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Fast, Fair and Open: FCC Proclaims Internet a Utility

• 02/26/15

The Federal Communications Commission today chose to keep the Internet open. In a three-two vote split down party lines, the FCC officially reclassified broadband Internet as a telecommunications service under Title II of the Communications Act. The new "Open Internet Order" will ban paid prioritization, blocking and throttling, said FCC Chairman Tom Wheeler in a statement. "These enforceable, bright-line rules assure the rights of Internet users to go where they want, when they want, and the rights of innovators to introduce new products without asking anyone's permission."

The commission also gave a stamp of approval to the efforts of community broadband providers when it preempted laws in Tennessee and North Carolina that prevented two organizations in those states from expanding their services.

The Internet vote was prompted by a legal battle that went mostly against the federal agency when it lost a case against Verizon regarding its "Open Internet Rules." In a case decided by the U.S. Court of Appeals for the District of Columbia, two of those rules — that Internet Service Providers (ISPs) can't block traffic on wired networks and that they can't put competing services into a "slow lane" to benefit themselves — were knocked down last year.

At the same time, the court's findings alluded to a decision made by the commission almost 14 years earlier to classify broadband as an information service and not a telecommunications service. That classification may have been a mistake, the court suggested. Broadband providers have economic incentives that "represent a threat to Internet openness and could act in ways that would ultimately inhibit the speed and extent of future broadband deployment," the court wrote.

The new classification set by the FCC today restores the agency's power to make decisions regarding Internet services, akin to the kinds of control it maintains over telecommunications services.

"These new rules are guided by three principles: America's broadband networks must be fast, fair and open," the FCC said.

Last May the commission opened the discussion when it proposed a new set of Internet protections and called for comments on the benefits and drawbacks to various approaches and rule formulations.

"We asked the public to weigh in, and they responded like never before," Wheeler said. Nearly 4 million individuals, companies and other organizations gave feedback; most, he added, "overwhelmingly spoke up in favor of preserving a free and open Internet."

The new order applies equally to fixed and mobile networks. The latter currently make up 55 percent of Internet usage, the commission reported.

Still, the Chairman threw a bone to ISPs, noting that the new rules must also "ensure incentives for private investment in broadband infrastructure so the U.S. has world-leading networks." He explained that the commission will attempt to avoid the "utility-style burdensome regulation" that could harm infrastructure investment. "That means no rate regulation, no filing of tariffs and no network unbundling."

As an example, he pointed to the FCC's "light touch" that has been applied to 22 years of wireless voice regulation. "There has never been concern about the ability of wireless companies to price competitively, flexibly or quickly, or their ability to achieve a return on their investment."

The new order has sparked support from education organizations. "Access to affordable, high-speed Internet is essential in today's society," said John Harrington, CEO of Funds for Learning, an E-rate consulting firm. "We value Chairman Wheeler's commitment to cultivating an environment in which broadband services, driven by competition and new technologies, are ubiquitous and cost-effective."

The decision regarding community broadband service addressed state laws that prevented community organizations from growing their broadband footprint outside of their current service areas. The petitions for relief were filed last July by the Electric Power Board (EBP), a community energy and broadband provider in Chattanooga, TN, and the City of Wilson, NC. In both cases, the providers deliver electric service and operate broadband networks providing Gigabit-per-second broadband, voice and video service.

Tennessee law precluded municipal electric utilities from expanding telecom and cable services outside of the areas where it delivered electricity. North Carolina placed numerous conditions on city providers in a 2011 law, precluding municipal providers from taking their services into neighboring counties. Comments filed in that case suggested that the law had been promoted and sponsored by incumbent providers and competitors to Wilson.

The FCC chose to override the state restrictions under a federal law that allows a federal agency to intercede where state laws conflict with national regulations. In this case, the FCC found a clear conflict between the state rules and Section 706 of the Telecommunications Act of 1996, which authorizes the FCC to take action to remove barriers to broadband investment and competition.

According to Commissioner Wheeler, 17 other states have blocked or "severely curtailed" community broadband efforts by "restrictive" state laws — "laws often passed due to heavy lobbying support by incumbent broadband providers."

"Today’s historic decision now enables Wilson and other North Carolina municipalities to provide the Gigabit broadband infrastructure and services that North Carolina and America need in order to remain competitive in our emerging knowledge-based global economy," said the City of Wilson in a statement.

The decision may spur additional moves by cities and towns to get into the broadband business, a development that could benefit schools and colleges. According to the Institute for Local Self-Reliance, city government in Longmont, CO, delivers "10 times the bandwidth" to the local school district that it received from a previous provider, saving the schools $100,000 annually. In Rockport, ME, the city teamed up the University of Maine system and other state organizations to bring students upload speeds 200 times faster than Time Warner Cable's package for the area.