Smaller broadband providers now have an opportunity to convince the FCC to maintain the small provider exemption from the new “enhanced” transparency (disclosure) requirements of the 2015 Open Internet Order.

As we explained in a recent advisory, the 2015 Open Internet Order temporarily exempts providers with 100,000 or fewer broadband subscribers from the FCC’s “enhanced” transparency and disclosure requirements. However, the Order required the Commission’s Consumer and Governmental Affairs Bureau to adopt an order by December 15, 2015 that would determine whether to extend or modify the exemption.

On June 22, the Bureau accordingly issued a public notice seeking comment on whether “smaller providers” should continue to be exempt from the “enhanced” transparency rules. The public notice raises the issue of whether the exemption should be extended permanently, and seeks comments on the costs and benefits of continuing the exemption, retaining the current threshold, and related issues. The enhanced transparency rules have not actually yet taken effect as they await required approval by the Office of Management and Budget. It may have been better if this proceeding could have been deferred so that the Bureau could make this determination with the benefit of a record on the actual costs and benefits of the rule. However, the Commission’s Order directs the Bureau to complete the proceeding by December 15, which is why the proceeding is starting now.

The public notice also clarifies that while the Open Internet Order referred to “100,000 or fewer broadband subscribers,” the current exemption applies to providers with 100,000 or fewer “broadband connections,” as reported on the most recent Form 477 (aggregated over all of the provider’s affiliates). Thus, broadband providers intending to rely on the exemption should review their most recent 477 filings to confirm that their reported connections fell below 100,000 connections.

The notice appears to shift the burden of demonstrating that this exemption should continue back on to smaller providers. For example, the notice characterizes the transparency rule enhancements as “modest” in light of the fact that the FCC declined to adopt more extensive disclosure rules regarding congestion source, packet corruption and jitter. These and other statements suggest that the FCC may not be inclined to permanently extend the exemption for smaller providers. To answer that question the FCC asks, among other things:

• What are the Costs and Benefits of the Exemption, including:
  • What is the burden of enhanced disclosures on smaller providers in terms of financial and other resources and, are such burdens disproportionately experienced by smaller providers?
  • Whether rural customers are likely to be disproportionally affected by the exemption?
  • How should benefits of the enhanced transparency rules to customers of exempted providers be balanced against public interest benefits of reducing burdens to providers?

• Whether There Should There be a “One-Time Temporary” Extension of the Exemption if not Permanently Extended?
  • If so, what period of temporary extension is appropriate?
  • Does the subscriber threshold affect the analysis?
  • Should there be any conditions for a one-time temporary extension of the exemption and what factors should the FCC consider?

• Whether the Commission Should Modify the Exemption Threshold:
  • Should the exemption include providers with 100,000 or fewer broadband connections as reported on their most recent Form 477 (aggregated over all affiliates), or is there a more appropriate level?
  • How should the FCC address providers that qualify for the exemption but have not filed a Form 477 as required?
  • Are there reasons to adopt different thresholds for fixed and mobile providers?

While the FCC considers whether to continue to exempt smaller providers from the 2015 transparency rules, it is clear that, based on its recently issued NAL seeking to impose a $100 million forfeiture on AT&T, the FCC will vigorously enforce perceived violations of all its transparency rules (including those adopted in 2010).