FCC releases net neutrality order, industry preps lawsuits

The FCC has delivered its long-awaited net neutrality order that reclassifies ISPs under Title II of the Communications Act, one that will open a host of legal challenges from major telcos like AT&T (NYSE: T) and Verizon (NYSE: VZ).

AT&T and Verizon have been the loudest critics of the order, with the CFOs from both companies telling investors during the recent Deutsche Bank investor conference this week that legal challenges are inevitable.

John Stephens, CFO of AT&T, told investors during the Deutsche Bank conference that the new rules are a solution looking for a problem and that they will create uncertainty for service providers to make new service and network investments. "Any kind of uncertainty is not good for investment," Stephens said.

Likewise, Verizon's CFO Fran Shammo took a similar tone arguing that the legal challenge process the order will create will cost taxpayers a lot of money. "We don't know what the 300-plus pages say yet, but I have to assume there will be a lot of litigation around it," Shammo said.

Despite any potential challenges, FCC Chairman Tom Wheeler has defended the order, saying that it is light touch regulation "tailored for the 21st Century."

"This modernized Title II will ensure the FCC can rely on the strongest legal foundation to preserve and protect an open Internet," wrote Wheeler in a prepared statement. "Allow me to emphasize that word 'modernized.' We have heard endless repetition of the talking point that 'Title II is old-style, 1930's monopoly regulation.' It's a good sound bite, but it is misleading when used to describe the modernized version of Title II in this Order."

Unlike the application of Title II to incumbent wireline companies in the 20th Century, the commission said in the over 300-page order it will forbear from utility-style provisions. Under the auspices of its light-touch approach, the FCC will not require telcos to unbundle last-mile network facilities. The regulator will also not apply rate regulation and cost accounting rules that existed in the AT&T Bell System monopoly.

Besides a ban on blocking content, throttling content and paid prioritization, the regulations also include what had previously been described as a "standard for future conduct." The rules now call for "a no-unreasonable interference/disadvantage standard." The commission may enforce the open Internet rules through investigation and the processing of complaints (both formal and informal).

For more:
- see this FCC order
- here's FierceWireless' take

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