Wu’s history as a law professor and advocate may offer some clues about how he will approach his duties. He rose to prominence as an advocate of “net neutrality,” a phrase he coined in 2002. In general, his scholarship focuses on telecommunications, technology, and competition.

After the 2020 presidential election, Wu and several former federal antitrust officials authored a Washington Center for Equitable Growth (WCEG) report entitled “Restoring Competition in the United States: A Vision for Antitrust Enforcement for the Next Administration and Congress.” The report that concludes the “U.S. economy is plagued by a problem of excessive market power” and “antitrust enforcement has failed to prevent this problem.” Among the report’s recommendations is a suggestion to create a White House Office of Competition Policy within the NEC, to bring a “‘whole government’ approach to competition policy.”

Although the White House has not created such an office, Wu’s title and administrative home in the NEC closely track WCEG’s advice. In the view of Wu and his co-authors, the White House should “pressure agencies to open up closed markets while discouraging agencies from entrenching the industries that they regulate.” Agencies that the WCEG report lists as possessing competition-related rulemaking authority range from the FDA to the Federal Housing Finance Agency.

Wu’s record and the current political environment, however, suggest that the internet and communications industries are likely to be a core part of his focus. The Department of Justice, FTC, and FCC will be central to any ramp-up in competition regulation or enforcement in this arena. These agencies have over time played complementary, but sometimes competing, roles in internet and communications issues, particularly in large communications and media mergers. With the shifting jurisdictional classification of broadband internet services at the FCC, moreover, the dividing line between FCC and FTC jurisdiction over various players in the market has been unclear. Both the FCC and FTC, for example, jointly took an aggressive stance against VoIP gateways through which unlawful robocalls were being transmitted.

These agencies present challenges to an assertive White House coordinating role. The FCC and FTC are independent; the selection of agency chairs and nominations to fill vacancies could indicate how willing the agencies will be to coordinate with the White House. At the same time, the Justice Department’s independence was a prominent issue in Merrick Garland’s confirmation hearings and could affect how the White House attempts to shape the Department’s competition policy agenda.

Wu will also have competition of his own within the White House. For instance, OMB’s Office of Information and Regulatory Affairs has a direct role in reviewing proposed federal regulations and may be more reluctant to issue aggressive regulations. Other White House components, from the Office of Science and Technology Policy to the Domestic Policy Council, are likely to make their voices heard, too.

We will closely monitor developments as Wu’s role and the leadership picture in key agencies become clearer.

The irony of John Oliver making robocalls in order to protest robocalls is rather funny. But, it raises the question – are these calls legal? The fact that the calls appear to be lawful – and would be legal regardless of the action Oliver called for in the program – highlights that there is an important distinction between illegal calls and unwanted calls. In the end, Oliver’s segment demonstrates some of the problems with modern efforts to apply the Telephone Consumer Protection Act (“TCPA”), a statute that was adopted well before the proliferation of cell phones in America, and seems to deter many legitimate calls while not sufficiently stopping scam calls.

Under the TCPA, it is unlawful to place an autodialed or a pre-recorded message call to certain phones without consent from the called party. Each of these elements – whether the call is autodialed or contains a pre-recorded message, the phone to which the call is made and whether consent is obtained – are relevant to determining the legality of any specific call. This makes for a complex, fact-based analysis as to whether any calling campaign is lawful or not.

The definition of an “automated telephone dialing system” or “ATDS” is one of the primary issues before the FCC today. An ATDS is defined in the statute as a device with the capacity (a) “to store or produce telephone numbers to be called, using a random or sequential number generator” and (b) “to dial such numbers.” The FCC over the years has taken an ever-expanding view of what falls within the scope of an ATDS, which has created significant uncertainty and inconsistency in federal courts that have jurisdiction over complaints alleging violations of the TCPA. The inconsistency and uncertainty has hampered legitimate efforts to provide information beneficial to consumers, and has led to a steady stream of petitions for clarification to the FCC itself.

Most recently, in 2015, the FCC adopted a new and even broader definition of ATDS that turned on a device’s “capacity” to function as an autodialer. Specifically, the FCC defined equipment as an autodialer if it contained the potential “capacity” to dial random or sequential numbers, even if that capacity could be added only through specific modifications or software updates (so long as the modifications were not too theoretical or too attenuated). Under this revised interpretation, any equipment that could be modified to dial numbers randomly or sequentially would be an ATDS – and therefore subject the caller to potential liability under the statute.

