Today, a divided FCC adopted enforceable “net neutrality” rules for the first time. By a 3-2 vote, with all three Democrats voting in favor and both Republicans voting against, the Commission adopted a Report and Order in its Open Internet inquiry. As Chairman Genachowski announced last month, the new rules rely upon the FCC’s “Title I” authority to adopt “basic rules of the road” to preserve the open Internet “as a platform for innovation, investment, competition and free expression.”

To win the support of the other Democratic Commissioners, the Chairman agreed to several changes from his proposal last month. Most notably, the Order applies the transparency rule and a limited blocking prohibition to wireless carriers, and -- although the exact extent is unclear -- appears to bar wireline broadband service providers from engaging in paid prioritization of Internet content. The Order also adopts a definition of the “broadband Internet access services” to which the rules apply.

Commissioners Copps and Clyburn pronounced this action imperfect but sufficient to enable them to permit adoption of the Chairman’s proposal. On the other hand, both Commissioners McDowell and Baker dissented from the Order. Both strongly objected to the Commission’s claim of exisiting authority over Internet network management. Commissioner McDowell also asserted that the Order would create “irreparable harm” -- a factor considered by courts in granting a stay of agency orders.

The FCC action is described in more detail below. UPDATED: A PUBLIC NOTICE WITH THE RULES WAS RELEASED. SEE BELOW

As of this posting, the FCC has not released the text of its Order. (However, a Public Notice and the text of the New Rules ~~will be~~ was released shortly after the meeting.) As described at the FCC meeting, the Order adopts three general rules:

to require transparency by all broadband Internet access providers (including wireless broadband providers) of their network management practices and the performance characteristics of their networks;
to prohibit, subject to “reasonable network management,” wireline broadband providers from blocking any lawful content, applications, or services, and to prohibit (also subject to reasonable network management) wireless broadband providers from blocking certain types of content -- specifically, access to lawful websites and competing voice and “video telephony” services. All providers are permitted to offer “specialized services,” so long as they do not impede the open Internet; and
to prohibit unreasonable discrimination by fixed broadband providers. (The Commission did not apply this non-discrimination requirement to wireless providers.)

Notably, the Order designates net neutrality complaints as eligible for the Commission’s expedited “Accelerated Docket” complaint procedures. The Accelerated Docket generally provides for a decision to be issued within 90 days of acceptance of the complaint on the docket.

From an enforcement/litigation perspective, the most significant aspect of this decision is its reliance on the FCC’s “Title I” (or ancillary) authority. In April, the US Court of Appeals for the DC Circuit reversed a previous FCC decision that relied on ancillary authority to prohibit Comcast’s blocking of P2P traffic.

The Commission majority’s approach relies upon this same ancillary authority, but offers a different explanation of the basis for authority and the relationship between the FCC’s action and areas within its Title II (common carrier), Title III (broadcast/wireless) and Title VI (multichannel video programming) grants of regulatory authority. We also understand that the Order re-interprets Section 706 of the Telecommunications Act of 1996, which directs the FCC to “encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans.” The FCC previously interpreted this section not to provide an independent grant of authority. We understand that the majority is reconsidering this interpretation and concludes that Section 706 provides authority for the FCC to act to preserve an open Internet marketplace. The sufficiency of this explanation of authority will be the key issue in the expected appeal.

Reaction to the FCC’s proposed rules has been mixed. Some large broadband providers have endorsed Genachowski’s proposal, or have been noticeably silent. The same is true for Internet content providers -- some have supported the rules, but others are objecting to them as being too lenient. Public interest groups sought a strengthening of the rules, while wireless providers and their trade associations have opposed application of the rules to wireless broadband services.

Immediately, there will be efforts by Republican leaders in the new Congress to overturn or prevent implementation of the new rules, but support for net neutrality by the President and Democratic leaders in Congress may prevent any such action in the near term.

Another review in the US Court of Appeals is certain. This review ultimately will decide whether the new rules are enforceable. We will follow this case as it moves through the appellate process.

FCC Adopts Net Neutrality Rules, Endorses Accelerated Docket Complaints for Violations