One year later, net neutrality still faces attacks in court and Congress

Today is the one-year anniversary of two of the biggest decisions made by the Federal Communications Commission under Democratic Chairman Tom Wheeler.

On February 26, 2015, the FCC voted 3-2 along party lines to enforce net neutrality rules and preempt state laws that prevent the expansion of municipal broadband networks. But whether either decision will survive past Wheeler’s chairmanship is still an open question. Republicans in Congress have tried to overturn them, and lawsuits against the commission are still pending.

Trade groups representing Internet service providers sued to halt the net neutrality rules and a related reclassification of broadband as a Title II common carrier service. Judges at the US Court of Appeals in Washington, DC, heard oral arguments in December and could issue a decision in the next few months (though no one knows exactly when).

North Carolina and Tennessee sued the FCC to preserve state laws that prevent municipal broadband networks from expanding to surrounding cities and towns. Oral arguments in that case are scheduled for March 17.

Meanwhile, Republicans have made numerous efforts to eliminate or minimize the impact of the FCC’s rulings, so far unsuccessfully. Some proposals would have simply wiped out the net neutrality rules entirely, such as one bill introduced last March called the “Internet Freedom Act.” Yesterday, presidential candidates Ted Cruz and Marco Rubio signed onto a similar bill to kill the net neutrality rules.

Other proposals are more subtle but could significantly reduce the FCC’s power to enforce rules meant to protect consumers.

One Republican-sponsored bill would forbid “rate regulation,” but without defining the term, raising concerns that ISPs could impose data caps in discriminatory ways or charge prices that the FCC would otherwise declare “unjust” or “unreasonable.” This bill was approved by the House Energy and Commerce subcommittee on communications this month despite objections from Democrats.

The FCC's main purpose in approving net neutrality rules was to bar ISPs from blocking or throttling traffic or giving priority to Web services in exchange for payment. But there were other aspects, such as enhanced transparency requirements that force operators to provide more information about the plans they offer and their network performance. While the FCC temporarily gave small Internet providers an exemption from the enhanced transparency requirements, Republicans in Congress have been trying to make the exemption permanent and broaden it to cover more ISPs.

While the FCC wanted to give the exemption to any provider with 100,000 or fewer subscribers, a Republican-sponsored bill would have expanded the exemption to include any ISP with fewer than 1,500 employees or 500,000 subscribers.

Though Democrats and Republicans have battled in nearly all net neutrality proceedings, they seem to have found a compromise on the small business issue. The compromise, passed by the House Energy and Commerce Committee yesterday, extends the exemption by five years and applies it to ISPs with 250,000 or fewer subscribers. The compromise is designed to protect small businesses from costly compliance efforts while ensuring that most Internet subscribers get better information about pricing and network information.

Though still in limbo, rules have impacted broadband industry

Despite the court case and Congressional activity, the new rules have had some effect on Internet providers’ behavior. The change was most striking in the realm of negotiating interconnection agreements that allow content providers and network operators to connect directly to consumer broadband networks.

There had been numerous fights over payments demanded by ISPs, with the end result being congestion that affected home Internet subscribers’ access to Web services. The FCC hasn’t banned interconnection payments but now allows complaints to be brought against ISPs that make unreasonable payment demands. The threat of complaints alone seems to have mostly put a stop to interconnection disputes.

Netflix’s contentious negotiations with Comcast, AT&T, Time Warner Cable, and Verizon played a big role in the FCC’s interconnection decision.

“We're hopeful that complaints never have to be filed, but if they do that they'll be dealt with promptly in a way that ensures ISPs are not exercising bottleneck power,” Netflix Public Policy Director Corie Wright told Ars.

The FCC also has a decision to make on whether to crack down on “zero-rating,” in which ISPs exempt certain types of content from data caps, sometimes in exchange for payment. The net neutrality rules don’t ban zero-rating but say that the FCC can stop implementations that harm consumers or competitors. The commission has been gathering information on the topic but hasn’t yet made any decisions.

ISPs failed to win a stay that would have halted net neutrality rules pending a final court decision, but some believe the FCC is moving slowly in enforcing them because of the pending case.

“We are in this limbo while we're waiting for the court to decide,” CEO Craig Aaron of consumer advocacy group Free Press told Ars. “You're seeing these zero rating plans, data caps, all kinds of things being rolled out there on the wireless side and by the cable companies.” It’s not yet clear whether “the FCC is going to be willing to step up and say what they can do and what they can't,” he said.

Republicans fight against each other on municipal broadband

The FCC'S municipal broadband decision has received less attention than the net neutrality one, though lawmakers such as US Rep. Marsha Blackburn (R-Tenn.) and Sen. Thom Tillis (R-N.C.) did try to overturn the FCC’s ruling.

Some Republican state lawmakers in Tennessee have taken the opposite position, pushing a bill that would remove the state's restriction that prevented municipal broadband providers from expanding. AT&T, which says taxpayer money shouldn’t be used to compete against private ISPs, was called a “villain” by one of the state lawmakers.

Assuming no congressional or state-level action, the big decision will come from the US Court of Appeals for the Sixth Circuit. In both North Carolina and Tennessee, the attorneys general are opposing the FCC and the municipalities that want to expand community broadband service.

The FCC argues that it can preempt state laws using its authority to promote broadband deployment by removing barriers to investment and competition in local markets. If the FCC wins, municipal Internet providers in Wilson, North Carolina, and Chattanooga, Tennessee may expand their offerings to surrounding towns. A legal precedent could also set the stage for expansions in other states.

North Carolina and Tennessee are among about 20 states that impose limits on municipal broadband. If the court ruling goes the FCC’s way, it would not be surprising to see cities and towns in other states petition the commission for preemption of similar laws.