On December 14th, 2017, the Federal Communications Commission (FCC) adopted and issued its “Restoring Internet Freedom Order”(WC Docket No. 17-108). It dismantles the Net Neutrality principle and the rules flowing from the latter.

Furthermore, it also restores the jurisdiction of the Federal Trade Commission (FTC) to act when broadband providers engage in anticompetitive, unfair, or deceptive acts or practices. Both agencies have agreed to work together to protect consumers. To this purpose, they published a Memorandum of Understanding.

Ajit Pait, chairman of the FCC, argued that Net Neutrality regulations impeded innovation and that the transparency system will foster rapid Internet growth and limit the substantial costs for broadband providers. Nonetheless, the FCC’s order is far from leading to a consensus. Several initiatives have been taken to overturn the FCC’s vote. For example, battleforthenet.com urges individuals and companies to write to Congress for a “Resolution of Disapproval”. Companies have also promised to take the issue to court (ex: Free Press, Netflix, etc.).

Mathias Avocats explains the principle of Net Neutrality and what consequences its repeal may have.

What is Net Neutrality?

The FCC passed Net Neutrality regulations in 2015. The regulations classify broadband access services as a telecommunications service. As such, the services are subject to the “Common Carrier” provisions under the Communications Act of 1934. Under Title II of the Act (“Common Carrier” provisions), Internet service providers cannot discriminate against how broadband is used. Internet has to be treated just as any other utility (ex: phone service, water, etc.).

Therefore, Net Neutrality regulations prohibit broadband providers from blocking websites or charging for higher-quality service or certain content. The principle ensures equal access to the Internet. As President Barack Obama said in 2014 when urging the FCC to take up the strongest rules to protect Net Neutrality: “There are no toll roads on the information superhighway”.

However, these regulations may be repealed with the FCC’s “Restoring the Internet Freedom Order”. Indeed, the FCC clearly stated that the order “restores broadband Internet access service to its Title I information service classification, reinstates the private mobile service classification of mobile broadband Internet access service, and returns to the Transparency Rule the FCC adopted in 2010 with certain limited modifications to promote additional transparency”.

Broadband providers will be free to set up various categories of services and will no longer be subject to a non-discrimination obligation. Subjecting providers to Title I of the Communications Act implies that the Internet is similar to any other product and isn’t a public service. Internet will be treated just like any other product in the free market system. Broadband providers will simply have to disclose information about their practices to consumers, entrepreneurs, and the FCC, including any blocking, throttling, paid prioritization, or affiliated prioritization.

The historical timeline below shows the evolution of the Net Neutrality principle:

net neutrality

What are the potential consequences?

As previously stated, broadband providers will no longer be subject to a non-discrimination principle and can freely chose and determine different packages. For example, they could use the bundling system under which a customer has access to certain websites according to what he or she pays. The Internet would be grouped into different categories (social media, email account, news…) and depending upon the provider customers will have access to these categories at different prices.

Another issue is pay-to-play deals: speedy services vs. slow services. A customer who pays a high fee for Internet services will more likely have a fast connection whereas customers not paying as much will have a slower Internet access. Small businesses, start-ups or even individuals may not be able to pay the price for fast services. This may hinder the economy and the available information. For example, big companies are more likely to be able to pay for speedy services and may monopolise a section of the internet (ex: Google for emails).

The potential consequences are hard to assess. It is nonetheless clear that Internet as we know it today may be change in fundamental ways.

It must be underlined that under the Congressional Review Act, federal agencies, such as the FCC, must submit final rules to Congress. After submission, Congress can begin a process to overturn the rule. This is namely battleforthenet.com’s aim. Therefore, the FCC’s “Restoring the Internet Freedom Order” may not become applicable. The Office of Management and Budget must also approve the new transparency rule.

On January 4th, 2018, the FCC released the final version of the Restoring Internet Freedom Order. Little changed between the vote in December 2017 and the final version. The Order officially took effect end of February when it was entered into the Federal Register. With the Order taking effect, actions can be taken against it. For example, 22 states attorney generals filed a lawsuit arguing against the repeal of net neutrality. Furthermore, Congress must still rule on the Order.

The FCC has filed a notice that the new rules repealing the Net Neutrality principle will come into effect on June 11th 2018. The Office of Management and Budget has approved the Restoring Internet Freedom Order for a three-year period. However, it remains to be seen how this will play out in practice considering the fact that several states have pushed legislation to enforce the Net Neutrality principle within their borders.

It must furthermore be stressed that the Information Commissioner’s Office (ICO) declared that it will continue “its civil and criminal investigations and will seek to pursue individuals and directors, as appropriate and necessary even where companies may no longer be operating”

Mathias Avocats will keep you informed of any further developments.