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The FCC’s net neutrality rules include several amendments

WASHINGTON, May 10, 2024 – The Federal Communications Commission’s net neutrality rules have changed little in recent weeks, most of them the result of clear pressure from various lobbying organizations.

The final rules published on May 4 did not differ substantially from the draft prepared by the FCC chairwoman Jessica Rosenworcel The final rules include three clear prohibitions – anti-blocking, throttling and paid prioritization – supported by the general standards of conduct and transparency principles set out in the common carrier framework under Title II of the Communications Act.

In the run-up to the FCC’s April 25 climate vote, Rosenworcel allowed a few tweaks here and there that reflected calls made by interested parties in discussions that took place with FCC commissioners, their advisers and senior commission officials at the Wireline Competition Bureau.

Some lobbyists got their way, others apparently didn’t.

The big winner was Akamai Technologies. The content caching and delivery network (CDN) provider sought guarantees that its business relationships with broadband Internet service providers would not be treated as paid prioritization, which is largely prohibited under net neutrality rules. Akamai even suggested the language it wanted included in the final order. And it got what it wanted, word for word.

The FCC order now reads: “Pursuant to the 2015 Open Internet Order and Documentation, we clarify that the prohibition on paid prioritization does not limit a (broadband Internet access service) provider’s ability to enter into an agreement with a CDN to store content locally on the BIAS provider’s network .

Rosenworcel also felt pressure from small ISPs seeking wholesale exemptions from net neutrality rules, arguing that compliance costs would reduce investments in broadband networks. WISPA, the trade association for fixed wireless access providers, requested an exemption covering all ISPs with 250,000 subscribers or less – a threshold that covered almost every ISP except a handful of industry giants. But Rosenworcel did not budge.

“We know that regulation in general, and open internet regulation in particular, can impact market participants in a variety of ways. “On balance, however, we conclude that our approach is unlikely to limit, but rather promote, overall investment and innovation in the internet ecosystem,” the FCC said.

When it came to the Universal Service Fund, broadband providers were vulnerable at the federal and state levels. However, Rosenworcel has decided to shield ISPs from contributions to the federal fund for now, despite vociferous objections from INCOMPAS, CCIA and NTCA. High-profile figures such as Affordable Broadband Campaign spokeswoman Gigi Sohn and Michael Calabrese of New America’s Open Technology Institute also chastised Rosenworcel.

In an issue that has received little attention, cable Internet service providers such as Comcast, Charter and Cox have sought new language expressly prohibiting states from requiring ISPs to contribute to country USF programs. Cable internet service providers reminded the agency that they had taken this position in the 2015 net neutrality rules, which were amended several years later.

Footnote 1476 in the final order reaffirmed the agency’s commitment to the 2015 policy, handing a victory to cable internet service providers, according to FCC and industry sources.

In the relevant part, footnote 1476 reads: “… Pursuant to our understanding under Art. 254(d), to maintain the status quo on benefit-based contributions (broadband Internet access services) and consistent with the 2015 Open Internet Regulation, we are maintaining the status quo with respect to the ability of states to impose contribution obligations on state level in the provision of BIAS for state universal service programs.”

Cable Internet service providers were pleased that the FCC took a national approach to USF funding.

“Despite intense pressure from several public interest and telecommunications industry groups to allow states to bill broadband subscribers charged from the Universal Service Fund, the FCC has determined that it should refrain from this requirement, which, if approved, could raise utility bills. Internet in consumers’ homes by billions of dollars, an industry source said.

The FCC’s decision barring states from requesting USF donations did not set a pattern. In some key areas, the FCC is taking a wait-and-see approach to state action.

For example, the FCC does not prohibit states from adopting their own net neutrality laws. In examining California’s net neutrality law, the FCC concluded that it “appears to largely mirror or overlap with our federal regulations (and) we see no reason to preempt it at this time.”

More controversial is the FCC’s approach to state laws creating affordable broadband programs and whether those laws constitute a form of impermissible rate regulation.

As the April 25 vote approached, FCC Commissioner Geoffrey Starks, a Democrat, added new language to the order to ensure the agency didn’t slam the door on state affordability programs. Accordingly, the FCC said it had not received “specific and robust records or discussions regarding any specific state broadband affordability program,” adding that it would not “address any specific program.”

To emphasize its hands-off approach, the FCC stated: “We also clarify that the mere existence of a state affordability program does not constitute rate regulation.”

According to the Republican commissioner of the FCC, this goes too far Brendan Carr.

In his 58-page dissent, Carr argued that by classifying ISPs as common carriers under Title II and waiving rate regulation, the FCC invalidated the New York State Affordable Broadband Act. Carr said New York’s law is a “naked rate regulation that is clearly bypassed” by net neutrality rules.

The day after the FCC adopted net neutrality rules, a panel of the U.S. Court of Appeals for the Second Circuit upheld the New York State ABA’s decision, finding that the state had discretion to do so while ISPs were classified as unregulated information service providers under Title I of the Act about communications.

However, the Second Circuit found almost unequivocally that the New York ABA Agreement is invalid when ISPs are common carriers under Title II, and the FCC used its forbearance authority to prohibit rate regulation. The FCC did both under the net neutrality rules.

“If the FCC decides not to impose a common carrier obligation, states are barred from imposing the same obligation on telecommunications services,” a district judge said Alison J. Nathan she stated in her panel opinion.

In an essay published Friday, a Boston College Law School professor Daniel A. Lyons agreed with Carr.

“The Second Court found that the decision to discontinue the Title II rate regulation provisions would prevail over New York law,” Lyons said.

The New York State Affordable Broadband Act requires the state’s ISPs to offer broadband to qualifying consumers for $15 per month for 25 Mbps or $20 per month for 200 Mbps.

It is unclear at this time whether the FCC will consider New York’s ABA rate control as equivalent to another state adopting the Affordable Connectivity Program (ACP) model, which would provide monthly cash rebates from state coffers.

To emphasize that it sees a key role for states, the FCC added the following footnote: “For example, the BEAD grant program established by IIJA requires that state BEAD programs ensure that ISPs offer a ‘low-cost broadband service option’ to eligible subscribers.”