sections 201 and 202: Interconnection Definition of BIAS includes the exchange of traffic between an edge provider (or intermediary) with the BIAS provider s network ( Internet Traffic Exchange ) Sections 201 and 202 (and the enforcement provisions of 208) will apply to commercial arrangements for the Internet Traffic Exchange between BIAS providers and Transit providers CDNs Edge providers The open Internet Rules prohibitions on blocking, throttling, paid prioritization, and the no unreasonable interference/disadvantage standard and Section 251 interconnection do not apply to Internet Traffic Exchange 17

18 Sections , 216, and 217: Enforcement Provisions Section 206: Carrier liability for Communications Act (and rule) violations (including attorney s fees) Section 207: Authority to bring complaints at the FCC or to bring suits for the recovery of damages in any federal district court Section 208: Authority for persons to bring complaints at the FCC and for the Commission to investigate those complaints Section 209: Requirement for the Commission to order payment of damages Section 216: Extension of laws to receivers and trustees Section 217: Supervisory liability (employee/agent acts) 18

19 Section 222: Privacy Proprietary Information (Section 222(a)): Establishes a duty of telecommunications carriers to protect the confidentiality of proprietary information ( PI ) of and relating to carriers, equipment manufacturers, and customers Affirms YourTel/TerraCom expansion of Section 222(a) Carrier Proprietary Information (Section 222(b)): Prohibits carriers who receive PI from other carriers for the purpose of providing telecommunications from using that PI for other purposes, including marketing Customer Proprietary Network Information (Section 222(c)): Defines CPNI and establishes situations in which carriers may use CPNI without obtaining additional consent Forbears from applying CPNI regulations (consent framework, data security, etc.) Foreshadows a forthcoming privacy proceeding 19

20 Section 224: Pole Attachments Section 224: Provides the FCC with authority to ensure that rates, terms, and conditions for pole attachments by telecom carriers and cable operators are just and reasonable Gives the Commission authority to hear pole attachment complaints Establishes a reverse preemption under which states may preempt FCC authority over poles Imposes obligations on utilities and local exchange carriers that own poles, ducts, conduits, or rights-of-way used for wire communications to ensure that BIAS providers have access on nondiscriminatory rates, terms, and conditions Note: Order states that it is not the Commission s intent to see any increase in the rates for pole attachments paid by cable operators that also provide BIAS Source: ACA 20

21 Section 225, 255, and 251(a)(2): Disabilities Access Section 225: Requires telecommunications service providers to offer (themselves or through a third-party) TRS to hearing-impaired and speechimpaired individuals. However, the Commission forbears from requiring BIAS providers to contribute to the TRS fund Section 255: Requires telecommunications service providers and equipment manufacturers to make their services and equipment accessible to and usable by persons with disabilities, unless it would not be readily achievable Section 251(a)(2): Prohibits a carrier from installing network features, functions, or capabilities that do not comply with the guidelines and standards established pursuant to section 255 Note: to the extent that there is a conflict between Sections 255 and 251(a)(2) and the Twenty-First Century Communications and Video Accessibility Act ( CVAA ) and its implementing rules, the CVAA controls 21

22 Section 214(e) and 254: Universal Service Section 214(e): Establishes eligibility requirements for receiving universal service support Section 254: Universal Service Fund: A $9 billion fund that seeks to ensure access to advanced telecommunications and information services for all Americans through four programs: High-Cost Program (Connect America Fund) Low-Income Program (Lifeline) Schools and Libraries Program (E-Rate) Rural Health Care Program (and Healthcare Connect Fund) Note: The FCC forbears from requiring BIAS providers to contribute to the USF and forbears from certain rate-regulation provisions of Section

23 Title II Provisions That Will Not Apply Provisions that will not apply: Sections 203 and 204: tariffing Sections 205 and 212: enforcing rates and practices Sections 211, 213, 215, and : information collection and reporting Section 214: discontinuance, transfer of control, and network reliability Sections 251, 252, and 256: interconnection and market-opening provisions Section 258: subscriber changes (slamming) Other rules that will not apply Truth-in-billing obligations Roaming-related provisions (note: existing data roaming rules will still apply) 23

24 Roundtable 2: Title II and Forbearance Participants: John Heitmann Chair Steve Augustino Partner Tom Cohen Partner Chip Yorkgitis Partner Hank Kelly Partner 24

25 Effective Dates; Appeal and Reconsideration Deadlines Effective Dates Most rules will become effective 60 days after publication in the Federal Register Rules that contain new or modified information collection requirements will become effective pending OMB approval. The Commission will set an effective date in a future Federal Register notice Appeal or Reconsideration Deadline Must file a petition for reconsideration with FCC within 30 days after public notice (Federal Register publication) Must file a petition for review with court within 60 days after publication in the Federal Register For appeals, there is a race to the courthouse for jurisdiction (USTelecom/Alamo) Congressional Disapproval (Congressional Review Act): Requires veto-proof majority 25

26 Unanswered Questions and Future Proceedings USF contributions Privacy obligations & FTC jurisdiction Scope of non-bias data services OTT Services: messaging and VoIP And many, many more 26

27 Roundtable 3: Unanswered questions and future proceedings Participants: John Heitmann Chair Steve Augustino Partner Tom Cohen Partner Chip Yorkgitis Partner Hank Kelly Partner 27

28 Questions? Jameson J. Dempsey Associate, Communications, Privacy & Information Security, and TCPA Defense Phone: (202) Robyn P. Mohr* Associate, Communications Phone: (202) *Admitted only in NY. Supervised by principals of the firm who are members of the DC bar. 28

29 Upcoming Kelley Drye Webinar Equipment Authorization Rules: What Manufacturers, Retailers, and Others in the Chain Need to Know Thursday, April 2 nd from 12:00 1:00 PM ET Please click here to RSVP Chip Yorkgitis Partner, Communications Phone: (202) Josh Guyan Senior Associate, Communications Phone: (202)

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