The Court of Appeals for the D.C. Circuit, which was asked to review this definition, was troubled by the “eye-popping” reach of the FCC’s interpretation, finding that it could be applied to any smartphone, and found that such a reach could not be squared with Congress’ findings in enacting the TCPA. The Court observed that the FCC’s interpretation was “utterly unreasonable in the breadth of its regulatory [in]clusion.” It rejected the FCC’s justification that a broad reach was necessary to encompass “modern dialing equipment,” concluding that Congress need not be presumed to have intended the term ATDS to apply “in perpetuity” and citing paging services as an example of TCPA provisions that have ceased to have practical significance. The Court also found that the confusion over the term “capacity” as it relates to the ATDS definition was multiplied by the FCC’s insufficient explanation of the requisite features that the covered ATDS equipment must possess. The Court set aside the prior interpretation and handed the issue back to the FCC for further analysis and explanation. In the year since that decision, the FCC sought comment on how to respond to the D.C. Circuit’s ruling and appears to be close to issuing a decision on the remanded issues. (As we have explained previously, Chairman Pai’s dissent to the 2015 ATDS definition may be indicative of how the FCC will approach the issue under his leadership.)

Which brings us back to John Oliver. Apparently concerned that the FCC would narrow the definition of ATDS, Mr. Oliver decided to take to the phones to call the FCC. And he is. He announced during his show that he had set up a program that would automatically dial each of the five FCC commissioner’s offices every 90 minutes and play a satirical pre-recorded message urging them to take action to stop robocalls.

But are these calls legal? Actually, it is very likely that they are. Oliver is sending a call containing a pre-recorded message, which satisfies the first element of the TCPA’s applicability. (The calls likely were sent with an autodialer too.) Because Oliver is calling the FCC’s office numbers – which are non-residential landline phones – those calls actually are not affected by the TCPA or the current definitional issue for the FCC. As consumers receiving political robocalls know, calls to landlines don’t require prior consent because the TCPA’s restrictions on the use of an ATDS or pre-recorded message don’t apply for landlines unless a call “introduces an advertisement or constitutes telemarketing.”

Further, the issue of revocation of consent to receive autodialed calls also does not come into play. Oliver spent some time on this show criticizing the “fine print” that some parties use for revoking consent to receive calls. However, Oliver’s explanation that the FCC could “revoke” consent for his calls by sending a certified letter to an address “buried somewhere within the first chapter of Moby Dick” that was quick-scrolled across the screen at the end of the episode, while entertaining, had no legal significance. (And, in any event, the FCC’s 2015 conclusion that consumers may “revoke consent at any time and through any reasonable means” was upheld by the D.C. Circuit upon review.) Put simply, consent is not required for the calls that Oliver is making, and revocation of consent similarly is not relevant to the calls. Nor does the TCPA limit the number or frequency of calls, so the 90-minute intervals for his calls do not amount to a violation of the statute. Finally, Oliver rightly observed during his segment that the National Do Not Call Registry only applies to telemarketing calls, so even if the FCC commissioners registered their office phone numbers on the National Do Not Call Registry, Oliver’s calls to them would not be unlawful.

What does it all mean? In part, it means that John Oliver was taking a bit of comedic license in order to be funny (which he is of course entitled to do). But more deeply, the stunt demonstrates that the TCPA isn’t really about unwanted calls, even though some will talk about the Act as if it were. Too often, the frustration of consumers is directed to unwanted calls when the proper question under the TCPA is whether calls are illegal. Moreover, an autodialed call is not necessarily unwanted, and consumers may be less concerned with how the call is placed than they are with its content. Nor are calls placed without the consent of the recipient necessarily illegal. This is true of Oliver’s calls to the FCC, but also of emergency calls, free messages from your wireless carrier and certain health-related calls, areas where the FCC has carved out exceptions to the consent rules.

Further, one lesson here is that, unlike net neutrality and other issues that are highly contentious and divisive, everyone seems to be relatively on the same side when it comes to robocalls. John Oliver and Chairman Pai would almost certainly agree that additional steps to prevent scam calls – like someone impersonating the IRS or falsely stating that a consumer has won a free cruise – are needed. And to be fair, the FCC is taking actions aimed at reducing these calls, such as allowing voice service providers to block calls from invalid, unallocated, and unassigned numbers before they ever reach a consumer’s phone, supporting development of the industry-led call authentication framework to combat deceptive spoofing, and voting to create a single, nationwide database for reporting number reassignments in order to reduce calls placed in good faith to the wrong party. But the public debate needs to be clearer – the key is figuring out whether what’s being done is effective at stopping illegal calls. Inflaming the public over every unwanted call does not help advance a workable solution to the real problem.

