The Federal Communications Commission’s Net Neutrality rules took full effect Friday, after a three-judge panel of the U.S. Court of Appeals for the D.C. Circuit denied petitions for a temporary stay of the rules made in separate lawsuits by AT&T and other telecom industry opponents.

“This is a huge victory for Internet consumers and innovators!,” FCC Chairman Thomas Wheeler exclaimed in a written statement. “There will be a referee on the field to keep the Internet fast, fair and open. Blocking, throttling, pay-for-priority fast lanes and other efforts to come between consumers and the Internet are now things of the past. The rules also give broadband providers the certainty and economic incentive to build fast and competitive broadband networks.”

The Net Neutrality rules govern both wired and wireless Internet services, and most observers predict the biggest impact will be felt by wireless customers. Wireless providers have experimented with speed throttling, priority access, data caps, and so-called “sponsored data” exempt from usage caps or usage billing. Some of these practices are now illegal under Net Neutrality rules and others are subject to increased scrutiny by the FCC.

Providers generally have not opposed rules blocking online censorship, paid prioritization, and selective speed throttling, but they are vehemently against the FCC’s catch-all “Internet general conduct rule,” that effectively allows the agency to oversee issues like interconnection agreements that connect content producers with each ISP, data caps/usage billing, and issues like zero-rating — providing an exemption from an ISP’s usage allowance for preferred content partners.

Providers argue the FCC could block innovative pricing and usage-based billing they argue customers would like to have.

Other industry groups claim Net Neutrality will lead to a significant decline in investments towards broadband upgrades and expansion. But Charter Communications CEO Thomas Rutledge, now in the middle of a multi-billion dollar merger deal with Time Warner Cable and Bright House Networks, disagreed, noting it will have no effect on Charter’s investment plans for its own cable systems or those it may acquire.

“The big news today is that there is no news,” said Timothy Karr, senior director of strategy for Free Press. “With Net Neutrality protections in place, there are no dramatic changes to the way the Internet works. Internet users are logging onto a network that’s open, as they’ve long expected it to be.”

Rutledge

Despite claims from Net Neutrality critics that increased oversight of the broadband business would lead to reduced investment and upgrades, Charter Communications CEO Thomas Rutledge said the new rules would have no effect on Charter’s investment plans.

Last week Rutledge sat down with FCC chairman Thomas Wheeler to discuss Charter’s proposed merger with Bright House Networks and Time Warner Cable. He was joined by Catherine Bohigian, Charter’s executive vice president for governmental affairs and FCC general counsel Jonathan Sallet and senior counselor Phil Verveer.

“Mr. Rutledge explained that the transactions will bring substantial consumer benefits, including providing a better Internet experience for watching on-line video, gaming, and using other data-hungry apps at more competitive prices, and that the mergers will not harm competition,” according to a one page filing with the FCC disclosing the meeting.

Despite repeated claims from pro-industry policy wonks that Net Neutrality and Title II oversight of cable broadband would cause operators to reconsider their investment plans, Rutledge made it clear Charter’s spending plans are unaffected.

“Mr. Rutledge agreed that the Commission’s decision to reclassify broadband Internet access under Title II has not altered Charter’s approach of investing significantly in its network to deliver cutting edge services including: the fastest entry-level broadband service (60 Mbps) with unlimited usage; out-of-home Wi-Fi hotspots; a state-of-the art, cloud-based user guide, allowing search and discovery across linear, video on demand and online content; open, non-proprietary downloadable security; and an innovative video app with hundreds of live and downloadable channels and the ability to display over-the-top content seamlessly on the television,” the disclosure continues.

Charter’s chief executive said the company supports Open Internet rules, including no throttles or blocks on lawful content and no paid prioritization. But he does worry about regulatory uncertainty while the FCC explores its expanded powers of oversight.

While consumer groups were busy fighting the Comcast-Time Warner Cable merger, AT&T’s $49 billion purchase of DirecTV has largely flown under the radar, with no comparable organized consumer opposition to the deal. But that does not mean the FCC will approve it as-is.

Negotiations with federal regulators and an exchange of regulatory filings and comments between AT&T, the FCC, and deal critics have apparently forced AT&T to agree to several concessions to make regulators amenable to approving the transaction.

The Washington Post reports that chief among those concessions is AT&T’s willingness to voluntarily abide by certain Net Neutrality rules regardless of any court challenges, including banning the slowing or blocking of websites and agreeing not to accept payments from website operators to speed up their content. AT&T has not said how long it intends to keep that commitment.

Deal opponents are also seeking other concessions from AT&T:

No paid interconnection deals: AT&T must route incoming content to customers without any fees charged to the companies originating the traffic. This became a hot button issue when Netflix felt it was forced to pay Comcast a fee to assure its streamed video content would reach Comcast customers without buffering or other errors. AT&T is expected to fiercely oppose this condition and says it should have the right to make private deals with content delivery firms.

