KEY POINTS

  • Net neutrality rules instituted during the Obama administration are likely to be reversed. New leadership at the US Federal Communications Commission (FCC), appointed by President Donald Trump, heralds a sea change in the regulation of the internet. 
  • New FCC Chairman Ajit Pai is set on overturning or severely weakening the three pillars of net neutrality his predecessor, Tom Wheeler, put into place. These are:
    • The reclassification of internet service providers (ISPs) under Title II of the Communications Act of 1934, allowing them to be treated essentially as public utilities for regulatory purposes.
    • The elimination of the Internet Conduct Standard enacted in 2015, which the FCC can use to determine if a business practice is beneficial to consumers.
    • The reversal or dilution of so-called "bright-line rules" that prevent ISPs from blocking legal content, throttling network speeds without informing consumers, and accepting fees to prioritize some data over others.
  • Different tech and telecom players are staking out varying positions on the end of net neutrality. Big ISPs and telecoms are fully in favor of the Title II rollback, but say they support the principles of net neutrality. Their industry groups have been pushing for a full repeal. Meanwhile, investors, startups, and digital trade organizations like the Internet Association oppose a repeal. 
  • Broadband internet providers have been investing huge sums in digital content businesses and stand to benefit. They'll gain free reign to control how data flows over their networks and can give content created by subsidiaries or partners a leg up.
  • Meanwhile, consumers may find digital services they prefer harder or more expensive to access. That could be a problem for app publishers, mobile wallets, and digital content creators who can't or don't want to pay ISPs for preferential treatment.
  • Since Congress is unlikely to act to preserve net neutrality, it's likely there will be no meaningful regulation in the US for the foreseeable future. Even if Democrats retake Congress in the 2018 midterm elections, Trump is unlikely to sign a bill limiting ISPs. 

Introduction

Just over two years ago, the US Federal Communications Commission (FCC), led by then-Chairman Tom Wheeler, adopted the 2015 Open Internet Order. This essentially classified internet service providers (ISPs) operating in the US as public utilities for regulatory purposes, requiring them to act as "neutral gateways to the Internet," as Adweek put it at the time. Consumer advocates and digital publishers [...]