Even with the appeal moving forward, action on net neutrality legislation continues on multiple fronts. While federal net neutrality bills may be stalled in Congress until after the mid-term elections, states continue to propose and adopt legislation and executive actions aimed at incentivizing BIAS providers to abide by the FCC’s 2015 net neutrality rules. These moves complicate the legal environment for BIAS providers as they attempt to navigate the non-uniform patchwork of state-level actions. The oral argument also comes less than a year after the Ninth Circuit’s decision giving the Federal Trade Commission broad authority over practices not classified by the FCC as telecommunications services, which includes BIAS (at least for now). A D.C. Circuit decision reversing the Order could undermine the FTC’s authority over BIAS providers and result in further legal challenges. In short, the oral argument represents only the next step in the continuing debate over the appropriate regulatory regime for broadband services and their providers. We will continue to track the appeal and report on any major developments.

The decision is notable because the last three appeals of previous FCC net neutrality orders were heard in the D.C. Circuit. The last time the Ninth Circuit heard a challenge of FCC net neutrality rules was nearly 15 years ago, in Brand X Internet Services v. FCC, which led to the Supreme Court’s seminal opinion on the FCC’s classification of cable modem service in 2004, National Cable & Telecommunications Association v. Brand X Internet Services. The Brand X decision in turn ushered in a decade of deregulatory policy in the broadband ecosystem.

The Ninth Circuit’s most recent foray into broadband policy came last month when an en banc panel held that the “common carrier exemption” in Section 5 of the Federal Trade Commission (FTC) Act—which prohibits unfair and deceptive trade practices—was “activity-based” and therefore that the FTC could bring a suit against AT&T Mobility for alleged violations of Section 5 related to the company’s non-common-carrier broadband service. A previous panel had held that AT&T Mobility was entirely exempt from Section 5 based on its “status” as a common carrier, raising significant questions about the boundaries of FTC and FCC jurisdiction. The en banc decision brings the Ninth Circuit back into harmony with other circuits that have addressed the issue.

We’re monitoring the appeal and will continue to update this blog with developments.

As we previously discussed, the Order effectively reverses the Commission’s 2015 Open Internet Order, reclassifying broadband Internet access service as a lightly regulated Title I "information service" and eliminating the 2015 Order's open Internet rules (while retaining a modified version of the transparency requirement).

The Order will not go into effect until after the Office of Management and Budget completes its Paperwork Reduction Act review, which could take several months. However, last Thursday’s publication is significant because it triggers deadlines for challenges to the Order, both in the courts and in Congress.

The Federal Register publication gives litigants ten days to file petitions for review in federal courts of appeals if they would like to be included in a court lottery to determine the venue for consolidating the Order’s challenges. The following petitions have already been filed:

• New York District Attorney General Eric Schneiderman announced he and 22 other Democratic attorneys general filed a petition for review at the U.S. Court of Appeals for the D.C. Circuit;
• Public Knowledge, Mozilla, Vimeo, National Hispanic Media Coalition, and New America’s Open Technology Institute each filed petitions for review in the D.C. Circuit;
• The California Public Utilities Commission and Santa Clara County each filed appeals in the Ninth Circuit;

Federal Register publication also allows lawmakers to formally introduce a Congressional Review Act (CRA) resolution of disapproval, which would reverse the Order and prevent the Commission from subsequently introducing a substantially similar Order. 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. Senator Ed Markey, D-MA, and House Communications Subcommittee ranking member Mike Doyle, D-PA, have led the Democrat’s effort to draft a CRA resolution to nullify the Order. At the time of this blog post, the CRA resolution had 50 Senator co-sponsors, including all 49 Democratic senators and Senator Susan Collins, R-ME. President Trump is not expected to support the CRA resolution, even if the measure passed both chambers of Congress.

In addition to activities in federal court and in Congress, 26 states are considering net neutrality legislation, and five state governors have issued executive orders regarding net neutrality following the Commissioners’ December 2017 vote.

We will follow up this blog post with a more comprehensive review of the Restoring Internet Freedom Order soon. In the meantime, contact any of the authors of this blog post for more information on the proceeding.

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.

