Parsing a New Net Dereg Reality

FCC Restoring Internet Freedom order makes case for light touch
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The FCC has finally released the language of its controversial Restoring Internet Freedom order, which the Republican majority approved Dec. 14 against visceral opposition from Democrats--edits to the item continued through this week.

Here are some key passages of the final language of a decision that ISPs have celebrated, Democratic members of Congress are trying to overturn, and activists say spells the end of an open internet as we know it.

That key language includes that case-by-case enforcement by other agencies of perceived non-neutral actions covers all of the 'net ecosystem--including the Googles and Facebooks and Twitters or the world--and that such an approach is preferable to "thou shalt not" mandates on ISPs alone because it does not nip "new innovative business arrangements" in the bud and allows the "ever-evolving internet ecosystem" to ever evolve.

The order defines just what ISPs will have to disclose under enhanced rules that still manage to reduce the reporting requirements in the 2015 order. The following are practices that are not barred by FCC rules, but which the Federal Trade Commission or Justice Department could decide were anticompetitive or unfair.

Blocking. "Any practice (other than reasonable network management elsewhere disclosed) that blocks or otherwise prevents end user access to lawful content, applications, service, or non-harmful devices, including a description of what is blocked."

Throttling. "Any practice (other than reasonable network management elsewhere disclosed) that degrades or impairs access to lawful Internet traffic on the basis of content, application, service, user, or use of a non-harmful device, including a description of what is throttled."

Affiliated Prioritization. "Any practice that directly or indirectly favors some traffic over other traffic, including through use of techniques such as traffic shaping, prioritization, or resource reservation, to benefit an affiliate, including identification of the affiliate."

Paid Prioritization. "Any practice that directly or indirectly favors some traffic over other traffic, including through use of techniques such as traffic shaping, prioritization, or resource reservation, in exchange for consideration, monetary or otherwise."

Congestion Management. "Descriptions of congestion management practices, if any. These descriptions should include the types of traffic subject to the practices; the purposes served by the practices; the practices’ effects on end users’ experience; criteria used in practices, such as indicators of congestion that trigger a practice, including any usage limits triggering the practice, and the typical frequency of congestion; usage limits and the consequences of exceeding them; and references to engineering standards, where appropriate."

Application-Specific Behavior. "Whether and why the ISP blocks or rate-controls specific protocols or protocol ports, modifies protocol fields in ways not prescribed by the protocol standard, or otherwise inhibits or favors certain applications or classes of applications.”

Device Attachment Rules. "Any restrictions on the types of devices and any approval procedures for devices to connect to the network."

Security. "Any practices used to ensure end-user security or security of the network, including types of triggering conditions that cause a mechanism to be invoked (but excluding information that could reasonably be used to circumvent network security)."

Here's why the majority is OK with deeding most of the enforcement of an open internet to other agencies:

"In the unlikely event that ISPs engage in conduct that harms Internet openness, despite he paucity of evidence of such incidents, we find that utility-style regulation is unnecessary to address such conduct. Other legal regimes—particularly antitrust law and the FTC’s authority under Section 5 of the FTC Act to prohibit unfair and deceptive practices—provide protection for consumers. These long-established and well-understood antitrust and consumer protection laws are well-suited to addressing any openness concerns, because they apply to the whole of the Internet ecosystem, including edge providers, thereby avoiding tilting the playing field against ISPs and causing economic distortions by regulating only one side of business transactions on the Internet."

As to arguments that the FTC lacks independent authority to enforce openness, the FCC cites Verizon's argument that " “[i]f broadband service providers’ conduct falls outside [the FTC’s] grant of jurisdiction—that is, if their actions cannot be described as anticompetitive, unfair, or deceptive—then the conduct should not be banned in the first place.”

While the FCC is preempting state attempts to impose their own net neutrality regs " that are inconsistent with the federal deregulatory approach we adopt," it cites states as partners in enforcement, pointing out that "all states have laws proscribing deceptive trade practices." The order added: "We do not disturb or displace the states’ traditional role in generally policing such matters as fraud, taxation, and general commercial dealings, so long as the administration of such general state laws does not interfere with federal regulatory objectives."

The item reclassifies interconnection out from under Title II, which the FCC says should not result in ISPs slowing traffic to extract higher fees. "We find that present competitive pressures in the market for Internet traffic exchange mitigate the risk that an ISP might block or degrade edge provider traffic through arrangements for Internet traffic exchange sufficiently to undermine the need for regulatory oversight through Title II regulation." The item cites NCTA's point that “the edge providers that send enough traffic to impact interconnection—e.g., Netflix, Google/YouTube, Facebook, and Amazon—are entities critical for a broadband provider to meet its customers’ needs.”

Fun fact: Not all ISPs are being reclassified. Some smaller, rural, ISPs providing DSL broadband service have been able to opt for Title II status and the benefits of pooled tariff arrangements and USF funds. The reclassification will not affect their Title II status. "Irrespective of the regulatory classification of broadband Internet access services, the Commission has continuously permitted facilities-based wireline carriers to provide broadband Internet transmission services on a Title II common carriage basis, with substantial flexibility in deciding how such services may be offered."

On eliminating the ban on paid prioritization: "[T]he incremental benefit of a ban on paid prioritization is likely to be small or zero. On the other hand, we expect that eliminating the ban on paid prioritization will help spur innovation and experimentation, encourage network investment, and better allocate the costs of infrastructure, likely benefiting consumers and competition."

On getting rid of the no-blocking and throttling rules: "We find the no-blocking and no-throttling rules are unnecessary to prevent the harms that they were intended to thwart. We find that the transparency rule we adopt today—coupled with our enforcement authority and with FTC enforcement of ISP commitments, antitrust law, consumer expectations, and ISP incentives—will be sufficient to prevent these harms, particularly given the consensus against blocking practices, as reflected in the scarcity of actual cases of such blocking."

On the limits of Sec. 706: "We conclude that the directives to the Commission in section 706(a) and (b) of the 1996 Act to promote deployment of advanced telecommunications capability are better interpreted as hortatory [encouraging], and not as grants of regulatory authority," calling the 2015 order's conclusion that they were independent grants "misguided and flawed."

The rules will not take effect until they are printed in the Federal Register and the Office of Management and Budget signs off on the paperwork collection obligations, which means likely late first quarter.

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