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Regulatory Update – 23 November 2017

Home Insights Regulatory Update – 23 November 2017

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Contributed by: Craig Shrive and Felicity Ellis

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Published on: November 23, 2017

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Repeal of net neutrality regulation in the US another step closer

Net neutrality regulation provides a level playing field by prohibiting network owners from providing preferential treatment to online services and content providers.

New Zealand does not currently regulate for net neutrality. Perhaps due to regulatory developments in the United States and Europe, net neutrality was discussed as part of the Government's review of the Telecommunications Act 2001. The Ministry of Business, Innovation and Enterprise (MBIE) noted that net neutrality and traffic management were not yet cause for concern, partially owing to the structural separation of New Zealand's main network provider, Chorus, from Internet Service Providers (ISPs). The Government's silence on the issue following the MBIE process is a good indicator there is no intention to regulate net neutrality in New Zealand.

Our Insight in May advised of developments in the United States. President Trump outlined a plan to change the classification of Internet Service Providers from "common carriers" to "information service providers", which removes ISPs from certain forms of regulation under the US Telecommunications Act, as they would no longer be treated as public utilities. US Federal Communications Commission (FCC) chairman Ajit Pai has since come out stating that the Obama-era regulation has 'depressed investment in building and expanding broadband networks and deterred innovation'.

On 21 November, the Chairman circulated a draft order to change the classification of ISPs (here), named the Restoring Internet Freedom Order. The following day, the Chairman released his Proposal (here), which will be put to a formal vote in the FCC on 14 December. Because of the 2:1 Republican majority in the FCC, many commentators see the outcome of the vote as a foregone conclusion.

However, US political commentators have suggested that the FCC may be acting outside of its powers, in its attempt to abruptly reverse rules on which many have relied, without a reason related to a change in factual circumstances. The Supreme Court has previously required federal agencies undertaking such action to 'examine the relevant data and articulate a satisfactory explanation for its action'. The Judicial branch may therefore be called upon to 'check' the power of the FCC.

The recent developments in the US further suggest that New Zealand's current position on net neutrality is unlikely to change in the foreseeable future.

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