Strongest Internet Rules Ever Proposed: FCC Chairman Tells ISPs They Are Public Utilities

The rules proposed by FCC Chair Tom Wheeler could put internet service providers in a tough legal bind.

Strongest Internet Rules Ever Proposed: FCC Chairman Tells ISPs They Are Public Utilities
[Photo: Alex Wong/Getty Images]

This has been a big week for the future of the Internet.


After months and speculation and a few days of rumor, Federal Communications Commission Chairman Tom Wheeler today came out in support of full “Title II” reclassification of broadband Internet. This means that Internet service providers like Comcast and Time Warner will not be allowed to offer paid prioritization of certain content. They will also be prohibited from blocking or throttling traffic.

In an opinion piece at Wired, FCC Chairman Tom Wheeler writes:

I am submitting to my colleagues the strongest open internet protections ever proposed by the FCC. These enforceable, bright-line rules will ban paid prioritization, and the blocking and throttling of lawful content and services. I propose to fully apply—for the first time ever—those bright-line rules to mobile broadband. My proposal assures the rights of internet users to go where they want, when they want, and the rights of innovators to introduce new products without asking anyone’s permission.

Crucially, Wheeler’s proposed rules will also apply to mobile broadband providers—cell phone companies like AT&T and Sprint that offer mobile data. With Wheeler on board, it is likely that the FCC will pass his proposed rules in a 3-2 vote at the February 26 FCC meeting with the other Democrats on the commission voting with Wheeler.

Wheeler’s public announcement comes on the heels of news leaked from the FCC that it will also be taking on the 19 to 21 states (depending on how you count) that have laws preventing local governments from building their own broadband networks. That decision will make it immeasurably easier for local governments to offer municipal broadband services that will directly compete with private ISPs.

Those 20 or so states currently have rules on the books that make it either difficult or pointless for local governments to create their own broadband service. Some restrict the geographic areas in which municipal broadband can be built, while other laws prevent cities from offering municipal broadband for cheaper than what private ISPs sell their service for, effectively defeating the whole purpose of an independent network.

Neither of these moves should come as a surprise to people who who have been paying attention to the FCC’s process this past year. After President Obama called for the “strongest possible rules” on net neutrality, FCC Chairman Tom Wheeler reversed course toward what everyone assumed would be reclassifying broadband as a public utility. Even AT&T’s policy representative to the FCC said on Monday that he expected Title II regulations coming down the pipeline.


Meanwhile, Wheeler has been enamored of the power of community broadband to compete with private ISPs for some time. Back in June of last year, he wrote a blog post extolling the virtues of the community broadband in Chattanooga, Tennessee and wrote that “it is in the best interests of consumers and competition that the FCC exercises its power to preempt state laws that ban or restrict competition from community broadband.” That goes to show that municipal broadband has been on Wheeler’s mind for at least half a year before this week’s news.

The announcements about support for Title II and for municipal broadband are major individual steps. But Wheeler’s moves this week really have to be considered in tandem to understand their full impact.

We’ve known for some time that telecomm companies will sue if the FCC pushes for regulating them as public utilities. So that news this week is again not unexpected.

In fact, Wheeler might be counting on it. Pushing for relaxed regulations against municipal broadband could act as a fail-safe in case his proposed Title II regulations do not stand up to the inevitable legal challenge in court.


The logic goes like this: Even if the Title II classification doesn’t stand, consumers will still have a choice for unrestricted, un-throttled, un-tiered Internet access through municipal broadband. If telecomm companies push hard and win in the courts, they will become even more reviled by the general public, which could generate the political will around the country for city governments to devote serious resources to their own Internet infrastructure.

Of course, just as Title II will be challenged, so too will the FCC’s attempt to preempt state regulations against municipal broadband. The FCC will claim that its authority to tell states that they cannot inhibit the spread of municipal broadband is derived from Section 706 of the Communications Act. That provision authorizes the FCC to promote competition in the broadband market and remove barriers to creating more broadband infrastructure.

And there’s the rub for telecomm companies. Arguing against both deregulating municipal broadband and regulating private broadband providers may prove to be a form of legal contortionism too unwieldy even for their policy teams. It would put telecomm companies in the awkward position of simultaneously arguing for more and less regulation of Internet infrastructure.

If telecomm companies argue that private investment is the best way to encourage the growth of broadband infrastructure in the place of city governments, they will have a very hard time arguing that they should not be regulated as public utilities, since that is what they would be effectively replacing.


Furthermore, in his announcement today, Wheeler specifically said that the FCC will not be enforcing every provision under Title II of the Communications Act. Through a process called forbearance, the FCC is able to pick and choose which regulations it wants to apply and which it will exempt. One of Wheeler’s proposed forbearances that is of particular interest: last-mile unbundling.

Peter Bright at Ars Technica argued persuasively last year that last-mile unbundling would be a suitable alternative to Title II regulation for net neutrality advocates. With last-mile unbundling, smaller upstart ISPs are able to basically rent space on another ISPs existing infrastructure. It’s a program that is popular in Europe and has been used to great effect. Because laying the physical wires for broadband service is prohibitively expensive, we don’t have a plethora of new ISPs starting up every week. That lack of competition allows the major ISPs to effectively operate as local monopolies.

If we had unbundling in the U.S., Bright argued, then net neutrality wouldn’t be necessary because competition would sort things out. If one ISP started throttling or blocking traffic, users could just sign up for service from another ISP that meets their needs. But that competition is the last thing that giants like Comcast and Time Warner want.

So Wheeler’s decision to forbear last-mile unbundling is a lifeline to private ISPs. Wheeler knows that without last-mile unbundling, the only competition that could threaten ISPs is city-owned broadband.

Wheeler may very well expect to lose on either Title II or municipal broadband. But he’s playing the long game here. As long as one of the two stands, Internet users will have an option to access a truly open Internet. It’s up to the big ISPs to pick their poison. They can decide whether they want to operate with more regulation under Title II or they can fight Title II and risk losing their geographic monopolies to city-owned infrastructure.

About the author

Jay is an award-winning journalist and former staff writer for Fast Company. Find him at @jcassano and