On December 14, 2017, the FCC voted 3-2 to roll back the 2015 Open Internet Order, with all Republican commissioners voting in favor of the item and both Democratic commissioners strongly dissenting.  As we discussed in an earlier blog post in anticipation of the vote, the Restoring Internet Freedom Order (1) reclassifies broadband Internet access service (BIAS) as an information service (and mobile BIAS as a “private mobile service”), (2) vacates the bright-line rules in the 2015 Open Internet Order, as well as the “general conduct standard,” (3) retains, but refactors, the open Internet transparency rule, and (4) returns consumer protection authority over broadband to the Federal Trade Commission (FTC).

So what happens now? The FCC has not yet published the text of the Restoring Internet Freedom Order, but we don’t expect any significant changes between the draft item and the final item.  Once the item is released, the Office of Management and Budget (OMB) must review the item and publish it in the Federal Register, which will trigger implementation dates (60 days from publication, except for items requiring further OMB approval) and start the clock for parties to challenge the order through an appeal or petition for reconsideration.  Based on news reports and the trade press, we expect the following things to happen:

• Several parties will appeal the Order.  As has happened after each of the open Internet orders, we expect parties will file federal appeals, and we expect the cases will be consolidated in a single appeal in the U.S. Court of Appeals for the D.C. Circuit.  Several parties, including Public Knowledge, Free Press, Incompas, the National Hispanic Media Coalition, and New York Attorney General Eric Schneiderman on behalf of a multi-state lawsuit, are expected to file suit in the near term.  The deadline for appeal—for all practical purposes—is ten days after publication in the Federal Register.  As we discussed in our earlier blog post on this issue, appellate courts give substantial deference to agency decisions, so long as the ultimate decision addresses the relevant facts and arguments and the outcome is within the zone of reasonable interpretations of the statute.  It is possible, therefore, that the court of appeals will uphold the 2017 rollback of the Title II classification without finding that the 2015 ruling was unreasonable.
• Democrats in Congress are working to nullify the Order.  Democrats in Congress have already begun the process of trying to nullify the Order through a Congressional Review Act (CRA) resolution.  While CRA resolutions are a powerful tool in the hands of the majority—as we saw with the rollback of the Broadband Privacy Order earlier this year—as the minority party, the Democrats are at a significant disadvantage.  We don’t expect the CRA resolution to pass, or for the President to sign it if it did.
• Republicans in Congress will attempt to pass net neutrality legislation.  We expect Republicans and BIAS providers to push for a bill that enshrines the basic bright-line net neutrality protections (i.e., blocking and throttling) in law, formally classifies BIAS as an information service, and otherwise prohibits the FCC from expanding its net neutrality authority and preempts the states from passing their own net neutrality protections.  House Communications Subcommittee Chairman Marsha Blackburn of Tennessee introduced just such a bill on Wednesday (The Open Internet Preservation Act), raising significant concerns from Democrats and representatives of edge providers, such as the Internet Association, that the bill failed to address important protections, including a ban on paid prioritization.
• States will attempt to introduce their own net neutrality protections.  In the wake of the Restoring Internet Freedom Order, several states announced initiatives to impose their own net neutrality protections on ISPs operating within their jurisdiction.  For example, legislators in Washington state and California have introduced bills to reinstate net neutrality protections, although federal law may preempt such laws.  Gov. Inslee of Washington State also suggested using the states’ power as a large purchaser of BIAS and telecommunications services to make net neutrality a condition of state contracting.
• The Federal Trade Commission and Department of Justice will fill the enforcement gap using general consumer protection and antitrust laws.  As mentioned above, the Restoring Internet Freedom Order cedes most net neutrality enforcement authority to the FTC.  In response to last week’s vote, FTC Acting Chairman Maureen Ohlhausen stated that the agency looks forward to serving as “the cop on the broadband beat.”  However, as we’ve discussed in detail in earlier posts, the scope of the FTC’s jurisdiction is still undergoing review in the Ninth Circuit, where the entire court is reviewing (en banc) an earlier decision by the court that the “common carrier exemption” of Section 5 of the FTC Act exempts all activities of common carriers—e.g., telecommunications providers—from FTC jurisdiction (known as a “status-based exemption”).  If the Ninth Circuit upholds the earlier panel decision, it would leave many ISPs outside the jurisdictional reach of the FTC and FCC, and would create a “circuit split” between the Ninth Circuit and the Second Circuit (which interprets the common carrier exemption as limited to the common carrier activities of common carriers).  Then it would be up to the Supreme Court to resolve the split, unless Congress clarifies or eliminates the exemption.  Nevertheless, last week the FTC and FCC forged ahead with a Memorandum of Understanding to coordinate and cooperate on net neutrality enforcement activities and consumer education efforts.  Further, in the wake of the vote, the Antitrust Division of the Department of Justice noted that it “stands ready to vigilantly protect American consumers and free markets” from activities of ISPs that violate the antitrust laws.  The House Antitrust Subcommittee recently held a hearing to explore the role of antitrust law in protecting consumers from net neutrality harms, which we covered in a separate post.

Net neutrality remains a red hot issue in the public sphere, and we don’t expect it to die down soon, particularly as claims about fake comments and flawed process persist.  As we begin to enter the 2018 midterm elections, there is a possibility that net neutrality will continue to play a prominent role in public debates.  For that reason, while it’s unclear how this issue will shake out, it’s clear that we will have another active year in the net neutrality saga. We will follow up with a thorough analysis of the Order when it is released.

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