AT&T must offer standalone broadband: With AT&T’s acquisition of DirecTV, more than ever it will have an incentive to sell customers a television bundle with Internet service. Regulators want AT&T to assure broadband-only service remains readily available. AT&T has offered 6Mbps DSL for $34.95 a month as its standalone option. Content delivery firms like Cogent want AT&T to offer 25Mbps service in all of AT&T’s markets for $29.95 a month for at least seven years. The FCC recently defined 25Mbps the minimum speed to qualify as broadband.

No end runs around Net Neutrality with data caps and exemptions: AT&T wants the right to exempt its preferred partners from its usage caps and claims that is beneficial to consumers. But cap opponents claim that is simply another way to collect money from content companies for preferential treatment — an end run around Net Neutrality rules. Opponents of these cap exemptions, known as “zero-rating” claim all content should be treated the same. AT&T could resolve this by removing data caps from its DSL and U-verse services altogether.

A well-placed source in Washington, D.C. with knowledge of the matter tells Stop the Cap! the Federal Communications Commission is prepared to take a hard look at the issue of Internet data caps and usage-based billing if a major cable operator like Comcast imposes usage allowances on its broadband customers nationwide.

Comcast introduced its usage cap market trial in Nashville, Tenn. in 2012 but gradually expanded it to include Huntsville and Mobile, Alabama; Atlanta, Augusta and Savannah, Georgia; Central Kentucky; Maine; Jackson, Mississippi; Knoxville and Memphis, Tennessee; Charleston, South Carolina; and Tucson, Arizona.

“Two and a half-years is exceptionally long for a ‘market trial,’ and we expected Comcast would avoid creating an issue for regulators by drawing attention to the data cap issue during its attempted merger with Time Warner Cable,” said our source. “Now that the merger is off, there is growing expectation Comcast will make a decision about its ‘data usage plans’ soon.”

In most test markets, Comcast is limiting residential customers to 300GB of usage per month, after which an overlimit fee of $10 per 50GB applies. Despite that, Comcast’s forthcoming premium gigabit speed plans are exempt from usage caps, the company announced.

Comcast sustomers in market test cities have not been happy with the usage caps, some confronted with inaccurate usage measurement tools or “bill shock” after claiming to find surprise charges on their cable bill. One federal employee offered his own story of bill shock — $200 in overlimit fees on his April Comcast bill. The customer spent $70 a month on broadcast basic cable television and Comcast Internet service. As an almost cord-cutter, he could instead rely on one of several alternative online video providers like Netflix or Hulu, but watching video that did not come from Comcast’s cable TV package contributed to eating his monthly usage allowance and subjected him to hundreds of dollars in extra fees.

“I’ve reviewed [the] account to see and can confirm the charges are valid,” responded a Comcast representative who defended the company’s usage cap trials. “Please understand that we are not here to take advantage of customers. We are here to provide a great customer service experience.  After researching [the] account, at this time no matter what level of service you obtain, the Internet usage [allowance] will remain the same.”

To date, the Federal Communications Commission has left the issue of data caps and usage-based billing on the back burner, despite a Government Accounting Office report that found little justification for usage limits or compulsory usage allowances on broadband.

In 2012, former FCC chairman Julius Genachowski defended the practice, claiming it would bring lower prices to light users, spur “innovation” and enable consumer choice. But Comcast customers have found little, if any savings from Comcast’s so-called “data usage plans.” The only savings comes from enrollment in Comcast’s Flexible Data Option, which offers a $5 discount if a customer keeps usage under 5GB a month on just one plan — Comcast’s 3Mbps $39.95/mo Economy Plus tier.

“We don’t see much innovation coming from Comcast’s usage limit trials because Internet pricing continues to rise and the plans have the side effect of discouraging customers from using competing video providers, which can consume a lot of a customer’s usage allowance,” our source adds.

You are over our arbitrary usage limit!

As far as enabling consumer choice, Comcast’s own representative put the kibosh on that, unless a customer wants to pay higher Internet bills.

Net Neutrality and issues surrounding Title II have consumed much of the FCC’s attention in the residential broadband business during the first half of the Obama Administration’s second term. Usage billing and data caps are likely to become bigger issues during the second half if there is a decisive move towards compulsory usage limits and consumption billing by large operators.

“An operator the size of Comcast absolutely will draw scrutiny,” said our source. “If Comcast decides to impose its currently tested market trial plans on Comcast customers nationwide, the FCC will take a closer look. Under Title II, the agency is empowered to watch for attempts to circumvent Net Neutrality policies. Usage caps and charging additional fees to customers looking for an alternative to the cable television package will qualify, especially if Comcast continues to try to exempt itself.”

Cable industry officials have also become aware of the buzz surrounding usage caps and growing regulator concern. Some reportedly discussed the possibility of FCC intervention behind closed doors at the recent cable industry conference in Chicago. Multichannel News reported (sub. req.) cable industry executives increasingly fear federal officials will ban usage pricing for wired broadband service on competitive grounds. Online video competitors rely on large cable and phone companies to reach prospective customers, many that may think twice if usage allowances are imposed on consumer broadband accounts.