• Reclassify fixed and mobile BIAS as an information service. The most significant change in the draft Order to the regulatory classification of BIAS. We expect that the Commission will follow through with its plan to reverse the 2015 Open Internet Order’s classification of fixed and mobile BIAS as a common carrier telecommunications service under Title II of the Communications Act, reclassifying BIAS as an “information service” and reinstating the regulatory framework that was in place prior to March 2015.
• Vacate the bright-line rules and the general conduct standard. Having reclassified BIAS as an information service, we further expect the Commission will eliminate the conduct rules adopted in the 2015 Title II Order, including the “bright-line” prohibitions on paid prioritization, blocking and throttling and the 2015 Order’s general conduct rule. The general conduct rule, which raised particular concern from Republican commissioners when it was adopted, prohibited BIAS providers from unreasonably interfering with or disadvantaging the ability of consumers to select, access, and use lawful Internet content, applications, and services, and for edge providers to make such content, applications, and services available to end users.
• Retain, but refactor, the open Internet transparency rule. Contrary to early suggestions, the Restoring Internet Freedom Order likely will not scrap the open Internet transparency rule, which was first imposed in 2010 and later enhanced in 2015. Instead, we expect that the Order will rescind the 2015 Order’s enhancements to the 2010 rule and provide additional flexibility to providers, allowing them to either post the statement on their websites or to submit them to the FCC for posting on a publicly accessible website.
• Return consumer protection authority to the FTC (with caveats). By reclassifying BIAS as an information service, the Order cedes the FCC’s consumer protection authority over BIAS to its sister agency the Federal Trade Commission (FTC). Specifically, while the 2015 Open Internet Order applied core consumer protection provisions of the Communications Act to BIAS providers, including sections 201, 202, 222, and 255, BIAS will now be subject to Section 5 of the FTC Act, which prohibits unfair and deceptive trade practices. Importantly, although the FCC and FTC are actively working on a memorandum of understanding to promote coordination of enforcement efforts, it’s an open question whether the FTC is able to enforce Section 5 against BIAS providers who also provide regulated common carrier services. Specifically, in 2016 the Ninth Circuit ruled that Section 5’s exemption for “common carriers” applied not just to a company’s common carrier activities, but to all activities of a common carrier. As a result of this decision, any BIAS provider that also provides telecommunications services may be shielded from both FCC and FTC jurisdiction. The FTC has appealed the panel decision en banc and the court heard argument in September. How the Ninth Circuit resolves this question – or whether it reaches a result without addressing the jurisdictional question – may impact whether the FTC will be able to be the “cop on the beat” that the FCC Order expects.
• Addresses several procedural issues. The draft Restoring Internet Freedom Order also resolves several procedural issues, denying a request from trade group INCOMPAS to modify protective orders related to four recent major transactions involving BIAS providers, and denying a request from the National Hispanic Media Coalition to incorporate several informal complaint in a subsequent proceeding open for public comment.

Ultimately, we will be back in a familiar location – in appeals over the FCC’s classification of broadband. Three of the FCC’s previous attempts have been before the D.C. Circuit, with two reversals (at least in part) of the FCC’s action and (ironically) one decision sustaining the 2015 decision that this Order will reverse. 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 both the FCC’s classification of BIAS as a Title II service and its expected reclassification of BIAS could be upheld, so long as the court determines that the decision falls within this traditional zone of deference. If that happens, then it will ultimately be up to Congress to prevent constant flip-flopping of the regulatory regime applicable to these services.

We are tracking and will provide a more complete client advisory when the final Order is released.

The core question discussed at the hearing was whether current antitrust law is sufficient to ensure net neutrality absent FCC rules. The panelists—including FTC Acting Chairman Maureen Ohlhausen and Commissioner Terrell McSweeney; former FCC Commissioner Robert McDowell; and Michael Romano, NTCA Senior Vice President of Industry Affairs and Business Development—and committee members were generally divided down party lines, with Republicans arguing that FCC rules were both unnecessary and counterproductive and Democrats arguing that rules were necessary to ensure an open Internet, free expression, and innovation.

At the same time, all panelists agreed that Congress should eliminate the so-called “common-carrier exemption,” which exempts Title II common carriers from FTC jurisdiction. By eliminating the exemption, the panelists argued that the FTC could assume a greater role in enforcing net neutrality and other consumer protection violations related to the communications industry.

The hearing took place in the midst of ongoing regulatory and judicial proceedings that would define the contours of FTC and FCC jurisdiction with respect to broadband providers. Specifically, the FCC is considering a Notice of Proposed Rulemaking that would dramatically scale back the FCC's earlier 2015 open Internet order--reclassifying broadband internet access as a lightly regulated “information service” and returning primary jurisdiction over broadband services to the FTC. At the same time, the Ninth Circuit has before it a pending rehearing en banc of a 2016 decision that broadly interpreted "common carrier exemption” as applying to all activities of common carrier entities, not just common-carrier activities. As we discussed in an earlier blog post, the original ruling was controversial, and FCC Chairman Ajit Pai has praised the decision to rehear the case.

