More Businesses Eligible for Exemption from the FCC’s Broadband Transparency Reporting Requirements of the 2015 Open Internet Order

By Shawn Marcum

Wikicommons, Creative Commons Attribution-Share – By: Tmthetom

Under the 2010 Open Internet Order, the Federal Communications Commission (“FCC”) required broadband Internet access service (“BIAS”) providers to inform “end-user consumers, edge providers, and the Internet community regarding commercial terms, performance characteristics, and network practices”[1] Then came the 2015 Open Internet Order, where the FCC introduced enhancements to these reporting requirements.[2] However, to ensure a careful rollout of these enhanced reporting requirements, BIAS providers with 100,000 or less broadband subscribers could apply for a waiver to delay the applicability of the transparency reporting requirements due to the upfront costs associated with compliance on smaller BIAS providers.[3] On February 23, 2017, the FCC passed an Order expanding the applicability of the waiver process to the transparency reporting requirements in the 2015 Open Internet Order.[4] The 2017 Order expanded the eligibility for this waiver to BIAS providers with 250,000 or less broadband subscribers after a lengthy review process.[5] Consequently, more small BIAS providers are able to use their limited resources for other purposes such as operation and infrastructural development.

Politically, expanding the applicability of this waiver provides small businesses with a glimpse of what to expect from the FCC moving forward under the new administration. Chairman Ajit Pai, the new chairman of the FCC, found the transparency reporting requirements “unnecessary, onerous, and burdensome . . . that impose unnecessary costs[, and instead] . . . [BIAS providers] should spend limited capital building out broadband, not ‘hiring lawyers and accountants to fill out unnecessary paperwork demanded by Washington, D.C.’.”[6] Chairman Pai is not alone in this belief. The American Cable Association, among many other commenters, sought to extend the waiver’s applicability because the costs of compliance are particularly disproportionate on small BIAS providers.[7] For example, if small businesses could avoid complying with the strict transparency rules, they could dedicate their limited resources to running the business and expanding it.[8] Hence, small businesses could expect to see an increase in orders lessening regulatory compliance.

However, there is sharp opposition to the government loosening regulatory compliance, especially in this particular case. Commissioner Clyburn found the increase from 100,000 to 250,000 unexplained and unreasonable[9] and stated that “[i]n an ongoing quest to dismantle basic consumer protections for broadband services, the majority has decided to exempt billion dollar public companies from being transparent with consumers.”[10] Similarly opposed to the increase is Senator Markey from Massachusetts, who says that approximately nine-million broadband subscribers will now not receive important information—e.g., performance statistics, pricing, data allowance rates, and below-the-line fees—regarding their broadband service.[11] Therefore, even though small businesses could expect a lessening in regulatory compliance, that expectation should not be a assumed as the opposition stands strong with much support.

[1] Small Business Exemption From Open Internet Enhanced Transparency Requirements, GN Docket No. 14-28, Order, FCC 17-17, 1, para. 2 (Feb. 23, 2017).

[2] See id.

[3] See id. at 2, para. 3.

[4] See FCC Votes to Protect Small Businesses from Needless Regulation: Service Providers with 250,000 Broadband Connections are Relieved from Excessive Reporting Obligations, FCC News (Feb. 23, 2017), https://transition.fcc.gov/Daily_Releases/Daily_Business/2017/db0223/DOC-343609A1.pdf.

[5] Small Business Exemption From Open Internet Enhanced Transparency Requirements, GN Docket No. 14-28, Order, FCC 17-17, 1, para. 1 (Feb. 23, 2017).

[6] John Eggerton, FCC Extends, Expands Small ISP Enhanced Transparency Waiver, B&C The Business of Television (Feb. 23, 2017, 12:07 PM), https://www.broadcastingcable.com/news/washington/fcc-extends-expands-small-isp-enhanced-transparency-waiver/163559.

[7] See id.; see also Small Business Exemption from Open Internet Enhanced Transparency Requirements, GN Docket No. 14-28, Order, FCC 17-17, 3, para. 5 (Feb. 23, 2017) (“Based on the record of these proceedings, there is substantial evidence that smaller providers—which can serve as vital sources of broadband throughout the country—would face real disincentives to deploying, maintaining, or upgrading that broadband infrastructure in light of the initial costs associated with the enhanced requirements.”).

[8] See Small Business Exemption from Open Internet Enhanced Transparency Requirements, GN Docket No. 14-28, Order, FCC 17-17, 3, note 19 (Feb. 23, 2017).

[9] Id. at 4, note 26, and 7 (Commissioner Clyburn Dissent) (finding the adoption of a number, because Congress found a number suitable for a different and particular context, does not mean that adoption is based on facts—i.e., “the Order we adopt today contains no analysis, no tailored solution, and in fact, does not even mention the American consumer at all.”)

[10] Id. at 7.

[11] See id.; see also John Eggerton, FCC Extends, Expands Small ISP Enhanced Transparency Waiver, B&C The Business of Television (Feb. 23, 2017, 12:07 PM), https://www.broadcastingcable.com/news/washington/fcc-extends-expands-small-isp-enhanced-transparency-waiver/163559.