The FCC's proposed "open Internet" and net neutrality rules, if adopted, will affect any enterprise or organization that uses or relies on the Internet for its business or operations.
On October 22, 2009, the Federal Communications Commission (FCC) formally launched a proceeding to adopt rules intended to "preserve the open Internet." A central part of the FCC's proposal is a rule that would require broadband Internet service providers—including operators of cable, telephone, fiber and broadband wireless networks—to give equal treatment to all data and Internet traffic carried over their networks (a concept popularly known as "net neutrality").
The October 22, 2009, adoption of a Notice of Proposed Rulemaking (NPRM) setting forth these proposed rules initiates one of the most important and significant proceedings the FCC has undertaken. The adoption of open Internet and net neutrality rules is a top priority for the Obama administration, as well as for FCC Chairman Julius Genachowski, the FCC's Democratic majority and many key members of Congress. It is therefore widely expected that final rules on these issues could be in place as soon as the middle of 2010.
If adopted, the FCC's proposed "open Internet" and net neutrality rules would have a significant impact not only on consumers, but on any enterprise or organization that uses or relies on the Internet to any extent for any part of its business or operations.
Because the proposed open Internet and net neutrality rules could have such a broad and sweeping impact on all consumers and on organizations of all sizes, every entity in every sector should be alert to the issues raised in this proceeding and should be prepared to get involved as necessary in order to ensure that their specific concerns and needs are taken into consideration as the FCC works on refining and finalizing these rules.
The full text of the FCC's 107-page NPRM has just been released. Below is a preliminary assessment of the proposed rules based on initial review.
Public comments on the proposed rules will be due January 14, 2010, and reply comments will be due March 5, 2010.
Potential Impact of the Proposed Open Internet and Net Neutrality Rules
The rules proposed on October 22, 2009, could affect a wide range of communications services upon which enterprises rely—such as videoconferencing, interoffice communications and web-based marketing (e.g., corporate websites)—because these services are generally carried, in whole or in part, over the public Internet and over broadband facilities that will likely be covered by the new rules. Depending on how the debate on the FCC's NPRM develops, these new rules could result in changes to the price, quality and availability of these services (whether for the better or for the worse remains to be seen), which may require businesses to revisit or renegotiate their current arrangements with Internet and communications service providers.
The new rules may also provide businesses and other organizations with greater flexibility, as they would be entitled to use any application, service or device of their choice, and thus would not need to get locked into proprietary systems as a condition of receiving service. Net neutrality rules could also open up new business opportunities by giving innovators and entrepreneurs greater certainty, openness and flexibility to develop new technologies, services and applications.
On the other hand, strong concerns have been expressed that any additional regulation of the Internet, such as the rules proposed today, would instead stifle innovation and investment in the development and deployment of new networks, technologies and services, and would result in higher prices and diminished service quality for consumers. These concerns were made especially clear by the FCC's two Republican commissioners, Robert McDowell and Meredith Attwell Baker, who—while supporting the initiation of this proceeding—strongly questioned whether the proposed rules are even necessary or appropriate in the first place.
Overview of the Proposed Rules
The FCC took its first active steps directed at maintaining the openness of the Internet with the adoption of its "Internet Policy Statement" in 2005, which established four principles that the FCC would use to guide its ongoing policymaking activities and its case-by-case enforcement of the communications laws. These four principles are as follows:
Consumers are entitled to access the lawful Internet content of their choice.
Consumers are entitled to run applications and use services of their choice (subject to the needs of law enforcement).
Consumers are entitled to connect their choice of legal devices that do not harm the network.
Consumers are entitled to competition among network providers, application and service providers, and content providers.
In the October 22, 2009, NPRM, the FCC is proposing to adopt these four principles as formal FCC rules. In addition, the FCC is proposing two new principles to be adopted as rules. These are as follows:
Non-discrimination – Broadband providers would be prohibited from discriminating against particular Internet content or applications, meaning that they cannot block or degrade lawful traffic carried over their networks, favor some content or applications over others (e.g., by providing greater bandwidth or higher quality of service levels than others receive), or otherwise disfavor a service that competes with a service offered by that broadband provider.
Transparency – Broadband providers would be required to be transparent about their network management practices through public disclosure of information regarding these practices.
All six of these principles—access to content, access to applications and services, access to devices, access to competition, nondiscrimination and transparency—would be subject to "reasonable network management," which would allow broadband providers to adopt practices to reduce or mitigate congestion on the network; address quality of service; and control unwanted, unlawful or harmful content or traffic.
According to the FCC, the proposed rules also would not affect any obligations that broadband providers may have to deliver emergency communications or to address the needs of law enforcement and public safety, nor would the rules limit broadband providers' ability to do so.
In addition to the proposed rules described above, the FCC is seeking comment on the appropriate treatment of "managed" or "specialized" services, such as subscription video services, certain business services for enterprise customers, and specialized applications such as Smart Grid or telemedicine.
The FCC is also requesting comment on the applicability of the proposed rules to wireless networks, which face substantially different network capacity and management issues than wireline networks. In recognition of the unique technical characteristics of wireless networks (especially mobile networks), the NPRM requests comment on how, in what time frames and to what extent the six principles should apply to wireless networks.
Comments on the proposed open Internet and net neutrality rules are due January 14, 2010, with reply comments due March 5, 2010.
Although the FCC adopted its Internet Policy Statement in 2005 in an effort to encourage broadband providers to operate their networks in a more open and nondiscriminatory manner, it is clear that, with the change of administration and the new leadership of the FCC under Chairman Genachowski, the FCC is very likely to adopt rules that could look very similar to the "common carrier" regulatory structure under which telecommunications carriers have operated for a century. These proposed rules are also part of the FCC's strong push to expand broadband deployment throughout the United States.
It is therefore apparent that this proceeding could be the first step in subjecting the "unregulated" Internet to greater FCC oversight and regulation. With the variety of applications, services and networks potentially implicated by these proposed rules, this proceeding has the potential to affect every business or consumer that relies to any extent on the Internet.
The McDermott Difference
Please let us know if you would like additional information regarding the FCC's proposed open Internet and net neutrality rules. We would be pleased to discuss these issues with you further and to assist you in evaluating the potential impact of these rules on your organization's operations. We would also be pleased to assist in apprising the FCC of your specific views and concerns regarding these proposed rules.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