For more information on the state of play with the current boundaries between FCC and FTC jurisdiction (in the context of consumer privacy), please join us for an ABA Antitrust Section webinar sponsored by the Privacy and Information Security and Media and Technology Committees on November 13, 2017 featuring:

• Jennifer Tatel, Partner, Wilkinson Barker Knauer
• Neil Chilson, Chief Technologist, Federal Trade Commission
• Rick Chessen, Senior Vice President, Law and Regulatory Policy, NCTA – The Internet & Television Association
• Yosef Getachew, Policy Fellow, Public Knowledge

The NPRM seeks to reclassify broadband Internet access service (BIAS) as a Title I information service, and reinstate a prior determination that mobile BIAS does not constitute a commercial mobile service. It proposes, in short, essentially the opposite conclusions as were reached by the Democrat-controlled Wheeler FCC in 2015. By classifying BIAS as an information service, the item seeks to return privacy jurisdiction over Internet service providers (“ISPs”) to the Federal Trade Commission (“FTC”). Furthermore, the NPRM seeks to eliminate the Title II Order’s general conduct standard, and seeks comment on whether to keep, modify, or eliminate the bans on blocking, throttling, and paid prioritization. Moreover, the item questions the wisdom and propriety of the Commission’s oversight authority with respect to the broadband interconnection market. Finally, the NPRM questions the necessity of the Open Internet transparency rule - a non-behavioral disclosure requirement upheld in two forms by the D.C. Circuit.

As described by proponents, the NPRM is a necessary response to regulatory uncertainty and reductions in network investment that resulted from the Title II Order.

As is always the case on matters of net neutrality, this NPRM is highly controversial. Prior to the item even being released, over 1.6 million comments had already been filed in the docket – a number that would have been even higher had the Commission not invoked sunshine rules to prohibit further comments in the week prior to the release of the NPRM.

The text of the NPRM has not yet been released. However, according to a draft of the item, comments will be due on July 17, and reply comments will be due August 16, assuring that the debate will continue into the fall.

The depth of the disagreement was evident in the Commissioners' statements during consideration of the item. FCC Chairman Ajit Pai and Republican Commissioner Michael O’Rielly released statements in favor of the NPRM. Unsurprisingly, Democratic Commissioner Mignon Clyburn vehemently dissented.

Chairman Pai defended the item by citing the robust growth of BIAS under the prior Title I regime, claiming the FCC’s utility style regulation under Title II was stifling investment in broadband networks, and lamenting the chilling effects of regulatory uncertainty on "pro-consumer" plans such as wireless zero rating and sponsored data services. He also claimed that the Title II Order damaged small carriers that struggled under the weight of the compliance costs associated with the 2015order. Furthermore, Chairman Pai claimed that the Title II Order’s general conduct standard would result in DC lawyers micromanaging the complex technical decisions of network engineers in ways that would stifle innovation and threaten the viability of next-generation 5G service.

Commissioner O’Rielly asserted that the Title II Order leaped to prohibitive conclusions on the basis of insufficient evidence (such as with the ban on paid prioritization), and welcomed the NPRM as a chance to reassess the validity of prior conclusions through cost-benefit analysis. He also emphasized the importance of the Commission reaching a conclusion with respect to whether or not BIAS is an interstate service, since an affirmative conclusion in that regard could preclude certain state privacy laws currently under consideration.

However, Commissioner Clyburn blasted the NPRM as an unnecessary and harmful abdication of the Commission’s responsibilities to protect consumers and promote competition. She warned that the proposal leaves too much discretion for ISPs to self-police, relies on questionable assumptions about investment in broadband infrastructure, and is myopic in its economic analysis insofar as it fails to account for the benefits of robust Open Internet rules for the broader Internet economy (i.e. edge providers). Finally, she touted the benefits of an Open Internet for those most vulnerable in our society, and expressed concern that reclassification may harm other efforts of the Commission to facilitate communications access for low-income Americans.

If the terminology is any indicator, neither side is likely to give ground. Democrats touted the 2015 order as "Protecting the Open Internet" while the Republicans have titled this proceeding as “Restoring Internet Freedom.” This NPRM certainly is the latest word on the subject, but it is unlikely to be the last.

First, the Commission proposes to reclassify BIAS as an information service and reinstate the determination that mobile BIAS is not a commercial mobile service. On both accounts, the NPRM essentially reverts to the policy determinations and justifications that underlay the Commission’s earlier classifications of fixed and mobile BIAS as information services, and seeks comments on those views. In support of its position, the NRPM looks to the statutory text of the 1996 Telecommunications Act, Commission precedent, and public policy considerations.

Second, the Commission seeks comment on the effect of the regulatory frameworks that the Commission adopted in its Title II Order. Specifically, it seeks comment on the FCC’s earlier decision to forbear from applying certain provisions of Title II to ISPs while imposing others, including section 222, which pertains to customer proprietary network information (CPNI). The NPRM also discusses the fate of the FCC’s Lifeline program, proposing to maintain Lifeline support for broadband, but apparently limiting such support to ”‘the provision, maintenance, and upgrading’ of broadband facilities capable of providing supported services.” Finally, the NPRM asks how reclassification of BIAS as an information service would impact other issues, such as pole attachments and infrastructure investment, and seeks proposals on how to further encourage broadband deployment.

