Internet service provider (ISP)

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An Internet service provider (ISP) is an entity that provides broadband service to subscribers. Broadband refers to all services that supply high-speed Internet to subscribers. In the United States, ISPs are regulated at the federal (per the Federal Communications Commission (FCC)) and state level. The largest ISPs in the United States include AT&T Internet Services, CenturyLink, Charter Communications, Comcast High Speed Internet (i.e., Xfinity), Frontier Communications, Verizon High Speed Internet, among others.

During the earliest days of the Internet, most end users connected to the Internet through dial-up internet service through local telephone lines. As a result, for more than two decades ISPs were regulated as common carriers, providing basic services and subject to Title II of the 1934 Communications Act. All common carriers are subject certain duties, including that they "furnish . . . communication service upon reasonable request," engage in no "unjust or unreasonable discrimination in charges, practices, classifications, regulations, facilities, or services," and charge "just and reasonable" rates. By contrast, enhanced services involved "any offering over the telecommunications network which is more than a basic transmission service," such as when "computer processing applications are used to act on the content, code, protocol, and other aspects of the subscriber's information.” ISPs, while classified as basic services–and not enhanced services–were subject to common carrier treatment under Title II of the Communications Act.

Most Internet access today is provided by "broadband" service, ISPs that furnish high-speed communications technologies, often by cable modem service. The phrase ‘net neutrality’ refers to an open relationship between ISPs, the end user, and websites; put simply, net neutrality is achieved when ISPs are prevented from interfering with access to the Internet by both end users and websites.

Federal Regulation of ISPs

At the federal level, ISPs are regulated by the FCC, the agency with jurisdiction over "all interstate and foreign communications by wire or radio." The FCC derives its substantive authority under the Federal Communications Act of 1934 and the Telecommunications Act of 1996. Despite the differences in time and dramatic differences in technology, the goals of both Acts remain similar: to promote competition and technological innovation in the telecommunications industry. Currently, the issue of competition remains a touchstone in the debate over the ability for ISPs to control access to internet content, otherwise known as net neutrality. 

The 1934 Act gave the FCC authority to "regulate interstate and foreign commerce in communication by wire and radio." This delegation of authority reflected Congress’ efforts to provide greater consumer protections against the growing monopolies and consolidation of American business, a problem that remains salient in the ISP marketplace. While the 1996 Act is more recent, the FCC derives most of its substantive powers and jurisdiction to regulate ISPs from the 1934 Act. For instance, the FCC obtains rulemaking power over different forms of communications services from Titles II, III, and VI of the Act. And Title I gives FCC “ancillary jurisdiction” over information providers. Specifically, Title I grants FCC authority to "perform any and all acts, make such rules and regulations, and issue such orders, not inconsistent with this chapter, as may be necessary in the execution of its functions." The Supreme Court read broadly FCC’s power to serve the public interest under Title I in National Broadcasting Co. v. United States.

Decades later, the 1996 Act was passed to deregulate the broadband industry. The 1996 Act’s goal was "to promote competition and reduce regulation” to lower prices, improve quality, and increase technological innovation “for American telecommunications consumers." The 1996 Act made an important distinction between information services and telecommunications services; the latter were regulated while the former were mostly unregulated. But the 1996 Act failed to classify the Internet solely as either service, leaving its regulatory status ambiguous.

As a result, during the Internet’s early history, ISPs were largely exempt from Title II regulation. In 2002, FCC determined that cable company ISPs was an "interstate information service" in the 2002 Cable Modem Order; they did not qualify as telecommunications carriers and were therefore “entirely exempt from Title II regulation.” The Supreme Court upheld FCC’s interpretation in National Cable & Telecommunications Ass'n v. Brand X Internet Services (2005). In Brand X, the Court deferred to the FCC's interpretation that cable broadband providers provide a "single, integrated information service," even if they own and operate the last-mile transmission facilities. In turn, FCC classified other ISPs (e.g., DSL and wireless) as information service providers exempt from Title II’s regulatory requirements.

In 2015, the Obama Administration formally adopted open Internet rules to “compel internet openness” among ISPs. To strengthen the authority of these rules, FCC then reclassified broadband access as a “telecommunications service.” This reclassification brought ISPs under the purview of Title II of the Communications Act. FCC believed that ISPs were more akin to traditional telephone transmission and warranted extensive “common carrier” regulation. Such classification gave FCC power to ensure that ISPs treat all internet traffic the same regardless of source. Industry groups challenged these rules in court arguing, inter alia, that FCC lacks the authority to reclassify. The D.C. Circuit in U.S. Telecom Ass'n v. FCC (2016) upheld both the rules and FCC’s decision to reclassify broadband access as a common carrier service.

In 2017, the Trump Administration repealed the Obama-era rules and reclassification with the 2017 Repeal Order. Specifically, the FCC reversed the 2015 Title II Order to "restore broadband Internet access service to its Title I information service classification." In support of its light-touch regulation, FCC argued that broadband access is an information service or, in the alternative, “inextricably interlinked” with information services. In other words, since ISPs provide a single unified information service, they squarely fit the definition of “an information service” of the 1996 Act.

[Last updated in July of 2020 by the Wex Definitions Team]