On Friday, August 3, 2018, Chairman Ajit Pai of the Federal Communications Commission (“FCC”) sent a pair of letters to Congress to defend the FCC’s stance on net neutrality.  Chairman Pai was responding to letters sent in December 2017 by Senator Claire McCaskill (D-Mo.) and Representative Jeff Fortenberry (R-Neb.) in advance of the FCC’s Restoring Internet Freedom Order (the “Order”)  which removed the classification of broadband networks as “common carriers” and jettisoned the principle of “net neutrality.” 

In 2015, the FCC classified broadband providers as “common carriers” under Title II of the Communications Act of 1934, thus enshrining a principle known as “net neutrality,” that is, that all Internet traffic should be treated equally.  As we have previously reported, a “common carrier” is essentially a business that transports things for other people as a public good, and is consequently prohibited from discriminating between different users of its service and different goods or services transported through its network.

Following President Trump’s election and subsequent appointment of Chairman Pai, the FCC reversed its stance on net neutrality.  On January 4, 2018, the FCC released the Order, which reclassified broadband providers from Title II “common carriers” to Title I “information service providers,” and thereby made them subject to significantly less regulation.  The Order took effect on June 11, 2018. 

In his letters, Chairman Pai explained that the FCC’s decision to reverse the common carrier rule was rooted in the fact that the Internet had, before the 2015 decision to subject broadband providers to Title II, flourished for decades without such regulation.  Instead, he argued, Title II classification led to a decline of investment in high-speed networks “by billions of dollars,” reducing access to broadband (especially in rural areas) and competition between providers.  By changing to the “light-touch Title I framework,” the Order “help[s] consumers and promote[s] competition.”  Chairman Pai also noted that the FCC’s Order promotes “more robust transparency” by requiring Internet Service Providers (“ISPs”) to “disclose a variety of business practices.”

Chairman Pai also explained that the Order restores the Federal Trade Commission’s (“FTC”) jurisdiction and authority to enforce consumer protection and anti-competition rules.  The previous Title II categorization had stripped the FTC of such authority.  Chairman Pai noted that the FCC and the FTC also have entered into a Memorandum of Understanding with regard to this issue to ensure that the agencies cooperate on enforcement matters.

It is still too early to tell how the FCC’s new rules will affect the Internet and the broadband marketplace, but we will continue to report on any updates.

Mr. Pai’s letter to Senator McCaskill is available here, and his letter to Representative Fortenberry is available here.