Third, the NPRM seeks comment on the existing open Internet rules and whether to “keep, modify, or eliminate them.” Specifically, the NPRM:

• proposes to eliminate the Title II Order’s “general conduct” standard and the list of factors underlying it;
• asks whether the FCC’s ex ante bright line rules (i.e., no blocking, no throttling, no paid prioritization, and transparency) are necessary at all;
• proposes to retain the reasonable network management exception for any rules it does not eliminate;
• asks whether to apply any rules it retains to mobile BIAS; and
• asks whether it should retain the enforcement procedures established in the Title II Order, including its informal and formal complaint procedures, advisory opinions, the role of the open Internet “ombudsperson” charged with representing consumer interests, and delegated authority to FCC bureaus for further rulemaking.

Finally, the NPRM proposes to conduct a cost-benefit analysis as a part of its new proceeding. Specifically, the NPRM seeks comment on how to conduct such an analysis and the importance of such an analysis, and proposes to rely on the Office of Management and Budget’s Circular A-4, Section E, which compares a baseline scenario to the proposed framework.

So what can we glean from the draft NPRM? Like Congress’s joint resolution rescinding the FCC’s 2016 Privacy Order, the Restoring Internet Freedom NPRM seeks to turn back the clock to immediately before the Title II Order was introduced. Despite occasional acknowledgement of existing rules and consumer protection objectives, the overall thrust of the NPRM is deregulatory. The key question for the Commission, then, is what, if anything, will remain from the existing open Internet framework, and how, if at all, the FTC will take up the mantle of broadband cop on the beat if the Commission reclassifies BIAS as an information service. At this stage, it’s still too early to tell. Stay tuned for more as we approach the Commission’s May 18^th vote and gain greater clarity on comment filing deadlines.

During an event at the Newseum in Washington, D.C., Chairman Pai announced that he would present a Notice of Proposed Rulemaking (NPRM) to reassess many aspects of the 2015 Open Internet Order, which reclassified broadband Internet access service (BIAS) as a Title II telecommunications service and imposed a number of common-carrier style regulations on BIAS. On May 18, 2017, Chairman Pai will ask for a Commission vote on the NPRM at the Commission’s monthly open meeting.

While many questions remain about the specific objectives of the item, according to Chairman Pai, the NPRM contains the following core objectives:

• Reclassification. The FCC seeks comment on reclassifying BIAS from a Title II telecommunications service to a Title I information service, returning to the status quo before the 2015 Open Internet Order.
• Reducing Uncertainty. The FCC seeks comment on eliminating the multi-factor general conduct standard contained in the 2015 Open Internet Order. This standard was the basis, for example, for the Wireless Bureau’s 2016 investigations into wireless carrier “free data” programs.
• Assessing Bright-line Rules. The Commission seeks comment on what ought to be done with respect to the existing bright line rules prohibiting blocking, throttling, and paid prioritization of BIAS traffic.

The FCC will release the draft text of the NPRM tomorrow. We will follow up as more information becomes available.

In the 2015 Open Internet Order, the FCC adopted enhanced transparency disclosure requirements for Internet service providers by requiring providers to disclose promotional rates, all fees and/or surcharges, all data caps and allowances, and additional network performance metrics (e.g., packet loss).

Initially, the Order exempted providers with 100,000 or fewer broadband connections (small providers) from such reporting transparency obligations for one year. However, former Chairman Wheeler’s FCC allowed such obligations to expire.

The FCC’s actions on Thursday restored the small carrier exemption, so that small providers will be exempt from reporting obligations for the next five years. They also expanded the exemption by changing the small provider threshold from 100,000 or fewer broadband connections to 250,000 or fewer broadband connections.

The Commission’s decision to expand the scope of the small carrier exemption was not without controversy. Commissioner Clyburn dissented from the Order, claiming that the expansion will allow some of the largest Internet service providers in the country to exempt their subsidiaries which have under 250,000 connections. She also claimed the Commission did not provide a sufficient rationale for changing course from FCC precedent.

Although the Order was approved on February 23, it is retroactive to January 17. Despite this development, small carriers remain subject to the requirements of the 2010 transparency rule, which include network management practices, network performance characteristics, and commercial terms of service.

For questions about transparency requirements or other aspects of Open Internet enforcement, feel free to reach out to the authors of this article or your regular Kelley Drye contact.

In the 2015 Order, the FCC adopted enhancements to the transparency rule, which covers both content and format of disclosures by providers of broadband Internet access service. However, OMB had been reviewing the enhanced transparency rule, after receiving complaints that the rule violated the Paperwork Reduction Act (PRA). The Commission made clear that it would announce an effective date for the enhanced transparency rule in the Federal Register in wake of OMB approval.

