FCC Bureau Extends Open Internet Order’s Small Provider Exemption Until December 2016; Table Set for Full Commission Review in December 2016

On December 15, 2015, the Federal Communications Commission’s (FCC’s) Consumer and Governmental Affairs Bureau (CGB or the Bureau) issued a Report and Order extending the temporary exemption for smaller broadband Internet access service (BIAS) providers from the 2015 Open Internet Order’s enhanced transparency rule. Smaller BIAS providers were already exempt from the enhanced transparency rule until December 15, 2015 but CGB has decided to extend the exemption for another year, until December 15, 2016. Notably, however, in an apparent concession to concerns raised by Commissioners Clyburn and O’Rielly, Chairman Wheeler announced in his statement that he would present the exemption to ​“the full Commission” for decision next December.

The enhanced transparency rule builds upon the Commission’s 2010 transparency rule by imposing additional requirements on providers, including the disclosure of promotional rates, all fees and/or surcharges, all data caps and allowances, and network performance metrics such as packet loss. However, the 2015 Open Internet Order temporarily exempted fixed and mobile BIAS providers with 100,000 or fewer connections from the requirements of the enhanced transparency rule. The Commission tasked CGB with determining whether the Commission should retain the small provider exemption, requiring a decision on whether to maintain the exemption by December 15, 2015. This order satisfies the Commission’s instruction.

On June 22, 2015, CGB issued a Public Notice seeking comment on whether the Bureau should maintain the temporary exemption and, if so, the appropriate threshold for whether a provider qualifies for the exemption. A number of commenters, primarily BIAS providers, argued that the temporary exemption should be made permanent.

CGB’s extension of the temporary small provider exemption will extend the exemption until after completion of the Office of Management and Budget’s (OMB’s) Paperwork Reduction Act (PRA) analysis, which is still ongoing. In its PRA analysis, OMB is assessing the burden small providers may incur when complying with the enhanced transparency rule. The CGB set December 15, 2016 as the expiration of its order. Notably, however, the order states that, after OMB’s PRA analysis is complete, ​“the full Commission” will consider whether to extend the small provider exemption and for how long. This appears to be a significant change in procedure, one that responds to at least two Commissioners’ expressions of concern over the applicability of the enhanced transparency rule to smaller providers.

Commissioner O’Rielly expressed these concerns in his separate statement, calling the temporary exemption a ​“monumental mistake in judgement and a missed opportunity to restore a bit of credibility and rationality” to the Open Internet proceeding. O’Rielly stated that small providers ​“shouldn’t have to comply now or in the future with burdensome requirements” like the Open 2015 Internet Order’s enhanced transparency rule. Commissioner Clyburn also issued a statement, stating that in February, she ​“advocated to exempt smaller providers” from the requirement and that ​“the Commission” needs more information in order to decide whether to extend the requirement.

In his statement, Chairman Wheeler gave in to these concerns. He stated that the CGB’s decision to extend the temporary exemption as the exemption will give CGB a ​“reasonable period to assess the burden associated with the enhancements to the transparency rule” and will give CGB ​“sufficient time to conduct a data-driven review.” Nevertheless, he promised that, ​“next December, I will present to the full Commission for their decision” the facts gathered by the CGB and will allow the Commission to ​“make an informed decision on the policy issues.” This concession could be significant, setting up an aspect of the Open Internet Order for a Commission vote after the 2016 election (and likely, after the D.C. Circuit’s decision in the appeal of the Open Internet Order).

For additional information regarding the enhanced transparency rule, the small provider exemption or the 2015 Open Internet Order, contact a member of Kelley Drye’s Communications Practice.