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Grow Your Business Technology

FCC Kills Net Neutrality: What It Means for Business

Business owner
Credit: Shutterstock

The Federal Communications Commission (FCC) recently voted to begin the process of repealing the utility style regulatory aspects of the Open Internet Order (OIO), which was adopted in its current form in 2015. The vote marks the beginning of an open, 90-day comment period during which citizens are encouraged to voice their opinions of the proposal to the FCC. 

What is the OIO, you ask? It basically means net neutrality on the web. And that is basically the principle that internet service providers (ISPs) should enable access to all content and applications regardless of their source, and to do so without favoring or blocking a particular product or website. It's become a hot-button political issue that could affect you and your business. Here's what you need to know. 

To pass the OIO in 2015, the FCC reclassified ISPs as common carriers under Title II. This means ISPs are currently classified as a public utility, like water, electricity and sewage. That action also brought them under the purview of the FCC. 

The commission did not apply all the Title II regulations to ISPs; it omitted more than 700 existing rules for utilities, which it determined would not really make sense for the internet. It's true; the majority of the rules that weren't applied were outdated, irrelevant to ISPs or both. For instance, Section 228, which details the regulation of telephone carriers offering pay-per-call services, wasn't applied. Or there's Section 276, which outlines the provision of payphone services. That wasn't applied, too. 

While the further regulation of broadband to ensure the free flow of data had been previously considered, it was historically dismissed by Republicans and Democrats alike. For instance, in the Telecommunications Act of 1996, President Clinton and Congress made a distinct separation between lightly regulated "information services" (ISPs) and heavily regulated "telecommunications services," such as phone carriers. 

They explained the rationale for this distinction by stating "Internet and other interactive computer services have flourished, to the benefit of all Americans, with a minimum of government regulation." In the years that followed, ISPs were managed primarily by the Federal Trade Commission (FTC), but in a 2005 statement, the FCC established its position on internet policies and set the groundwork for net neutrality (a term coined by Professor Tim Wu in 2003). 

Then, in 2007, Comcast was accused of (and subsequently found guilty of) throttling BitTorrent traffic. Two organizations, Free Press and Public Knowledge, filed a complaint with the FCC claiming that by throttling service, Comcast violated the 2005 guidelines set forth by the FCC. 

The FCC responded by trying to enforce the order via a censure and stated that Comcast's methods violated federal policy. In 2010, Comcast took the FCC to court to fight the ruling, claiming that the FCC did not have adequate jurisdiction over ISPs and therefore couldn't enforce rules. The courts sided with Comcast citing its designation under Title I as the reason the FCC had no ground. 

Following the 2010 ruling, the FCC set out to establish clearer broadband guidelines and published the first draft of the Open Internet Order. In 2011, Verizon sued the FCC claiming they had no legal jurisdiction over an ISP, and that the OIO was therefore unlawful. 

In 2014, the U.S. Court of Appeals for the D.C. Circuit upheld Verizon's assertions and stated that the OIO could only apply to common carriers and not to Title I organizations such as broadband providers. However, since the FCC was the organization that designated broadband providers as Title I in the first place, it was considered within its purview to change that designation. 

So, in 2015, the FCC officially made ISPs a common carrier, or Title II organization, which meant they were subject to the rules of the OIO. The OIO mandated that there be no blocking, throttling or paid prioritization by ISPs. 

That brings us to today. 

New proposal (2017) 

The first part of the new proposal seeks to repeal the Title II Order so that ISPs are no longer regarded as common carriers or commercial mobile services. This would "return to the light-touch regulatory framework first established on a bipartisan basis during the Clinton Administration," according to the FCC. 

The Notice of Proposed Rulemaking (NPRM) also seeks to "return authority to the FTC to police the privacy practice of Internet service providers" and eliminate the "vague Internet conduct standard." In addition, it allows the FTC to conduct a cost-benefit analysis that would analyze whether regulatory intervention (based on forecasts rather than results) is necessary. Lastly, the new rules seek comment on whether the bright-line rules in the Title II Order will be maintained, eliminated or modified. 

So basically, the new rules would remove the ISPs from the control of the FCC and give them back to the FTC, where they would follow rules similar to those established by the Clinton administration. And the changes will examine if regulations are actually necessary or not based on data analysis. 

Critics of the FCCs decision to overturn the OIO fear that without the current level of FCC regulation, ISPs will threaten free speech and competition by pushing certain content in the "fast lane," banishing other content to the "slow lane" and blocking content at will. Such companies as Google, Microsoft, Amazon, Twitter and Facebook publicly oppose the new proposal. 

