RPC Reg Spotlight July 26, 2011

 

Regulatory Action in the Spotlight:

 

Federal Communications Commission (FCC) Report and Order creating regulations for Internet service providers

 

 

Adverse Effects:

 

  • Increased regulatory compliance
  • Ends spirit of innovation that has characterized the Internet since its inception
  • Broad interpretation of Order could lead to litigation

 

 

Response of the Obama Administration:

 

Upholding principles of “net neutrality” according to President Obama and the FCC, the Open Internet Order follows years of rulings from the judiciary and the FCC on the relationship between the Internet and the federal government.  The Open Internet Order creates new rules to regulate the manner in which Internet service providers (ISP’s) manage their networks; including transparency requirements for network management practices, and prohibiting “unreasonable” blocking and prioritizing of content.  The FCC released the Open Internet Order in late December 2010, and submitted it to the Office of Management and Budget on June 30, 2011.  Barring legislative or judicial action, the Open Internet Order will go into effect 60 days after the final rule is published in the Federal Register.

 

 

Impact on the United States:

 

 The Open Internet Order places additional burdens on ISP’s, requiring publicly disclosed network management information, including providing customers with accurate information on management practices, network speed, terms of service, content and applications.  Some U.S. communications companies and trade groups have raised concerns that the required disclosures will impose undue burdens on ISP’s, especially smaller providers serving rural areas.  Many of these smaller providers lack the testing capabilities to measure actual broadband speed over their infrastructure on an individual customer basis.  Further, the rules are too broad and could subject ISP’s to protracted litigation.

 

The Order would not allow ISP’s to unreasonably discriminate in transmitting lawful network traffic over a consumer's broadband Internet access service.  With the advent of real time entertainment applications, these services are currently responsible for 49.2% of the peak bandwidth download time.  As the use of real time applications becomes more prevalent, ISP’s are faced with a situation of increased bandwidth usage by a small segment of customers.  This could lead to either a slowing of the network, or the ISP’s having to invest capital in network upgrades crucial to handling that increased bandwidth.  Either way, the majority of customers will end up paying for the usage.

 

 

In Closing:

 

The Open Internet Order places an undue burden on ISP’s and entrepreneurs, and could chill the spirit of entrepreneurship, technical innovation, and cultural expansion that has been the promise of the Internet since its inception.  The Order leaves too many questions open to interpretation in determining what is considered “reasonable” and “unreasonable.”  Further, restrictions on data transit in the name of “reasonableness” could diminish the ability of individual developers to create new uses for the Internet, and could prevent consumers from experiencing the Internet as they choose.  The technology community has been responsible for some of the most dynamic growth in the American economy during the last 20 years, and increased government regulations would stifle that innovation and growth.

 

 

Relevant Legislation:

 

House Republicans have sought to limit the FCC’s regulatory autonomy.  Two bills, H.R. 96, the Internet Freedom Act, sponsored by Rep. Marsha Blackburn and H.R. 166, the Internet Investment, Innovation, and Competition Preservation Act, sponsored by Rep. Cliff Stearns, would more clearly define the FCC’s regulatory authority.   H.J.Res. 37, sponsored by Rep. Greg Walden, uses the Congressional Review Act to overturn the Open Internet Order, stating that Congress disapproves of the Order and that “such rule shall have no force or effect.”  The resolution passed the House of Representatives on April 8, 2011.