FCC Approves New Net Neutrality Rules

The U.S. Federal Communications Commission (FCC) has approved new net neutrality rules for internet service providers. After its previous rules were struck down twice, the regulator proposed new, tougher rules, drawing on the existing regulation of fixed telephony and backing from U.S. President Barack Obama. The new order reclassifies internet access as a telecommunications service, as defined under Title II of the Telecommunications Act. This gives the FCC greater authority to regulate internet providers. The new rules also ban paid prioritization, in which a service provider can pay the network operator for preferred access to end users. They also prohibit the blocking of lawful content and throttling of services. These rules will also apply to internet services over mobile networks. The FCC’s authority is extended to interconnection agreements between network and content providers, allowing it to hear complaints and settle disputes.

The announcement by the FCC also prompted statements from a wide range of industry players, most of which were opposed to the plan for stricter regulation of internet services. While operators such as Verizon say the rules will create uncertainty about network investments and innovation in the industry, others like Netflix were more supportive, saying that the approval of the rules is a “clear win for consumers.”

Customers in the U.S. have made it clear, in the form of nearly four million public comments, that they will not tolerate ISPs having control over their free access to content. Even before the ruling, ISPs, including MNOs, already realized that a lack of transparency about plan features and pricing would alienate subscribers and hurt retention. Throttling, too, has had a negative impact on public perception of network operators, although many operators continued the practice. Now that the FCC has imposed these stricter rules, ISPs will need to find ways to compensate for the revenue that they formerly brought in by charging content providers for internet “fast lanes.” We believe the message is clear: They should focus on generating revenue by building out their mobile and fixed networks and making them as strong and fast as possible. Giving the American public access to the best—and fairest—service is the way to generate revenue in an era of net neutrality.

“While the U.S. has moved decisively toward true net neutrality, the European Union remains agnostic on the subject. The compromise on roaming and net neutrality reached this week between EU member states, which still must be approved by the European Parliament, forbids blocking and slowing down of content but allows internet service providers to offer different levels of service quality to different content providers. Operators won this concession by consistent application of pressure. So the climate in Europe remains—at least for now—more pleasant for ISPs than that on the other side of the Atlantic.    

John Dorfman, 

Editor-in-Chief, The Tarifica Alert

The above item appeared in a recent issue of Tarifica's "The Story of The Week", a weekly report that analyzes noteworthy developments in the telecoms industry from around the world. For past issues or to learn more about Tarifica: http://www.tarifica.com/contactus.aspx