Prior to the new proposal passing, the American Civil Liberties Union, along with 170 other organizations, penned an open letter to the FCC urging them to uphold the OIO, citing increased broadband infrastructure investments and record-high ISP revenues as evidence of its efficacy. 

Michael Macleod-Ball, an adviser to the ACLU on first amendment issues, stated, "The history of practices shows there were instances of content discrimination ... There is no reason to think this won't happen again if regulatory conditions are changed." Many media outlets, such as The Nation and Wired agree with Mr. Macleod-Ball. 

For media outlets, the fear is that without treating ISP as common carriers, the FCC won't be able to stop ISPs from charging for certain types of content while offering other content (from larger corporations) for free. Critics seemingly say this would not only make internet access more expensive for end users but would also make it harder for independent voices to be heard. 

While the ACLU is primarily concerned with the effect of the repeal on end users, there are other concerns that organizations and individuals opposed to the revision have raised. Some startups, like those who signed the Startups for Net Neutrality letter, believe that under a Title I designation, ISPs may use their autonomy to crush small businesses and promote large corporations. They might, for example, give preferential treatment to big-box stores by giving them faster service that's free to the user and then charge extra when you access small independent online retailers. 

Other advocacy groups, such as Common Cause, assert that upholding the OIO is a civil rights issue, and that without the current legislation, minority-focused outlets could be given inferior service and that rampant censorship could occur. Or they could be forced to pay for bandwidth online. 

Supporters of the repeal, including FCC Chairman Ajit Pai, argue that they are in favor of an open internet in that they believe less regulation and government involvement equals openness and freedom. Chairman Pai often points to the 20 years preceding significant FCC oversight, and the success of startups founded during that time, as proof that no additional regulation was ever needed. Supporters reportedly refer to the OIO as a solution to a problem that didn't exist. 

The U.S. Chamber of Commerce, an independent lobbying group that represents more than 3 million businesses nationwide, supports the FCCs new proposal saying, "We encourage lawmakers to permanently preserve net neutrality and at the same time prevent agencies from treating innovative technologies from being treated like public utilities." Such companies as AT&T, Verizon, IBM, Oracle, Intel, Qualcomm and Cisco also spoke out against treating ISP as common carriers in 2015. 

Individuals who support the FCC's 'Restoring Internet Freedom' rulemaking do so for various reasons. Some supporters believe it should be within an ISPs rights to charge users differently based on bandwidth usage. Some argue that it's logical to charge a large company that uses more resources (such as Netflix) more money than a small company that doesn't require as much bandwidth (such as a local restaurant that has a website). They view the assignment of ISPs as common carriers as a way for corporations to get out of paying for the service that allows them to reach millions of people. 

The potential for stifled innovation due to regulation is another oft-cited reason for removing ISPs from the common carrier designation. Supporters worry that using an outdated classification and applying it to ISPs is the first step toward increased regulation in the future. People with this perspective, like Washington Post contributor Larry Downes, often point to other services with heavy government regulation (health care, education, transportation) and the relative lack of innovation and high costs associated with those industries as a reason for the FCC to pull regulation now. 

Harm to small businesses and underserved communities is the last commonly cited reason for supporting the FCC's recent move. The American Action Forum, a nonprofit advocacy group, argues that small ISPs that serve rural communities will be negatively affected by the costs associated with new regulations and compliance. They note that of the companies affected by the common carrier designation, 90 percent are small businesses. The Rural Wireless Association seconds this point of view and stated their support of a recently passed Small Business Exemption as well as the appointment of Chairman Pai to the FCC. 


Regardless on which side of the fence you sit, you can make your voice heard on this issue. To do so, visit the FCC online and click + New Filing on the left-hand side of the screen under "Filters." This will instantly open a form (Docket 17-108) that you can fill out and submit. The form requires you to include your address and name and has optional fields for comments, organization affiliations and contact email address. 

By submitting this form, you are filing a document into an official FCC proceeding, which means all the information you submit (including any names or addresses you include) will be made public online. The comment period remains open until July 17.

On July 12, many web-based companies joined a movement to make their opinions known, calling it a day of action. Those companies included Amazon, Code Academy, Funny or Die and Spotify. That group is encouraging people to sign an online petition and to change their social media profiles to indicate their position. 

Mona Bushnell

Mona Bushnell is a New York City-based Staff Writer for Tom’s IT Pro and Business News Daily. She has a B.A. in Writing, Literature, and Publishing from Emerson College and has previously worked as an IT Technician, a Copywriter, a Software Administrator, a Scheduling Manager and an Editorial Writer. Mona began freelance writing full-time in 2014 and joined the Purch team in 2017.