Don’t call them “utility” rules: The FCC’s net neutrality regime, explained

Within a few weeks we’ll have a huge document full of legalese on the Federal Communications Commission’s net neutrality rules, to replace the near-200-page order from 2010 that was mostly overturned by a court ruling last year.

But there are enough details in the 4-page summary of FCC Chairman Tom Wheeler’s proposal released today for us to tell you in general terms what it does and doesn’t do. FCC officials also provided further background in a phone call with reporters today. One thing they were clear on: this isn’t “utility-style regulation,” because there will be no rate regulation, Internet service providers (ISPs) won’t have to file tariffs, and there’s no unbundling requirement that would force ISPs to lease network access to competitors.

But the order does reclassify ISPs as common carriers, regulating them under Title II of the Communications Act, the same statute that governs telephone companies. ISPs will not be allowed to block or throttle Internet content, nor will they be allowed to prioritize content in exchange for payments. The rules will apply to home Internet service such as cable, DSL, and fiber, and to mobile broadband networks generally accessed with smartphones.

Internet providers will be common carriers in their relationships with home Internet and mobile broadband customers; they will also be common carriers in their relationships with companies that deliver content to subscribers over the networks operated by ISPs. That includes online content providers such as Amazon or Netflix.

The rules apply only to retail Internet providers, those that offer consumers the ability to access the Internet. They do not regulate Web applications or other network operators. Content delivery networks like Akamai, which improve performance by optimizing delivery of content across the Internet, would not be affected by the paid prioritization ban.

Here’s a more detailed look at what kinds of rules both fixed and mobile broadband providers will and won’t have to follow (assuming the commission approves Wheeler’s plan on Feb. 26).

Three “bright line rules”

The ban on blocking, throttling, and paid prioritization is the biggest takeaway.  “Broadband providers may not block access to legal content, applications, services, or non-harmful devices… may not impair or degrade lawful Internet traffic on the basis of content, applications, services, or non-harmful devices… [and] may not favor some lawful Internet traffic over other lawful traffic in exchange for consideration—in other words, no ‘fast lanes.’ This rule also bans ISPs from prioritizing content and services of their affiliates,” the FCC said. The core provisions of Title II banning “unjust and unreasonable practices” will be used to enforce these rules.

Data caps

There’s no ban on data caps, but the proposal would let the FCC intervene when caps are used to harm consumers or competitors. Cellular providers have been experimenting with “zero-rating,” letting consumers access certain services without using up their data allotments. AT&T is charging companies for the right to deliver data without counting against customers’ caps; T-Mobile exempts certain music services from caps, but without charging anyone.

FCC officials on the call with reporters seemed less concerned about data exemptions that occur without payment than those that require payment, but did not commit to banning any particular type of practice. The matter will be handled on a case-by-case basis to determine whether a zero-rating program hinders competition for “over-the-top” services, those provided over an Internet connection. In the net neutrality order, the FCC is not taking any stance on specific programs provided today.

Transparency

Though the 2010 order’s anti-blocking and anti-discrimination rules were thrown out because of a lawsuit filed by Verizon, the court did not object to requirements that ISPs tell the public about their network management practices. ISPs will face greater disclosure requirements in the new proposal, but the fact sheet didn’t say exactly how the rules will be different.

Possible loophole? “Reasonable network management”

Net neutrality advocates have worried that exceptions to anti-discrimination rules would render them meaningless. Wheeler is allowing for “reasonable network management,” which “recognizes the need of broadband providers to manage the technical and engineering aspects of their networks.”

But ISPs cannot claim “reasonable network management” in order to meet a business need. “For example, a provider can’t cite reasonable network management to justify reneging on its promise to supply a customer with ‘unlimited’ data,'” the FCC said.

Some data services that don’t go over the public Internet will be largely exempt from Title II oversight. VoIP phone service offered by a cable provider is one example; another is a heart-monitoring service that doesn’t use the public Internet. These exceptions don’t change the transparency requirements, which “will continue to cover any offering of such non-Internet data services—ensuring that the public and the Commission can keep a close eye on any tactics that could undermine the Open Internet rules.”

A standard to cover unforeseen misbehavior

Just in case ISPs come up with some new way of creating a non-neutral Internet, there will be a “standard for future conduct” that would help the FCC determine whether new practices should be allowed. While not fully defined in the fact sheet, “the proposal would create a general Open Internet conduct standard that ISPs cannot harm consumers or edge providers.”

Netflix’s favorite part: interconnection disputes

Netflix and some other companies have complained about the prices ISPs charge for direct network connections. These connections ensure a smooth path into the network but don’t provide any priority thereafter. The net neutrality proposal doesn’t ban these agreements, but gives the FCC “authority to hear complaints and take appropriate enforcement action if necessary, if it determines the interconnection activities of ISPs are not just and reasonable, thus allowing it to address issues that may arise in the exchange of traffic between mass-market broadband providers and edge providers.” Besides companies like Netflix, content delivery networks such as Akamai or transit providers such as Cogent could bring complaints to the FCC.

New taxes and fees? Nope

Some Title II opponents tried to convince the FCC that Title II would bring $15 billion in new user fees per year, causing millions of households to stop subscribing to Internet service.

That’s simply not true, the FCC said. “The Order will not impose, suggest or authorize any new taxes or fees,” the commission said. The moratorium on Internet taxation will continue, as required by Congress. Today’s order does not require broadband providers to contribute to the Universal Service Fund (USF), which subsidizes telecommunications projects in underserved areas.

FCC officials noted that they have already begun a separate proceeding on USF funding that could ultimately put a USF charge on customers’ bills, similar to the USF charges on telephone bills. That will proceed independently of the Title II decision. But even so, the FCC could keep the entire Universal Service Fund the same size, so that surcharges on broadband would be offset by reductions in surcharges on phone lines.

While USF fees won’t be applied because of this order, the FCC said it will boost “universal service fund support for broadband service in the future through partial application” of the USF portion of Title II.

Google gets what it wanted: Pole access

Google asked the FCC to enforce Title II rules guaranteeing access to poles, rights-of-way, and other infrastructure controlled by utilities, making it easier for Google Fiber to enter new markets. The FCC said it would enforce the part of Title II that “ensures fair access to poles and conduits” to help new broadband providers.

It’s not clear how much this will really help. Google had a dispute with AT&T over pole access in Austin, Texas, but the companies settled and Google doesn’t seem to have been shut out of any market because of pole attachment problems. And broadband providers could actually end up paying higher pole attachment rates than they did before because “how you’re classified affects what you have to pay,” a cable industry lawyer explained to Ars.