Now that OMB approval is complete, the FCC has sent a notice for publication to the Federal Register, and clarified that the enhanced transparency rule goes into effect January 17, 2017.

The End of the Small Provider Exemption:

The completion of OMB review coincides with the end of a temporary exemption for small Broadband Internet access service (BIAS) providers from the enhanced transparency rule.

The 2015 Open Internet Order expanded the transparency rule from the 2010 Open Internet Order by creating new obligations, requiring providers to disclose promotional rates; all fees and/or surcharges; all data caps and allowances; and additional network performance metrics (e.g., packet loss).

The 2015 Open Internet order exempted small providers (i.e., those with 100,000 or fewer broadband connections) from these new transparency obligations.

Initially, 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 exemption for one year. The FCC could have opted to make this exemption permanent, but did not take that course of action.

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

The FCC’s settlement requires T-Mobile to pay a total of $48 million. It further requires T-Mobile to clearly and conspicuously disclose any material limitations on the amount and speed of mobile data for its “unlimited” plans, and includes reporting and training obligations.

Facts and Law Underlying Liability

According to the FCC, T-Mobile advertised “unlimited” mobile data service without adequately disclosing that during times of high network usage characterized as “contention”— defined as network stress that does not rise to the level of “congestion” (i.e., where Internet access begins failing altogether)—an algorithm would limit the data speed of its customers who had used more than a certain, preset amount of data. Customers whose data was de-prioritized or throttled by T-Mobile experienced network speeds even slower than other users connected to the same cell site. T-Mobile received hundreds of complaints from consumers whose data service was affected by these throttling practices. In considering whether T-Mobile violated the FCC’s 2010 Open Internet Order, the FCC pointed to the Transparency Rule that requires Internet service providers (“ISPs”) to publicly disclose accurate information about the technical and financial terms under which they offer services. The purpose of this rule is to enable consumers to make informed choices about which services to buy and how to use them. While ISPs may be permitted to implement data management practices (e.g., throttling) to address network congestion, the Transparency Rule requires that ISPs provide specific information related to their practices such as the types of traffic subject to practices; purposes served by practices; practices’ effects on end users’ experience; criteria used in practices, and the typical frequency of congestion usage limits and the consequences of exceeding them. At a minimum, ISPs must prominently display or provide links to these disclosures “on a publicly available, easily accessible website that is available to current and prospective end users.”

In addition to requiring the disclosure of information related to data management practices, the FCC’s 2015 Open Internet Order made clear that the Transparency Rule requires an ISP’s advertising to be accurate and consistent with its disclosed practices. As noted by the FCC, “a provider making an inaccurate assertion about its service performance in an advertisement, where the description is most likely seen by consumers, could not defend itself against a Transparency Rule violation by pointing to an ‘accurate’ official disclosure in some other public place.” “Allowing such defenses,” according to the FCC, “would undermine the core purpose of the Transparency Rule.” In its investigation as to whether T‑Mobile violated the Transparency Rule, the FCC determined that several necessary disclosures were missing in T-Mobile’s advertising. Specifically, the FCC determined that from August 2014 until June 12, 2015, T-Mobile’s disclosures did not inform consumers of (i) the specific data threshold that triggered the de-prioritization; (ii) how application of the de-prioritization could impact consumers’ ability to use data services; (iii) the specific speed reductions that consumers could face; and (iv) the types of apps and data services that could be adversely affected.

Terms of the Consent Decree

Under the terms of the settlement, T-Mobile has agreed to pay a total of at least $48 million and to adhere to certain conduct provisions. Key terms of the monetary payment include:

• Civil Penalties: T-Mobile will pay a $7.5 million civil penalty to the FCC.
• Consumer Benefits: T-Mobile will spend up to $35 million in consumer benefits, including (i) giving a discount of 20%, up to $20, on the price of any in-stock accessory to certain customers with “unlimited” data plans and (ii) giving a 4 GB upgrade to “unlimited” plan customers who subscribe to a mobile data service line under the T-Mobile or MetroPCS brands.
• Broadband Service and Devices to Schools: T-Mobile will spend at least $5 million in providing mobile broadband service and devices to students at low-income schools. To the extent that the $35 million in consumer benefits is not spent, the unspent money will be added to the $5 million in broadband service and devices to schools.

