FCC Reclassifies Broadband Internet Access and Preempts State Law on Muni Broadband
February 26, 2015
In two orders adopted today the Federal Communications Commission (FCC) made a fundamental change in the regulatory treatment of broadband Internet access service and pre-empted two State laws restricting municipalities from deploying broadband networks. Both actions were adopted on a 3 to 2 vote by the five member commission and will face challenges in court.
In the first order (FCC 15-24) the FCC voted to reclassify the retail offering of broadband Internet access service as a “telecommunications service” subject to regulation under Title II of the Communications Act. For the past 10 years the Commission has treated all retail broadband Internet access service offerings as an “information service” not subject to regulation under Title II of the Communications Act. As a result of the changed regulatory status the Commission will now be able to adopt and enforce rules prohibiting Internet service providers from blocking Internet services (for example a competing video service), slowing down (or “throttling”) some Internet traffic (i.e., by favoring its own services over others) or offering fast lanes to select customers that are not available to other customers (also called “paid prioritization). In addition, the Commission will now be able to use its authority under the Communications Act to hear complaints from consumers and adopt enforcement orders regarding unreasonable discrimination, require access by people with disabilities, and support broadband Internet access services using universal service funds.
Unfortunately for competitors, the FCC also decided in the order to forbear from applying most of the provisions of Title II of the Communications Act to broadband Internet access service, including the provisions Congress adopted in 1996 specifically to promote competition in the local exchange market. These local competition provisions, found in sections 251 and 252 of the Communications Act, were used successfully by competitors to offer competing local exchange service prior to the FCC’s decision in 2005 to classify telephone company broadband Internet access service as an information service. Eckert Seamans filed comments on behalf of several clients in the proceeding leading up to this order opposing forbearance from sections 251 and 252. Eckert Seamans is not aware of any other entity that addressed the Commission’s failure to conduct the proper forbearance analysis, and we will be reviewing the order carefully on this point.
The second order (FCC 15-25) pre-empted State laws in Tennessee and North Carolina that prohibited municipalities from expanding services offered over municipal broadband networks operated by the Electric Power Board in Chattanooga, Tennessee and the City of Wilson in North Carolina. The order found “a clear conflict” between the State laws and Congress’ directive to the FCC under section 706 of the Telecommunications Act of 1996 to “remove barriers to broadband investment and competition.” The FCC’s claim of authority under section 706 to pre-empt State law to promote broadband deployment has potential ramifications for State public utility commissions, State legislatures, and municipalities.
Eckert Seamans has attorneys who have been closely following both of these proceedings. We would be happy to discuss how the specifics of the orders may affect your particular company or interest. Please contact Rob Gastner at 202.659.6674 if you have questions or concerns.