netneutralityThe FCC confirmed today that it plans to vote later this month on an order that would reclassify broadband as a Title II or telecommunications service and impose strict Network Neutrality rules. In a blog post on the website of media outlet Wired, FCC Chairman Tom Wheeler said the order includes the “strongest open Internet protection ever proposed by the FCC.”

According to an FCC fact sheet issued today, the order also “bolsters universal service fund support for broadband service” but doesn’t require broadband providers to contribute to the Universal Service Fund. On a conference call with reporters today, senior FCC officials stopped short of saying the order exempts broadband services from the USF contribution base, however. Instead they said that issue would be resolved in a separate proceeding.

Title II and Net Neutrality
Net Neutrality has been an open issue since an appeals court last year struck down two of three Open Internet rules established by the FCC in 2010, arguing that the commission did not have the authority to impose those rules. Reclassifying broadband as a Title II or telecommunications service is expected to establish that authority.

Title II services include traditional communications services such as voice that are heavily regulated. But in the fact sheet released today, the FCC argues that it will forebear from imposing certain traditional Title II regulations, including rate regulation, on broadband services.

Net Neutrality Rules
The order that the FCC will vote on re-instates the two Net Neutrality rules that the appeals court rejected, including prohibitions against traffic blocking and traffic discrimination. The latter means “no throttling” and “no paid prioritization,” the FCC said in the fact sheet.

The order exceeds previous FCC Net Neutrality rules in two ways.

First, the new rules would apply to landline and wireless broadband, whereas wireless services previously had less strict guidelines.

Second, the commission would have the authority to hear complaints about Internet interconnection and take enforcement action if necessary.

In today’s briefing with reporters, FCC officials noted that the commission’s oversight of Internet interconnection would include two types of carriers — retail carriers that provide broadband service to end users and edge carriers that offer connectivity between retail carriers and content providers.

Providers of applications and content would be treated as customers of carriers, not as carriers, the officials said.

No USF Changes
Some readers might be perplexed by the idea that the proposed order could “bolster” USF support yet not require broadband providers to contribute to the fund.

What the FCC apparently means by “bolstering support” is that by classifying broadband as a Title II service, the commission more clearly establishes its authority to direct USF funding toward broadband – although considering that USF funding has been used toward broadband for years, that authority doesn’t seem to be in question.

Universal Service covers part of the costs of deploying voice and broadband in rural areas where the cost of providing service is high. The program is supported by communications service providers, who contribute a percentage of interstate voice revenues to the fund – a methodology that is becoming increasingly impractical as voice revenues decline at the same time that the FCC has set ambitious broadband deployment goals.

Rural telecom and other service provider groups have suggested that the program should be funded as a percentage of voice and broadband revenues, but that idea has received strong opposition from some of the same interest groups that have been pushing for strong Net Neutrality guidelines and Title II reclassification. Although the FCC has essentially capped the Universal Service program, those groups have expressed concerns that including broadband in the contribution base would cause broadband rates to rise.

And based on the way the FCC capitalized and bolded certain words in today’s fact sheet, it would appear that the commission is taking care not to ruffle the feathers of those who don’t want to see any changes in who should contribute to Universal Service:

…the Order DOES NOT require broadband providers to contribute to the Universal Service Fund under Section 254

The Order will not impose, suggest or authorize any new taxes or fees — there will be no automatic Universal Service fees applied

These were the only words bolded in the three-page document other than subheads and the three Net Neutrality rules. And that doesn’t bode well for those hoping that any change might actually result from the open proceeding on the USF contribution base.