On May 16, Senate Democrats (joined by a handful of Republicans) won a narrow vote to block the Federal Communication Commission (“FCC”) from reclassifying broadband internet services. The reclassification, due to take effect on June 11, 2018, would give internet service providers the right to prioritize (or de-prioritize) access to certain online services and websites. The move is seen by many—particularly search engine, social networking and online retail firms—as undermining so-called “net neutrality,” or the principle that all internet traffic should be treated equally.
Federal regulation of telecommunications services stretches back to the early 20th century and the regulation of telephone and wireless services under the Mann-Elkins Act of 1910 and the Federal Radio Act of 1927. In 1934, President Franklin D. Roosevelt signed a new Communications Act establishing the FCC and broadly applying the concept of “common carrier” to telephone and wireless communications. Tracing its roots to English common law, 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. In context of the 1934 Act, this meant that the telephone monopoly could not alter its service based on identity or location of the people using the telephone, or the content of their conversations.
The breakup of the telephone monopoly in the 1980s and the rise of the internet in the 1990s left the FCC ill-equipped to regulate the market, at least from a legislative standpoint. A sweeping update to the 1934 regime, the Telecommunications Act of 1996, brought internet traffic sent through dial-up modems under the common carrier, or “Title II,” classification. However, the 1996 Act did not make specific provision for the new wave of high speed broadband service providers, which remained effectively deregulated.
Despite the lack of regulation, broadband providers were subject to FCC rules and policies, and this fundamental ambiguity led to a raft of lawsuits in the early 2000s. Meanwhile, a natural tension had emerged between the broadband service providers that had invested in broadband infrastructure, and the websites that relied on it to deliver their services. Whereas websites and software companies favored the “common carrier” approach allowing restriction-free access to internet users, broadband providers wanted the ability to “throttle” or otherwise restrict unwanted traffic on their networks, from the file-sharing protocol BitTorrent to voice and video applications (such as Skype) which compete with their own services.
The FCC appeared to have settled the issue in 2015, when it officially classified broadband networks as common carriers. Although this decision survived a concerted legal challenge in the U.S. Court of Appeals for the District of Columbia in 2016, it would not survive the political earthquake set off by Donald’s Trump’s election victory later that year. President Trump appointed Ajit Pai—a lawyer with links to the broadband industry—to head the FCC. An FCC vote in July 2017 reversed the Title II classification by a 3-2 majority.
With the rule change set to come into force in a matter of weeks, proponents of net neutrality in the Senate have launched a last-ditch attempt to block its implementation. By passing a Congressional Review Act resolution to undo the FCC’s 2017 vote, they won a small victory. However, the resolution still needs to be approved by the House and signed by President Trump. Absent a major campaign by constituents to sway House members, or a change of heart by the President, net neutrality’s prospects continue to look bleak. Nonetheless, broadband providers should be wary of declaring victory too soon.
