Zero-rating, throttling and other wireless practices targeted by FCC's net neutrality rules

FCC Chairman Tom Wheeler's draft order to create net neutrality rules will apply all of the rules to mobile broadband networks for the first time. One of the practical effects of the proposed rules is that wireless carriers would have less flexibility to deploy "reasonable network management" practices on their networks. The rules would also put future uses of zero-rating and sponsored data programs under the microscope to ensure they are not harming consumers or content providers.

The FCC's 2010 net neutrality rules largely exempted wireless carriers, but the commission argues that times have changed since then. Specifically, the agency pointed to figures showing that 55 percent of Americans' Internet traffic now runs on mobile devices, and that there are now 140 million LTE users, up from just 70,000 in 2010.

The agency's proposal would reclassify retail broadband service Americans buy from cable, phone, and wireless carriers as a telecommunications service, instead of a lightly-regulated information service. Both the service to the end user and to edge providers would be classified under Title II via the new rules.

Wheeler's proposal will be circulated to his fellow commissioners on Thursday and voted on Feb. 26. The proposal could change between now and then, but according to a fact sheet provided by the FCC, right now it includes some clear rules:

  • No blocking: broadband providers will not be able to block access to legal content, applications, services, or non-harmful devices .
  • No throttling: broadband providers will not be able "impair or degrade" lawful Internet traffic on the basis of content, applications, services, or non-harmful devices.
  • No paid prioritization: broadband providers may not favor some lawful Internet traffic over other lawful traffic in exchange for payment, i.e. there will be no "fast lanes." Carriers and ISPs will also be barred from prioritizing content and services of their affiliates.
  • The rules will include a "standard for future conduct," with the rationale being that because the Internet is always evolving, "there must be a known standard by which to determine whether new practices are appropriate or not. Thus, the proposal would create a general Open Internet conduct standard that ISPs cannot harm consumers or edge providers."

CTIA and the wireless carriers have long argued that carriers should have greater flexibility to manage their networks than wired ISPs because of spectrum constraints and inherent differences in how their networks are architected. FCC officials said they understand that wireless networks need to be managed differently--the agency said it will take into account whether a network is running on fiber, DSL, cable, unlicensed wireless, licensed wireless or another network medium. Nevertheless, the draft rules take a pretty hard line in defining what constitutes "reasonable network management."

For example, the network practice must be "primarily used for and tailored to achieving a legitimate network management--and not commercial--purpose. For example, a provider can't cite reasonable network management to justify reneging on its promise to supply a customer with 'unlimited' data."

That would seem to nix wireless carriers' ability to throttle the speeds of customers on legacy unlimited data plans simply because they are not on usage-based plans.

FCC officials said that zero-rating services, such as T-Mobile US' (NYSE:TMUS) offering to not count many streaming music services toward a user's data usage, would be looked at under the general standard for future conduct to see if they harm content companies or consumers. The rules do not take an opinion on existing plans, and companies can ask the FCC for guidance.

Additionally, sponsored data programs, in which a content provider subsidizes a subscriber's data usage to access their content, would also fall under that general "future conduct" rule and would be evaluated on a case-by-case basis. AT&T Mobility (NYSE: T) currently offers such a program but has signed up only 10 customers to date.

CTIA has argued that the FCC would be overstepping its bounds if it reclassified mobile broadband as a telecommunications service under Title II of the Telecommunications Act--but the agency says it disagrees. Specifically, the FCC thinks that Section 332 of the Telecommunications Act does not bar the FCC from redefining mobile broadband as a "Commercial Mobile Radio Service" subject to Title II regulations, a senior FCC official said on a conference call with reporters. Congress has given the FCC the flexibility to redefine certain terms based on changes to how networks are used, and the FCC intends to update its definitions based on factors such as how much consumers are using mobile broadband and the prevalence of LTE networks, the official said.

For more:
- see this FCC fact sheet (PDF)
- see this Re/code article
- see this The Verge article

Related Articles:
FCC's Wheeler lays out net neutrality plans while AT&T, Verizon reportedly prep lawsuits
CTIA's Baker praises Republican net neutrality bills, but AT&T's Stephenson sees lawsuits ahead
Republican lawmakers embrace net neutrality, but would block FCC from using Title II
Sprint splits from industry, is OK with Title II for net neutrality as long as wireless has flexibility
CTIA comes out swinging against Title II net neutrality approach for wireless

Suggested Articles

The petition claims the FCC exceeded its authority in designating Huawei as a national security risk.

The new Viasat browser exemplifies innovation.

FCC Chairman Ajit Pai instead wants to subsidize up to $9 billion for rural 5G deployments over the next 10 years.