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Divided FCC overhauls net neutrality, gives FTC more authority over broadband

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Divided FCC overhauls net neutrality, gives FTC more authority over broadband

In a widely expected yet highly contentious move, the Federal Communications Commission approved a major overhaul to its net neutrality regulations that will lessen the agency's role in regulating internet service providers, undoing a major change enacted two years earlier under the prior Democratic administration.

After a brief delay when the meeting room was temporarily cleared due to unspecified security concerns, the commission voted 3-2 along party lines Dec. 14 to adopt Republican Chairman Ajit Pai's order overturning the Open Internet Order of 2015. The new order, which will go into effect in early 2018, reclassifies broadband as a Title I service under the Communications Act, versus the current Title II classification. The distinction impacts how much authority the FCC has to regulate broadband services.

The agency has much broader oversight powers for Title II services — including the ability to impose tariffs, set rate regulations and impose net neutrality rules — than Title I services. The more stringent Title II regulatory powers relate to common carriers, or companies that transport information, services or goods, such as public utilities and telcos. Consequently, the new order also eliminates the commission's previous net neutrality rules, which prohibited network operators from blocking or throttling legal internet traffic or prioritizing certain traffic in exchange for payment.

The proceeding has generated heated controversy, on display during the Dec. 14 meeting when the audience was first warned not to be disruptive and later temporarily cleared from the room "on the advice of security." The vote occurred shortly after everyone was allowed back into the meeting room.

Net neutrality proponents say the overturned 2015 order placing broadband service providers under Title II is essential to preserving a free and open internet. Chairman Pai and others who supported the new order returning broadband providers to Title I classification argue the move will eliminate unnecessary regulatory burdens and encourage greater investment in deployment of broadband services.

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Federal Communications Commission
Source: FCC

Under the newly adopted order, broadband providers will be subject to a transparency rule requiring them to publicly disclose if and when traffic is blocked, throttled or prioritized. In advance of the vote, the FCC said it worked out a memorandum of understanding with the Federal Trade Commission outlining which agency will be responsible for various online consumer protection efforts. If a broadband service provider violates the transparency rule by failing to publicly disclose its practices with respect to blocking, throttling, paid prioritization or congestion management, the FCC will take enforcement action. The FTC, however, will investigate and take enforcement action as appropriate against broadband service providers concerning the accuracy of the transparency disclosures. The agency will also monitor and take actions against other deceptive or unfair acts involving broadband service. The FCC and the FTC said they will broadly share legal and technical expertise.

Prior to the vote, FCC Commissioner Mignon Clyburn, a Democrat, said that in adopting the order, the commission effectively "pulls its own teeth."

Pointing to the tens of millions of public comments that were filed as part of the proceeding, Clyburn said, "The public can plainly see that a soon-to-be toothless FCC is handing the keys to the internet ... over to a handful of multibillion-dollar corporations. And if past is prologue, those very same broadband internet service providers ... will put profits and shareholders returns above what is best for you."

As for the role the FTC will play going forward, Clyburn argued the agency has no "technical expertise" on telecommunications services and requires "a very high bar" for proving unfair or deceptive practices as well as consumer harm.

Republican FCC Commissioner Brendan Carr said that the FTC had a clear history of overseeing the practices of broadband providers prior to the 2015 Open Internet Order. "Before the FCC stripped it of jurisdiction, the FTC, the nation's most experienced privacy enforcement agency, brought over 500 privacy enforcement actions, including against ISPs," Carr said. As a Title II service, broadband in 2015 became subject to common carrier regulations, and common carriers are exempt from the FTC's jurisdiction.

Commissioners on both sides of the vote said that the FCC's Dec. 14 action is unlikely to be the final word on net neutrality. Immediately following the vote, New York Attorney General Eric Schneiderman said he will lead a multistate lawsuit to stop the rollback of net neutrality.

"Congress may enact legislation providing new [net neutrality] rules," Republican FCC Commissioner Michael O'Rielly said, adding, "I firmly believe that will be a better course and the only way to give finality to this issue."