Back To The Future: FCC Returns To Light Touch Regulation Of The Internet

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This week, the Federal Communications Commission’s (“FCC’s”) Restoring Internet Freedom Order took effect, rolling back the public-utility style regulation of Internet service providers (“ISPs”) pursuant to title II of the Communications Act, imposed during the prior administration by the FCC’s 2015 Open Internet Order (“2015 Order”). The agency’s return to a light touch regulatory approach has sparked public debate since FCC Chairman Ajit Pai proposed it more than a year ago. And while the FCC’s action is already the subject of several judicial challenges consolidated in the D.C. Circuit, a number of states have also sought to impose their own state-specific net neutrality legislation. But it remains to be seen whether individual states can impose net neutrality obligations on ISPs, particularly in light of the FCC’s invocation of its preemption authority in the Restoring Internet Freedom Order.

The 2015 Order, adopted by the FCC under then-FCC Chairman Tom Wheeler, reclassified broadband Internet access service from an information service to a telecommunications service, meaning the FCC would treat broadband Internet service like a public-utility service. The 2015 Order modified existing transparency requirements applicable to ISPs’ disclosures to consumers and imposed three “bright line rules” that prohibited ISPs from engaging in certain activities that would slow down, limit access, or selectively alter data speeds – often referred to as no-blocking, no-throttling, and no-paid prioritization. The 2015 Order further installed a “General Internet Conduct Rule,” in the form of a vaguely framed multi-factor balancing test, that was intended to prevent ISPs from unreasonably interfering with or disadvantaging the ability of consumers to access and use lawful content and edge providers to make their content available to consumers.

The Restoring Internet Freedom Order displaced the 2015 Order, reinstating the information service classification and the attendant “light touch” regulatory regime that had existed for decades prior to 2015. Although state and local governments had not actively pursued net neutrality legislation prior to 2015, when ISPs were subject to the same regulations the FCC has now adopted, they have responded to the Restoring Internet Freedom Order with a variety of legislative and regulatory measures to regulate Internet access service. Some states, for example, have adopted or proposed legislation directly imposing on ISPs most, if not all, of the 2015 Order’s key provisions (no-throttling, no-blocking, etc.). Other states, like California, have proposed to go even further than the 2015 Order, including by seeking to regulate offerings that exempt certain activities from users’ data caps (called “zero-rating”), which the FCC’s 2015 Order expressly declined to address. Still others, however, have required or have proposed to require ISPs to agree to abide net neutrality principles throughout the state in order to qualify for governmental contracts, or prohibit state agencies from contracting with ISPs that do not abide the 2015 Order’s requirements.

The tension between the FCC’s deregulation and the states’ regulation appears likely to spark additional legal wrangling. The issue comes down to whether state regulations that resurrect the 2015 Order can survive a legal challenge based on preemption or otherwise. While the Communications Act preserves States’ authority to regulate states intrastate communication matters, the FCC has authority to regulate interstate communications, including information services. In reliance on this authority, the FCC declared in its Restoring Internet Freedom Order its intent to “preempt any state or local measures that would effectively impose rules or requirements” that have been repealed, or “that would impose more stringent requirements.”

There will be much to watch as the net neutrality debate continues to play out at the Commission, the courts, and state houses across the country. We will continue to monitor developments in this area.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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