Challenges to new FCC rules will likely have an impact on all businesses, small and large.
On February 26, 2015, the Federal Communications Commission (FCC) adopted rules which upheld “net neutrality.” Net neutrality is the principle that information on the Internet should be moved impartially, without regard to content, destination or source. The controversy over net neutrality is that high-speed internet service providers (ISPs) like Comcast and Verizon have moved for two-tiered Internet service, meaning ISPs could charge content providers a premium fee for priority placement and faster speed across their systems. For large corporations and businesses, paying those premiums would be feasible. However, small businesses would likely find themselves at a disadvantage if unable to pay for those same premiums.
Challenging the Open Internet Order
In 2010, in an effort to preserve net neutrality, the FCC published the Open Internet Order, which adopted three basic rules regarding ISPs and net neutrality:
- Transparency: ISPs had to disclose their network management practices, performance characteristics, and terms and conditions of their broadband services;
- No blocking: ISPs could not block lawful content, applications, services or non-harmful devices; and
- No unreasonable discrimination: ISPs could not unreasonably discriminate in transmitting lawful network traffic.
Following its issuance, Verizon legally challenged the 2010 Open Internet Order, leading to a 2014 decision by the District of Columbia Court of Appeals which sided with the ISPs and vacated two parts of the Open Internet Order. Specifically, in Verizon v. FCC, the Court of Appeals determined that the FCC did not have the authority to impose net neutrality without classifying ISPs as common carriers. The court stated that since the FCC had classified broadband providers as “information services” and not “telecommunications services,” they could not be regulated as common carriers under Title II of the Communications Act of 1934. In ruling for Verizon, the Court of Appeals vacated the “no blocking” and “no unreasonable discrimination” portions of the 2010 Open Internet Order, which are the cornerstones of net neutrality.
In Response: Fast, Fair and Open
In response to the decision in Verizon v. FCC, the FCC was forced to re-explore its ability to create net neutrality rules. In May 2014, the FCC proposed rules that would allow “fast lanes” and “slow lanes” online, but also included considerations about whether to reclassify ISPs as common carriers. John Oliver, host of the HBO late-night show Last Week Tonight, weighed in by calling on the public to provide comment to the FCC to protect net neutrality. The FCC was subsequently hit with 3.7 million comments weighing in on the matter. President Obama also voiced his support for net neutrality and called for reclassifying ISPs as common carriers under Title II, which would subject ISPs to FCC regulation.
On February 26, 2015, the FCC enacted a new Open Internet Order with three basic rules:
- No blocking: Broadband providers could not block access to legal content, applications, services or non-harmful devices;
- No throttling: Broadband providers could not impair or degrade lawful Internet traffic on the basis of content, applications, services or non-harmful devices; and
- No paid prioritization: Broadband providers could not favor some lawful Internet traffic over other lawful traffic in exchange for consideration of any kind—in other words, no “fast lanes.”
These rules were enacted in response to the Verizon v. FCC decision, reclassifying ISPs as telecommunication service providers, finally subjecting them to FCC regulation. In its press release, the FCC stated, “These new rules are guided by three principles: America’s broadband networks must be fast, fair and open—principles shared by the overwhelming majority of the nearly four million commenters.”
The Pros and Cons
Supporters of net neutrality say that it essentially lowers the barriers of entry for entrepreneurs, startups and small businesses by ensuring that the Internet provides a fair and level playing field for all. Supporters say that net neutrality will continue to enable small businesses and entrepreneurs to thrive on the Internet. They argue that if net neutrality dies, the Internet will become home to “fast lanes” which will allow ISPs to charge premiums to customers that want to ensure that visitors to their sites get access with optimal speeds. For large companies, paying the premiums may be feasible. However, small businesses may find paying the premiums difficult. Supporters state that without a functional website accessible via the “fast lane,” it will be difficult for these small businesses to thrive.
Opponents of net neutrality argue that ISPs have to be free to manage their networks so all customers receive adequate levels of service. Opponents also argue that regulation of the Internet will negatively influence innovation, which the Internet fosters and that some level of restriction, or at least prioritization, is necessary to promote the best interest of consumers as a whole. Furthermore, opponents argue that bandwidth is a limited commodity and not all internet traffic is of equal importance. They argue that public policy actually requires some discretion to the ISPs to allow priority for certain internet content, such as a doctor waiting to view a high-resolution image CAT scan for a critical ER patient.
The newly enacted FCC rules are likely to be challenged by opponents. The results of these challenges will likely have an important impact on all businesses, small and large alike. iBi