FCC says proposed net neutrality rules will withstand legal challenges from AT&T, Verizon

The FCC says that Chairman Tom Wheeler's draft order to create net neutrality rules that would reclassify broadband Internet access under Title II has the legal footing it needs to withstand any legal challenges that telcos like AT&T (NYSE: T) and Verizon (NYSE: VZ) plan to launch once the rules come out.

Under the proposed neutrality rules, any retail broadband service Americans buy from a cable operator, telco or a wireless operator would be reclassified as a telecommunications service, instead of a lightly-regulated information service. Both the service to the end user and to edge providers would be classified under Title II.

Wheeler's proposal is leveraging two main elements of legal authority: Title II of the Communications Act and Section 706 of the Telecommunications Act of 1996. By using these two provisions, the FCC said the "proposal provides the broad legal certainty required for rules guaranteeing an open Internet."

In addition, the FCC will forbear from three key provisions: 1) rate regulation, unbundling or other forms of utility regulation; 2) Universal Service Contributions under Section 254; and 3) imposing new taxes or fees. In addition, the proposed rules would not require additional proceedings before forbearance is adopted.

The proposed rules will be circulated to the other FCC commissioners on Thursday and a vote on the measure will take place on Feb. 26. Although the regulator could make modifications to its proposal, an information sheet provided by the FCC laid out some specific rules:

  • No blocking: Broadband providers will not be able to block access to legal content, applications, services or non-harmful devices.

  • No throttling: Broadband providers will not be able "impair or degrade" lawful Internet traffic on the basis of content, applications, services or non-harmful devices.

  • No paid prioritization: Broadband providers may not favor some lawful Internet traffic over other lawful traffic in exchange for payment, i.e., there will be  no "fast lanes." Carriers and ISPs will also be barred from prioritizing content and services of their affiliates.

  • The commission's new rules would also include a "standard for future conduct," with the rationale being that because the Internet is always evolving, "there must be a known standard by which to determine whether new practices are appropriate or not. Thus, the proposal would create a general Open Internet conduct standard that ISPs cannot harm consumers or edge providers."

Already, reports have emerged that both AT&T and Verizon are ready to launch legal challenges on the FCC's proposal.

A VentureBeat article citing unnamed sources revealed that both carriers will file lawsuits "almost immediately" after the Title II reclassification becomes official. 

The FCC's proposal is a major blow to Verizon, one of the key movers in having the regulator's 2010 net neutrality rules overturned last year.

Michael Glover, Verizon senior vice president and deputy general counsel, criticized Wheeler's move in the company's policy blog.

"Heavily regulating the Internet for the first time is unnecessary and counterproductive," wrote Glover. "It is unnecessary because all participants in the Internet ecosystem support an open Internet, and the FCC can address any harmful behavior without taking this radical step. Moreover, Congress is working on legislation that would codify open Internet rules once and for all. It is counterproductive because heavy regulation of the Internet will create uncertainty and chill investment among the many players—not just Internet service providers—that now will need to consider FCC rules before launching new services."

Joining Verizon is AT&T, whose vice president of federal regulatory, Hank Hultquist, argued in a blog post Monday that the FCC has not taken the proper steps needed to legally reclassify broadband as a common carrier telecommunications service.

"Under longstanding precedent, the FCC must make particularized findings with respect to the offerings of individual carriers in order for it to find that either they are operating as common carriers, or should be required to operate as common carriers," he wrote. "The FCC has not engaged in the kind of detailed analysis that would be needed to assess the offerings of every ISP that would be subject to its rules."

Besides the carriers, the FCC's proposal is being challenged by a group of Republican lawmakers that have proposed another method to ensure the openness of the Internet while not permitting the agency to reclassify broadband as a utility under Title II of the Communications Act.

For more:
- see this FCC fact sheet (PDF)
- see this Re/code article
- see this The Verge article

Sound Off: Reactions to the FCC's new net neutrality rules

Related articles:
FCC argues it has authority to apply net neutrality rules to wireless carriers
FCC to strengthen oversight of ISP interconnection deals
AT&T, Verizon challenge FCC's authority on net neutrality
Verizon says net neutrality should not touch interconnection arrangements
Verizon tells FCC to address blocking and paid prioritization without Title II reclassification

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