The FCC's plan to reclassify broadband

The Federal Communications Commission released detailed plans Thursday to ensure that it has authority to craft new rules to keep the Internet open.

Figuring out exactly what the FCC is proposing and how it will affect the industry and consumers is confusing. The procedure the FCC has chosen to shore up its authority is complicated and requires some legal gymnastics. To get the skinny on what's being proposed check out this FAQ below:

What exactly did the FCC do on Thursday?
FCC Chairman Julius Genachowski released details of a new plan to reclassify broadband services so that some common carrier rules required by telecom services would apply to broadband. The thought is that reclassifying broadband would put the FCC on firmer legal ground for establishing Net neutrality rules, which are supposed to keep the Internet open and free and protect consumers from companies trying to monkey with their Internet traffic.

The FCC is doing this because a month ago the agency's authority was called into question when a federal court ruled against the FCC for punishing Comcast for violating its Net neutrality principles. The court basically said that the FCC did not have the authority to give Comcast a slap on the wrist for slowing down BitTorrent traffic on its network.

How is broadband currently classified?
Today, broadband is classified as what's called a Title I Information service under the Telecommunications Act. These services are not regulated by the FCC. This means that the FCC cannot tell broadband providers that they need to share their networks with competitors or what prices to charge for their service.

By contrast, services that are classified under Title II of the Telecommunications Act are considered telephony services and those are regulated. Under this provision, companies that own their own phone networks are considered common carriers and they must share that infrastructure with competitors. The government is also able to set rates on how much they charge for the use of those facilities.

If the FCC is reclassifying broadband as a Title II service will all the rules under this classification apply to broadband?
The short answer is no. Under this plan, the FCC will reclassify broadband as a regulated service under Title II. But broadband services will be exempt from most of the old rules written for a monopolistic, 100-year-old telephone infrastructure.

The FCC has no intention of forcing facilities sharing or to control rates, FCC officials have promised. The FCC says all it is trying to do with this measure is to reassert the limited authority it thought it had before the Comcast decision. Genachowski simply wants to put the agency on firmer legal ground so that the agency can finish making its proposed Net neutrality principles official regulation. Without reclassification, the FCC argues that its new rules could be challenged in court.

Does the FCC even have the legal authority to reclassify broadband services?
In 2005, the U.S. Supreme Court affirmed the FCC's legal authority to reclassify communications services, according to the agency. In the Brand X case, a 6-3 majority of the Supreme Court affirmed the FCC's decision at the time to classify cable broadband as an unregulated information service. The majority in this case said that FCC had the technical expertise to determine the classification.

As a result, cable modem service remained unregulated. Soon after the decision, the FCC reclassified DSL service as an information service as well to put it on the same legal ground as cable.

Assuming that the FCC does have the authority to reclassify traffic, does this mean that all Internet services will be classified as Title II?
No, the FCC has said that it will limit the new rules to broadband transmission. This means that services, such as EarthLink's broadband service, which uses infrastructure from another provider like AT&T, will not be regulated. Other Internet services, such as Google would also not be regulated under this definition.

The FCC argues that the basis for applying the standard in this way comes from the dissenting opinion in the Brand X case led by Justice Antonin Scalia. He argued that broadband transmission service should be classified separately from Internet content services.

Does anyone disagree that the FCC has the legal authority to reclassify broadband services?
Yes, the telephone companies, namely AT&T and Verizon Communications, strongly disagree that the FCC has the authority to reclassify broadband.

"We believe this is without legal basis," said Jim Cicconi, senior executive vice president of external and legislative affairs for AT&T. "Congress has never given the FCC explicit authority to regulate the Internet under Title II. Simply because it desires to do so, or is concerned because a court has questioned its authority to do so, does not by itself confer legal authority."

AT&T suggests that if the FCC is concerned about its legal standing, it should go back to Congress and ask Congress to pass a law giving it explicit authority to deal with the issue.

"The right and proper step is to place that question before the Congress," Cicconi said in his statement. "We feel confident that if the FCC proceeds down this path, the federal courts will ultimately reach the same conclusion."

Tom Tauke, Verizon's executive vice president of public affairs, also 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."

There must be some companies that support the FCC's position. Who are they?
Thirteen companies, including Google, Amazon.com, and eBay, praised the FCC's reclassification proposal in a letter sent to Genachowski in support of his plan.

"We applaud the middle ground approach that you have proposed," the letter said. "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."

It sounds like there will soon be a lot of lawsuits brewing. Are broadband companies the only ones likely to sue? What other types of legal challenges could there be?
AT&T, Verizon Communications, Comcast, and all the other broadband providers are likely to challenge the reclassification rules in court. But that's just the beginning. There is a very good chance that even groups that support the FCC's reclassification plan could sue the agency for making too many exceptions to the rules.

For example, the advocacy group Free Press applauded the FCC's plan for "sending a clear signal" that they are "charting a path toward sensible broadband policy framework that will protect consumers and promote universal access."

But then the group's President and CEO Josh Silver went on to say in the same statement that the plan did not go far enough.

What kind of effect could all this litigation have on broadband service? Could the FCC's actions stifle investment?
Legal uncertainty is never a good thing for investors. The FCC said it is confident that none of the forbearance provisions will be overturned. In the 17 years since the FCC was granted the right to make exceptions to its rules, none of those exceptions has ever been overturned, the agency said. But critics say that courts may see things differently, and even the suggestion of ongoing litigation over this issue could cause companies and broadband investors to take a wait and see approach. And this would stifle innovation and slow down broadband deployments precisely at the time the FCC is trying to encourage more investment in broadband.

"If the FCC follows through with the chairman's stated intent, it will have a direct impact on jobs and investment in one of the areas of the U.S. economy that many hoped could help lead the recovery," Cicconi said in his statement.

So what's next? How long will it take for the FCC to actually go through this process of reclassifying broadband traffic a Title II service?
First, the FCC will vote on the an item to start the process. This should take place within the next month, according to FCC officials. The "notice of inquiry" will ask the public for input on how to reclassify broadband services.

At the same time, the FCC will issue a "notice of forbearance," which will clarify the exceptions to Title II that should be included when reclassifying broadband. It's difficult to say how long this process will take. But it's a good guess to say it will take several months to a year to get the proposal finished.

What does this all mean for the average consumer?
Honestly, broadband consumers are not likely to see any change in service anytime soon. Even if broadband services are reclassified, which won't happen for at least a year, consumers aren't likely to notice anything different. But critics say that in the long run, consumers will be affected because companies will stop investing in their infrastructure.

Supporters say just the opposite. They believe more investment will result, because Internet companies will invest in creating new services without the fear of big broadband providers trying to control their services.