• Update Disclosures: T-Mobile will update its disclosures to clearly explain how the “Top 3 Percent Policy” works and the impact it has on consumer data speeds.
• Unlimited Clarification: If T-Mobile continues to advertise data service as “unlimited,” it must clearly and conspicuously disclose all material restrictions (including its “Top 3 Percent Policy”) on the amount and speed of mobile data.
• Notice: T-Mobile must notify consumers when they are approaching the threshold before the “Top 3 Percent Policy” goes into effect.
• Consumer Broadband Label: T-Mobile must adopt the FCC’s “Consumer Broadband Label” in conjunction with its other Open Internet disclosures within 90 days.

Observations:

This latest FCC enforcement action demonstrates the agency’s continuing commitment to aggressive and high profile enforcement in the consumer protection arena. Last June, the FCC proposed to fine AT&T $100 million for similar conduct related to unlimited data plans. Further, the FCC recently released guidance on complying with the Transparency Rule (raising challenges from industry) and consumer-facing broadband disclosures. The FCC also continues to examine the permissibility of sponsored data plans under its open Internet rules.

In the wake of the FCC’s 2015 Open Internet Order, which reclassified broadband services as common carrier services (taking those services outside the scope of the FTC’s jurisdiction), and the Ninth Circuit’s recent decision in FTC v. AT&T, which found that the common carrier exception to the FTC’s jurisdiction is status based rather than activity based (eliminating the FTC’s jurisdiction over ISPs), the FCC’s role as a consumer protection watchdog is likely to continue to grow.

As a result, broadband providers should reexamine their network management practices, advertising, and transparency statements to ensure compliance with FCC rules and guidance.

Alysa Hutnik and Spencer Elg, of Kelley Drye’s Advertising Group, co-authored this post.

To see our full client advisory please click here. If you have any questions about the open Internet rules or the decision, feel free to reach out to the authors of this blog post or your usual Kelley Drye contact for more information.

We are in the process of reviewing the decision and will circulate a client advisory in the coming days. In the interim, please contact John Heitmann or Jennifer Holtz with any questions.

In the 2015 Open Internet Order, the Commission applied the consumer privacy protections of Section 222 of the Communications Act to BIAS providers. Section 222 regulates:

• Proprietary Information. Section 222(a) establishes a duty of telecommunications carriers to protect the confidentiality of proprietary information of and relating to carriers, equipment manufacturers, and customers.
• Carrier Proprietary Information. Section 222(b) prohibits carriers who receive proprietary information from other carriers for the purpose of providing telecommunications from using that proprietary information for other purposes, including marketing.
• Customer Proprietary Network Information. Section 222(c) defines CPNI and establishes situations where carriers may use CPNI without obtaining additional consent.

In the Advisory, the Bureau warned that, during this gap period, BIAS providers should “employ effective privacy protections in line with their privacy policies and core tenets of basic privacy protections.” Rather than focusing on what the Bureau referred to as the “technical details” of the provider’s practices, the Bureau announced that its focus will be on whether providers are taking “reasonable, good-faith steps” to comply with Section 222. In other words, it seems, for now, the Bureau will be looking more at efforts and less at outcomes in its enforcement.

The Advisory also encourages BIAS providers to seek informal guidance from the Enforcement Bureau. It stated that both informal guidance, and advisory opinions as provided in the Open Internet Order are available. The Bureau cautioned that no provider “is in any way required to consult with the Enforcement Bureau,” but such consultations would, in and of themselves, “tend to show that the broadband provider is acting in good faith.” This may prove to be a significant stance, particularly if the provider is operating or using customer information in ways that later prove to be controversial. BIAS providers should carefully consider their options to obtain guidance in connection with a particular use of customer information once the rules take effect.

In light of this Enforcement Advisory and the 2015 Open Internet Order, all BIAS providers should conduct a review of their customer privacy practices and public-facing policies. Such a review would be an important starting point in demonstrating “reasonable, good-faith steps” to comply with Section 222.

On Thursday, March 12, 2015, the Federal Communications Commission (FCC) released the text of its long-awaited Open Internet Order, which it adopted on February 26, 2015.

As we discussed in a previous blog post, the FCC voted 3-2, along party lines, to reclassify “broadband Internet access service” (including both fixed and mobile broadband) as a “telecommunications service” under Title II of the Communications Act of 1934, as amended, and to apply new prohibitions on blocking, throttling and paid prioritization. It also forbears from many provisions of Title II, while applying other of the traditional Title II provisions.

The release of the Order enables everyone to begin the process of dissecting the dense 300+ pages of rules and explanations for the Commission's action. The Order also moves the Open Internet rules one step closer to judicial review. Appeals can be filed once the Order is published in the Federal Register, a process that may take a week or more to be completed.

Kelley Drye will be hosting a webinar on the new rules on Tuesday, March 24 at noon Eastern time.

**This event has occurred in the past. To access a recording of the webinar, please click here. For a copy of the slide presentation, please click here.

Stay tuned for further updates as we digest this controversial order.