FCC Releases Draft Order Reclassifying Broadband Internet Access Service

FCC Releases Draft Order Reclassifying Broadband Internet Access Service and Establishing New Rules for Internet Service Carriers/Providers

The Federal Communications Commission (FCC) circulated a draft Declaratory Ruling, Order, and Report and Order, and Order on Reconsideration (Draft Order) that proposes to change the classification of Broadband Internet Access Service (BIAS) once again from an “information service” to a “telecommunications service.” The FCC proposes a “light touch” in regulating providers of information services while the agency imposes more extensive regulations on providers of telecommunications services. Accordingly, by classifying BIAS as a telecommunications service the Draft Order imposes some new rules to Internet Service Providers (ISPs) that apply to telecommunications providers while choosing to “forbear” from imposing others. The FCC is expected to vote on and adopt this item at its next open meeting currently scheduled for April 25, 2024.

This long-awaited action will change the current status of ISPs and the last-mile broadband BIAS service they offer to customers. BIAS is any mass-market retail service by wire or radio that provides the capability to transmit data to and receive data from all or substantially all Internet endpoints, including any capabilities that are incidental to and enable the operation of the communications service, but excluding dial-up Internet access service.

New Rationale for Classifying BIAS as a Telecommunications Service
As observers of this action are aware, in a 2015 decision, the FCC moved the classification of BIAS from information service to telecommunications service and, in 2017 moved it back to information services. JSI observes that the FCC’s 2024 justification for telecommunications classification is buttressed by its discussion of national security and cybersecurity threats that require BIAS to be regulated as a telecommunications service. For example, in the proposed action, all BIAS providers are given blanket Section 214 operating certification, and all providers may discontinue service without a 214 filing with the FCC. However, the FCC may revoke Section 214 certification of an ISP when national security is threatened—the FCC asserts that it could not assist with national security in this manner if BIAS remains classified as an information service. JSI will wait with others to see if this matter survives expected legal challenge in the courts.

Potential Impacts if the Draft Order is Adopted in its Current State
The proposed action seeks to classify BIAS as a telecommunications service and classify mobile BIAS as a commercial mobile service. This will return BIAS to a 2015 posture where BIAS was a telecommunications service for consumer protections, e.g., no blocking, no throttling, no paid prioritization, and a general conduct rule to prevent unreasonable interference or disadvantage to end-users or edge providers (including a watchful notice on the use of data caps that may harm users’ use of the Internet with review of these caps on a case-by-case basis). It would also make changes to the transparency rules providers currently face. Providers will be required to disclose certain network practices and performance characteristics, and adopt changes to the means of disclosure, including adopting a direct notification requirement. The action is also designed to provide the FCC with additional authority to safeguard national security, advance public safety, and facilitate broadband deployment.

Areas that Will Remain Status Quo
Consistent with its action in 2015, the FCC proposes to exercise its authority to provide broad, tailored “forbearance” from imposing all its rules that apply to telecommunication carriers. For example, the FCC will not impose rate regulation, tariffing, unbundling of last-mile facilities, and cost accounting regulations, as well as a host of other regulations. However, it will not forbear on certain reporting requirements related to national and cyber security.

Given the continued increase in the amount of payments telecommunications carriers must contribute to the universal service fund (USF), a notable disappointment with the proposed forbearance is that the FCC will not require, at this time, that BIAS revenues be assessed for the federal universal service. Thus, BIAS will remain exempt from contributing to the USF and the base of those contributing to the fund will not increase to include ISPs. The FCC notes that while it forbears from establishing a BIAS USF assessment, it intends to address USF contributions in the future. The commitment for future action on contribution reform is welcomed but long overdue.

Carriers who have an affiliate ISP, or who provide BIAS directly will be affected by this action. JSI will continue to monitor the progress of this matter and expects to report on the final rules when they are adopted and released. If you have any questions about this matter, please contact Jenn Holtz, John Kuykendall, or Douglas Meredith.