Net Neutrality Rules Approved by OMB; Stage Set For Litigation and Legislative Challenges

In a major step forward for what one telecom observer called “the defining saga” of Federal Communications Commission Chairman Julius Genachowski's tenure, the Office of Management and Budget approved the information collection requirements of the controversial 2010 Open Internet Order. The approved provisions concern new network management disclosures required from broadband service providers and formal complaint procedures under the net neutrality rules. The new rules are expected to be published in the Federal Register in one to three weeks and will go into effect 60 days later.

While the OMB’s approval marks the final regulatory hurdle before implementing the Open Internet Order, the publication of the rules is expected to set off a flurry of long-awaited legal and legislative challenges to the net neutrality rules. Both Verizon and MetroPCS are expected to refile their appeals of the Open Internet Order challenging the FCC’s authority, which were dismissed without prejudice by the D.C. Circuit earlier this year because they were filed before publication of the rules in the Federal Register. The net neutrality rules would prohibit Verizon and other fixed broadband providers from slowing or discriminating against the delivery of content (a process known as “throttling”) from third-party content websites such as Netflix. Reports indicate that online video issues will become more heated over the next few years as more viewers forgo traditional cable and satellite television services.

On the legislative side, opposition to the Open Internet Order reached its peak last April, when the House of Representatives passed a Resolution of Disapproval under the Congressional Review Act seeking to invalidate the net neutrality rules while also attempting to limit the federal funds available to enforce the new regulations. The disapproval resolution followed months of hearings and criticism regarding the initial delay in publishing the net neutrality rules. Republican opponents of the net neutrality rules on the House Energy and Commerce Committee, led by Chairman Rep. Fred Upton (R-MI), are expected to continue questioning the FCC’s jurisdiction to regulate broadband traffic.

While opposition to the net neutrality rules increases, the FCC has already taken steps to notify companies affected by the Open Internet Order of their compliance obligations, releasing draft guidance last July on the network management transparency disclosures required from broadband service providers once the rules become effective.

House Committee Launches Data Security and Electronic Privacy Review

In the wake of recent high-profile data breaches suffered by major companies that exposed over 100 million customer records to identity theft, the House Energy and Commerce Committee announced plans to conduct a sweeping review of the data security and privacy issues affecting American consumers and businesses. The Committee will divide the review into two phases by first surveying current security measures used to protect personal information online before turning to bolstering privacy protections for Internet users. Committee Chairman Rep. Fred Upton (R-MI) noted that the recent rise in cyber attacks seeking access to personal data necessitates a reassessment of the security standards used by companies that collect customer information. Communications and Technology Subcommittee Chairman Rep. Greg Walden (R-OR) echoed Sen. Upton’s concerns and stated that the review aims to produce policies which will strike a balance between protecting consumer information and maintaining innovation.

The Committee’s review will likely serve as a launching point to evaluate existing cybersecurity proposals and develop new data protection legislation. In April, Sen. John Kerry (D-MA) and Sen. John McCain (R-AZ) introduced the “Commercial Privacy Bill of Rights Act” to establish federal consumer privacy protections that would apply across industry sectors and level stiff civil penalties against companies that mishandle or lose customer information. To protect the privacy of young social media users, Rep. Joe Barton (R-TX) and Ed Markey (D-MA) proposed the “Do Not Track Kids Act,” which would establish a “Digital Marketing Bill of Rights for Teens,” require companies to erase personal information upon request, and prohibit the storage of user geolocation data. The storage of geolocation data garnered recent media attention following reports that Apple’s iPod and iPad operating systems tracked user movements through a software “bug” which the company later removed. States such as California have also attempted to force social media providers to afford customers more control over their online privacy settings, facing staunch opposition from many major Internet companies.

Despite some industry opposition, federal agencies, lawmakers, privacy advocates, and other online companies generally agree that some form of comprehensive data security legislation is necessary as more Americans disclose personal information online. The Committee has already heard testimony from companies damaged by cyber attacks that government support will be crucial to securing customer data.   More than 45 states and U.S. territories currently possess some form of data breach notification or protection laws, creating a confusing and occasionally contradictory patchwork of regulations for customers and businesses to navigate. With the announcement of its data security and privacy review, the Committee hopes to soon place these diverging policies under one legislative roof.

Symposium on Broadband Reclassification and Net Neutrality What's at Stake? What's the End Game?

On Thursday, December 2nd, K&L Gates hosted a program on net neutrality and the potential regulatory reclassification of broadband Internet access presented by the ABA Antitrust Section's Communications & Digitial Technology Industries Committee. The program, moderated by Washington, DC partner Marty Stern, included:

  • Parul Desai, Policy Counsel, Consumers Union
  • Neil Fried, Minority Chief Counsel, U.S. House of Representatives Energy and Commerce Committee, Subcommitee on Communications, Technology and the Internet
  • Glenn Manishin, Partner, Duane Morris
  • Lee Selwyn, President, Economics and Technology, Inc.

Audio Archive of event now available (American Bar Association members only) 

Several of the speakers were also authors of articles in the Fall 2010 Broadband Reclassification and Net Neutrality Symposium issue of the Committee's Icarus newsletter.  An article providing an overview of the issue by K&L Gates' partners Marty Stern and Marc Martin, and associate Peter Denton, is available here.  (Posted with permission.)