Net Neutrality and Open Internet Rules

Net Neutrality and Open Internet Rules

The issue of the need to maintain net neutrality and an open Internet concept has been a considerable debate for years, with the most recent development being the landmark ruling of the US Court of Appeals for the District of Columbia Circuit on 14 June 2016 in favour of net neutrality.

Net neutrality is a principle which requires all Internet Service Providers (“ISPs”) to treat all sources of online content equally and provide all consumers with the right to access the content on a non-discriminatory basis.

The idea behind net neutrality is that the Internet should remain open and neutral with uninhibited access to online content without the ISPs being allowed to block, impair or establish fast/slow lanes on the delivery of online content to consumers.

However, ISPs argue that they have the right to optimise the use of the network resources and that Internet traffic or traffic prioritisation measures are necessary to ensure a reasonable quality of service standard for all Internet users, especially as Internet traffic continues to grow.

The Open Internet Rules in the US

In the US, the Federal Communications Commission (“FCC”) has developed Open Internet Rules, which are designed to protect free expression, innovation and economic growth on the Internet, as well as to promote investment in broadband networks.

The Open Internet Rules are also intended to ensure that consumers and businesses alike have access to a fast, fair and open Internet. The FCC’s Open Internet Rules came into force on 12 June 2015 and apply to both fixed and mobile broadband Internet access services, which is classified as a “telecommunications service” by the FCC.

Essentially, the Open Internet Rules set out five bright-line rules, as follows:

(a) No blocking: ISPs are not allowed to block access to lawful online content, applications, services or non-harmful devices;

(b) No throttling: ISPs are not allowed to impair or degrade lawful Internet traffic on the basis of content, applications, services or non-harmful devices;

(c) No paid prioritisation: ISPs are not allowed to favour some lawful Internet traffic over other lawful traffic in exchange for consideration of any kind (in other words, ISPs are not allowed to provide “fast lanes” to certain content/service providers who are willing to pay in exchange for fast lanes);

(d) No unreasonable interference: ISPs are not allowed to interfere unreasonably with their end users’ ability to use broadband Internet access services, or with their edge providers’ ability to make lawful online content, applications, services and devices available to end users; and

(e) Enhanced transparency: ISPs must publicly disclose accurate information regarding the network management practices, performance and commercial terms of its broadband Internet access services to allow end users to make informed choices and for content, application and service providers to develop, maintain and market Internet offerings.

As many as 4 million Americans have overwhelmingly voted to support the FCC’s initiative in keeping a free and fair Internet.

Many tech giants like Google, Facebook and Netflix have also rallied in favour of the Open Internet Rules. It is said that without net neutrality, ISPs may choose to deliver certain online content at a slower speed, for example, making the video streaming on Netflix or YouTube buffer, unless they pay extra to get in the fast lane.

However, the Open Internet Rules were not welcomed by the ISPs and they brought a case against the FCC. They argued, amongst others, that as broadband is an information service, as opposed to a telecommunications service, hence the FCC lacked statutory authority to create the Open Internet Rules and impose them on ISPs. They also argued that some of the rules were unconstitutionally vague and ran afoul of the US Constitution.

The US Court of Appeals rejected the ISPs’ arguments and held in favour of the Open Internet Rules. The court held that:

    • FCC had the authority to reclassify broadband as a telecommunications service. This was based on the evidence that consumers generally viewed broadband as essential communication and information platform that transmits data of their own choosing to their desired destination, as opposed to a mere information service;
    • interconnection arrangements are derivative of the broadband Internet access service and hence, they could be regulated under the law;

FCC had the authority to come up with measures to encourage the deployment of broadband infrastructure and rules to govern ISPs’ treatment of Internet traffic; and the

  • Open Internet Rules generally require ISPs to offer a standardised service that transmits data on a non-discriminatory basis. Such equal access rule did not run afoul of the First Amendment to the US Constitution (which affirms the right to freedom of expression).

This decision affirmed the US Government’s view that broadband is a utility that should be made equally available to all consumers, rather than a luxury that does not require government supervision. This decision marks a landslide victory for net neutrality in the US and an enormous win for consumers.

With this decision, all ISPs must treat all Internet traffic equally, and this assures a level playing field for all online content and benefit both consumers and online content developers alike.

President Obama – The Man behind the Push for Net Neutrality Rules

The current US President, Barack Obama, is known as an ardent supporter of net neutrality. He has been instrumental in calling on the FCC to take up the strongest possible rules to protect net neutrality. In an open letter to the FCC in November 2014, he wrote,

“an open Internet is essential to the American economy, and increasingly to our very way of life. By lowering the cost of launching a new idea, igniting new political movements, and bringing communities closer together, it has been one of the most significant democratizing influences the world has even known… The Internet has been one of the greatest gifts our economy and our society has ever known… there is no higher calling than protecting an open, accessible and free Internet.”

Net Neutrality Concept in Malaysia & ASEAN

In ASEAN, Singapore’s telecommunications regulator (the Infocomm Development Authority) issued its net neutrality policy in 2011 and it appears that Singapore is the only regulator in the region which has taken a clear stand on net neutrality.

Under this policy, ISPs can offer specialised or customised online content or services and can perform reasonable network management practices but are not allowed to impose discriminatory practices which would render any lawful online content inaccessible or unusable.

In other words, ISPs are not allowed to block lawful online content. However, there is no outright ban on ISPs throttling Internet traffic and selling fast lanes to content providers.

In Malaysia, there are currently no provisions within the Communications and Multimedia Act 1998 (“CMA”) that expressly address net neutrality.

The closest related provision would be Section 197 of the CMA, which provides that service providers may set rates for their services in accordance with market rates. Section 198, in turn, sets out certain principles on rate setting, which prescribes that rates, amongst others “must be fair and, for similarly situated persons, not unreasonably discriminatory” and “should not contain discounts that unreasonably prejudice the competitive opportunities of other providers.”

Section 199 states that the Minister may, on the recommendations of the MCMC, intervene freely in the setting of rates for any competitive facilities or services provided, for good cause or public interest.

In terms of blocking of online content, while it is noteworthy that the MSC Malaysia Bill of Guarantees assures that there will be no censorship of the Internet, this, however, does not mean that any person may disseminate illegal online content without regard to the law.

The Government has the power to direct ISPs to block access to or remove certain prohibited content if the content is found to have violated Malaysian laws.

Delivery of online content is subject to the provisions of the CMA which prohibit the dissemination of indecent, obscene, false, menacing or other illegal or offensive materials and also the provisions of the Content Code and the Internet Access Service Provider Sub Code. For example, the Code says that ISPs must not discriminate unduly between persons in the provision of their services and must provide equal access to all consumers.

ISPs must also endeavour to provide consistent and reliable access to Internet services.

About the author:
This article was written by Edwin Lee Yong Cieh, Partner of LPP Law – law firm in Kuala Lumpur, Malaysia (+6016 928 6130, [email protected]). Feel free to contact him if you have any queries.
This article was first published in CHIP Magazine Malaysia.
The view expressed in this article is intended to provide a general guide to the subject matter and does not constitute professional legal advice. You are advised to seek proper legal advice for your specific situation.
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