FCC Net Neutrality Rules Finally Released, Cue The ISP Lawsuits And Hyperbole

Given the hysterical reaction to the FCC's new net neutrality rules the last few weeks, it was easy to forget that nobody had actually read them yet. As noted previously, the lack of public documents wasn't some sort of elitist cabal, but a routine (if stupid) part of FCC procedure restricting the agency from publicizing new rules until they've been voted on and include all Commissioner commentary. Of course, ISPs and congressional allies breathlessly opposed to Title II hadn't read the rules either, preventing their lawyers from launching their expected legal assaults.

Today the lawsuit countdown can begin in earnest on the news that the FCC has formally released the toughest net neutrality rules seen in U.S. history (which notably isn't saying much). The rules themselves can be found here (pdf), and while it's some 400 pages, much of that is supplemental material and included Commissioner dissents. You can find all the Commissioners' statements here. Ajit Pai, who has waged a one man war against Title II (and Netflix) for months, offered up a sixty-seven page dissent (pdf) in which he called the rules an "unprecedented attempt to replace...freedom with government control."

While it will take telecom lawyers a few days to fully parse out the legal semantics, the rules on first glimpse do precisely what the agency said they'd do, focusing primarily on four areas of protection: making sure ISPs are transparent with network management; prohibiting outright blocking of websites, prohibiting the throttling of websites and services, and prohibiting anti-competitive "paid prioritization" (no, contrary to repeated claims, this doesn't ban things like technology for disabled people).

While a dramatic improvement over the 2010 rules (they actually cover wireless networks, for example), it remains wholly unclear if the FCC is actually going to tackle the hot spot areas where the modern net neutrality fights are actually occurring.

Issues like usage caps, usage cap meters, zero rated apps and interconnection -- areas where most of the current neutrality debate is focused -- remain in a sort of nebulous grey area when it comes to how far the FCC's willing to go to protect consumers. While the order contains a general conduct rule the agency says can be used "to stop new and novel threats to the Internet," the rules also make it very clear the agency's taking a "wait and see" approach to many of these issues:

"While we have more than a decade’s worth of experience with last-mile practices, we lack a similar depth of background in the Internet traffic exchange context. Thus, we find that the best approach is to watch, learn, and act as required, but not intervene now, especially not with prescriptive rules. This Order—for the first time—provides authority to consider claims involving interconnection, a process that is sure to bring greater understanding to the Commission."

Despite all the hand-wringing about the rules somehow killing innovation angels and startups, carriers will likely need to engage in some particularly ham-fisted abuses to truly get the attention of the FCC, who'll be working overtime to counter the narrative that they're a blundering government agency drunkenly implementing "heavy handed regulation." It's in this muddy grey area that you can expect ISP creativity to flourish when it comes to anti-competitive behavior, and despite a lot of breathy analysis today -- we're simply not going to understand the rules' impact until we have concrete examples of what the FCC considers anti-competitive behavior.

In an accompanying statement (pdf), FCC boss Tom Wheeler again makes it clear the agency is forbearing from many of the heavier-handed utility-style aspects of Title II -- including mandatory universal service contributions, rate regulations, or a return to local loop unbundling (much to the chagrin of some consumer advocates). The FCC boss also tries to shoot down for the millionth time (for whatever good it will do) the idea that the rules will somehow crush sector innovation or investment:

"Let me be clear, the FCC will not impose “utility style” regulation. We forbear from sections of Title II that pose a meaningful threat to network investment, and over 700 provisions of the FCC’s rules. That means no rate regulation, no filing of tariffs, and no network unbundling. During the 22 years that wireless voice has been regulated under a light-touch Title II like we propose today, 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."

Upon release, the rules head to the Federal Register, and after being published in the next week or two, a 60-day countdown begins before the rules formally take effect. ISPs have thirty days to sue after publication in the Federal Register, so you can expect legal maneuvering (and ridiculous ISP rhetoric) to heat up quickly. As for which ISP will sue, AT&T and Comcast are waiting for regulatory approval of their respective mergers, and may not want to play starring roles in the next round of legal fisticuffs. That leaves Verizon, whose earlier lawsuit brought us to this point to begin with, as most likely to lead the legal charge.

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