FCC details plan to reassert authority over Internet

The Federal Communications Commission on Thursday detailed plans for its so-called "third way" to reclassify broadband service as a telecommunications service, which would help the agency reassert its authority for regulating the Internet, after it lost an important legal battle last month.

The purpose of the statement is to put the agency on stronger legal footing after a federal appeals court ruled last month that the FCC had no legal authority to punish Comcast for slowing down BitTorrent traffic on its network. The FCC officially censured Comcast for violating its Net neutrality principles.The court decision has called into question the FCC's authority for any regulation of the Internet, especially new regulation the agency is forming to deal with Net neutrality--the broad question of whether rules are needed to prevent lopsided treatment for certain Web sites or types of Internet traffic. The chairman's statement, which asks for input from the public and the industry in determining how traffic should be reclassified, is a step toward making the FCC's legal status in regulating broadband services more certain.

Consumer groups and Net neutrality advocates have been calling for the FCC to reclassify broadband as a telecommunications service, which would make all the old regulation for the regular phone network apply to broadband. But broadband providers, namely AT&T, Verizon Communications, Comcast and others, vehemently oppose this approach arguing that it would kill innovation and investment.

In his statement Thursday, Genachowski said he is taking an approach that would apply some telecommunications regulation on broadband, but not all regulation. He emphasized that this would be a light regulatory approach that would still encourage investment in broadband.

"I directed the FCC general counsel and staff to identify an approach that would restore the status quo--that would allow the agency to move forward with broadband initiatives that empower consumers and enhance economic growth, while also avoiding regulatory overreach," he said. "In short, I sought an approach consistent with the longstanding consensus regarding the limited but essential role that government should play with respect to broadband communications."

Specifically, the FCC is looking to apply new classification rules narrowly. This means it plans to only apply old telephony rules that pertain to network transmission. Chairman Genachowski said the FCC will "not regulate the Internet, including Web-based services and applications, e-commerce sites, and online content."

The chairman's statement said that the agency will not assert new powers that it did not have before the Comcast decision was handed down. Essentially, the chairman said he simply wants to reassert and clarify the FCC's jurisdiction as it was understood before the court case was decided.

The chairman clearly stated that the agency is not looking to regulate broadband pricing or require broadband infrastructure owners to share their network elements with competitors. This has been a big fear among broadband providers. Under the 1996 Telecommunications Act, telephony networks are required to share their infrastructure and the government has set prices on how much operators can charge for access to that infrastructure.

In the late 1990s, it was hotly debated whether broadband would fall under these same requirements. Cable had never been regulated in this fashion. The Supreme Court's Brand X decision upheld this assertion, and cable operators have never been forced to lease part of their networks to competitors. The FCC later reclassified DSL an information service to put it on equal footing with cable modem services, and thus broadband services have been "unregulated" since then.

Chairman Genachowski also made it clear in his statement that the FCC will include measures in its rules that ensure that future FCC's do not try to overregulate broadband services and the Internet. But he said it is important to have enough of a legal footing in place to make sure the agency can protect consumers and achieve goals presented in the National Broadband Plan. This includes having enough legal authority to reorient the Universal Service Fund to support broadband in rural and underserved areas in the U.S.

"The FCC would invoke only the few provisions necessary to achieve its limited but essential goals," he said."The commission would take steps to give providers and their investors confidence and certainty that this renunciation of regulatory overreach will not unravel while also giving consumers, small businesses, entrepreneurs and innovators the confidence and certainty they need and deserve."

Genachowski pointed out in his statement that the FCC has taken a similar approach in the past in the way it regulates wireless phone service. The agency has applied certain rules to wireless, but it has not applied rules that don't make sense for that particular technology.

"In short, the proposed approach is already tried and true," he said.

The FCC plans to open a comment process that would involve the public as well as the broadband and Internet industries to provide input on how the new classification rules should be applied.

Thirteen technology companies, including Amazon, eBay, and Google , said in a letter sent to Chairman Genachowski Thursday that they supported the FCC's light regulatory approach. The companies noted that they are seeking the "deployment of better and faster broadband transmission services as quickly as possible." But they added that the recent Comcast decision "raised serious doubts about the FCC's ability to implement the National Broadband Plan."

They applauded the agency for finding a middle ground in finding a legal way to assert the agency's authority.

"A heavy-handed regulatory regime isn't the right Answer," the companies said in the letter. "We share your belief that this course will create a legally sound, light-touch regulatory framework that benefits consumers, technology companies, and broadband Internet access providers."

Comcast, the nation's largest cable operator, which opposed reclassification and new Net neutrality regulation, said in a statement it was not entirely pleased with the FCC's approach. But the company seemed relieved that the FCC is taking a less aggressive stance and is asking the industry for its input.

"While we are disappointed with the inclination not to lean in favor of Title I regulation, we are prepared to work constructively with the commission to determine whether there is a 'third way' approach that allows the commission to take limited but effective measures to preserve an open Internet and implement critical features of the National Broadband Plan, but does not cast the kind of regulatory cloud that would chill investment and innovation by ISPs," said Sena Fitzmaurice, vice president of government communications at Comcast. "We also appreciate the chairman's desire to take extremes off the table and to try to develop a path to providing ISPs and others in the Internet ecosystem with clear rules of the road about what consumers expect of them, including the commission's need to have authority to address complaints should any arise, while avoiding the elements of Title II that are destructive to our business."

Verizon Communications, which also doesn't support Net neutrality regulations or reclassifying broadband services, said the FCC's plan would actually harm consumers and investment in broadband infrastructure. Verizon has invested $18 billion over the past few years in upgrading its broadband network with fiber to create its Fios service.

Verizon appears to already be gearing up to challenge the new rules and reclassification in court. Tom Tauke, Verizon's executive vice president of public affairs, said he doesn't believe that the FCC has the authority to make these changes.

"We believe that the chairman's stated approach is legally unsupported," he said in a statement. "The regulatory and judicial proceedings that will ensue can only bring confusion and delay to the important work of continuing to build the nation's broadband future."