At the CES Conference earlier this month, Chairman Wheeler signaled the FCC would adopt net neutrality rules, including a ban on paid prioritization, consistent with President Obama’s blog post from November.  These remarks were noteworthy because the Chairman stated he would circulate a draft net neutrality order for adoption at the February Commission Meeting that would rely on Title II of the Communications Act as authority for the anti-blocking and anti-discrimination rules that the D.C. Court of Appeals struck down last January in Verizon v. FCC.

The Chairman’s Title II statements must have triggered alarms among the major ISPs. The Republican–controlled Congress has moved quickly.  On January 16, Senator Thune and Representative Upton, Chairmen of the Senate and House Commerce Committees, released a Discussion Draft of a bill that tracks the FCC’s 2010 Open Internet Order.  The synopsis of the Discussion Draft summarizes the major elements:

“To amend the Communications Act of 1934 to ensure Internet openness,to prohibit blocking lawful content and non-harmful devices, to prohibit throttling data, to prohibit paid prioritization, to require transparency of network management practices, to provide that broadband shall be considered to be an information service, and to prohibit the Commission or a State commission from relying on Section 706 of the Telecommunications Act of 1996 as a grant of authority.”

Importantly, the Discussion Draft limits the authority of the FCC to expand the bill’s net neutrality principles.

The Discussion Draft reflects significant concessions by the major ISPs, but it tracks the major concerns of the cable industry, AT&T and Verizon over Title II-based net neutrality rules. The bill would foreclose potential rate and related regulation of broadband Internet access service under Sections 201 and 202 of the Communications Act.

The restriction on Commission authority under Section 706 also precludes the FCC from relying on Section 706 to preempt state laws restricting municipal broadband.  More broadly, the draft bill is an effort by the Republican-controlled Congress to limit regulatory agency discretion.

It is unlikely release of the Discussion Draft or hearings on the bill will cause the FCC to defer action on a Title II-based net neutrality order or an order that preempts restrictive state laws limiting municipal broadband networks under Section 706 of the Act.  Were Congress to enact a bill modeled on the Discussion Draft—which is a possibility—the Administration would be presented with an interesting choice.  A veto is one possibility, but codification of basic net neutrality principles could insulate the principles from being gutted by the agency in the future and from the risk of another adverse appellate court decision.  The related consideration is whether the Administration could strike a deal with Congress to limit state laws restricting municipal broadband.