FCC and FTC Enter Memorandum of Understanding to Coordinate Regulation of ISPs

Following the recent adoption of the “Restoring Internet Freedom Order” by the Federal Communications Commission (FCC), the FCC and the Federal Trade Commission (FTC) have entered an agreement to coordinate their cooperation on the regulation of ISPs to protect consumer interest.

Background

In February 2015, the FCC adopted the “Open Internet Order,” which reclassified broadband internet service as a common carrier service regulated under Title II of the Communications Act of 1934. Prior to the 2015 order, the FTC had general (“Section 5”) authority to regulate entities involved in interstate commerce and prevent “unfair or deceptive acts or practices in or affecting commerce.” 15 U.S.C. § 45(a). However, the FTC statute expressly precludes it from exercising jurisdiction over common carriers like telephone companies.

Because the FCC has exclusive jurisdiction over telecom common carriers, by classifying the provision of broadband internet service as a common carrier service, the 2015 order removed jurisdiction from the FTC to regulate internet service providers (“ISPs”) engaging in those activities under its Section 5 authority. Supporters of the 2015 order argued that it was necessary to regulate broadband services effectively and protect “net neutrality” while opponents argued that the 2015 order was not a well-tailored solution and would apply an outdated regulatory model to broadband internet service that predated even the imagination of that medium.

Last month, the FCC voted to approve the proposed “Restoring Internet Freedom Order,” which reverses the FCC’s 2015 decision. By reclassifying broadband internet back to being an “information service,” and thus not a common carrier service, the “Restoring Internet Freedom Order” is intended to return jurisdiction to the FTC to regulate ISPs, under its Section 5 authority to protect consumers and promote competition, including ISP privacy practices. The “Restoring Internet Freedom Order” sets up a system in which the FTC and FCC will work together to regulate ISPs, as they did before the 2015 Open Internet Order. Following adoption of the “Restoring Internet Freedom Order,” the FTC and FCC entered a Memorandum of Understanding, through which the agencies will coordinate online consumer protection as they did prior to the 2015 order.

Even though broadband internet service is no longer considered a common carrier service, the return of jurisdiction to the FTC over such non-common-carrier services of telecom companies still depends on the outcome of a case pending decision before the Ninth Circuit.  In FTC v. AT&T Mobility, the court is rehearing en banc a Ninth Circuit panel opinion holding that the FTC is precluded from exercising jurisdiction over even the non-common-carrier services of a common carrier (e.g., the broadband services of a cell phone carrier).

Takeaways

• Under the new Order’s transparency obligations, ISPs must disclose their network management practices, performance, and commercial terms of service to consumers.
• Under the MoU, the FCC will have authority to review complaints and take enforcement actions against ISPs who fail to comply with disclosure obligations.
• The FTC, however, will assert authority to take action against ISPs with inaccurate disclosures or other unfair or deceptive acts or practices related to broadband services.
• The agencies will share legal and technical information as well as complaint contents and will collaborate on consumer and industry outreach and education.