FCC Considers Net Neutrality Rules, Could Impact Video Game Industry

by Perkins Coie

“Net neutrality” has become one of the most hotly debated issues before lawmakers and regulators in Washington this year.  Proponents of net neutrality argue that the government should regulate the conduct of broadband Internet Service Providers to ensure that the Internet is not divided into “fast lanes” and “slow lanes,” and to prevent them from offering preferential treatment to providers of content, applications, or services that pay more for priority access to the consumer.  Opponents of net neutrality argue that network owners should be able to manage traffic on their networks without government intervention.  They complain that regulation of Internet services will inhibit competition and innovation, and will create disincentives for network owners to upgrade their networks. 

Although the debate has been going on for more than a decade, the Federal Communications Commission (FCC) is set to consider new rules this summer and fall.  The two main points of contention in the public debate over net neutrality before the FCC are: (i) whether the FCC should reclassify broadband Internet service as common carrier service, and (ii) whether the FCC should prohibit or regulate paid prioritization deals.  This debate is significant for every company whose products or services depend on broadband Internet access, and especially for those in the video game industry whose businesses depend on consistently high-quality, low-latency service.  The FCC released its latest proposals on May 15, 2014 and has opened a proceeding for public comment on the proposals with deadlines on July 15 and September 10. 

The FCC issued its new proposals in response to a decision in January by the U.S. Court of Appeals for the District of Columbia Circuit, which invalidated portions of the rules the FCC adopted in 2010.  Those rules incorporated three major components:  (i)  transparency rules, which required broadband service providers to disclose accurate information regarding their network management practices and terms of service; (ii) a “no blocking” rule, which prohibited broadband providers from blocking lawful content, applications and services, subject to reasonable network management; and (iii) an anti-discrimination rule, which did not apply to mobile broadband providers, but prohibited providers of fixed broadband services from discriminating in the transmission of lawful network traffic over a consumer’s broadband Internet access service.

Verizon and others challenged the rules on the basis that the FCC lacked statutory authority to adopt them and that the statute prohibited the FCC from treating broadband providers as common carriers.  The Court of Appeals held that, although the FCC had authority to adopt regulations to promote deployment of broadband services under Section 706 of the Communications Act, it could not impose traditional common carrier obligations on providers of those services. It found that the Communications Act expressly prohibits the FCC from regulating non-telecommunications services as “common carrier” services, and the FCC has consistently refrained from applying common carrier regulations to broadband services.  The Court of Appeals vacated the no blocking and antidiscrimination rules because they appeared to be common carrier rules, but it upheld the rules requiring transparency as they were consistent with other statutory requirements.

In its new proceeding, the FCC proposes to enhance the transparency rules to give consumers, edge providers, and regulators greater access to disclosures of network congestion and notice of any new practices by broadband providers that might impact consumers’ use of online services.  It also proposes to reinstitute the previous no blocking rule and to adopt a new rule that would incorporate an enforceable legal standard of conduct barring practices by broadband service providers that threaten the “openness” of the Internet. 

The FCC seeks to address the controversy surrounding “paid prioritization” of Internet traffic using the proposed enforcement mechanism.  Although the rules the FCC adopted in 2010 did not expressly prohibit paid prioritization, the FCC stated that paid prioritization deals were unlikely to be permitted given the prohibition on unreasonable discrimination.  The Court of Appeals examined this issue closely in its assessment of the FCC’s statutory authority to adopt the rules.  Focusing on the FCC’s statement concerning paid prioritization, the Court of Appeals determined that the FCC had left no room for individualized bargaining with edge providers.  The FCC’s new proposal asks commenters whether it should prohibit paid prioritization deals outright, or whether there are other methods it may use to ensure that broadband providers do not treat consumers, edge providers, and innovators unfairly.  It also asks for information on private transactions between edge providers and broadband providers and how these deals affect the market.

Regardless of what rules the FCC ultimately adopts concerning paid prioritization, the FCC will have to articulate a more sound statutory basis for the rules than it did in 2010 if they are to survive judicial challenge.  The FCC proposes to continue to rely on Section 706 of the Communications Act, but to do so in a manner that is more consistent with its statutory authority, as interpreted by the Court of Appeals.  The FCC has also asked for comment as to whether it should instead use its authority under Title II of the Communications Act to reclassify broadband Internet service as a “telecommunications” service, subject to common carrier regulation.  Edge providers such as Netflix and Mozilla have publicly supported this approach, as have many advocacy groups. 

Net neutrality will be a significant issue in the context of merger review proceedings before the FCC and antitrust authorities this year.  Several major providers of broadband services have voluntarily agreed to abide by the 2010 rules until new rules are in place.  Net neutrality has also generated considerable interest on Capitol Hill and may become the catalyst for a long-awaited overhaul of federal communications laws to bring them in line with present-day technologies. 

The rules the FCC adopts will impact the video game industry as they will affect all online video streaming and other Internet-based services, particularly as games become more interactive and utilize more bandwidth.  While the proposed transparency rules will likely help video game companies and consumers assess whether broadband providers are living up to expected levels of service, increased scrutiny of private contracts between broadband providers and online game companies and other regulations on edge services may be unwelcome.  Video game companies should be assessing how the proposed rules could affect them and should be developing their legislative and regulatory strategies now to ensure that their input in the public comment process is most effective.

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.

© Perkins Coie | Attorney Advertising

Written by:

Perkins Coie

Perkins Coie on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.