FCC Chairman wants broadband transmission regulated as telecom service

Federal Communications Commission Chairman Julius Genachowski today said he would like to see the transmission portion of broadband connections classified as a Title II, or telecommunications service.

In a statement issued this morning, Genachowski said the move is aimed at giving the FCC authority to implement Net neutrality guidelines and create a broadband Universal Service fund without entailing additional regulatory burdens such as regulating Internet content or broadband prices.

“Heavy-handed prescriptive regulation can chill investment and innovation, and a do-nothing approach can leave consumers unprotected and competition unpromoted, which itself would ultimately lead to reduced investment and innovation,” Genachowski said.

Some stakeholders have argued that Title II regulations would be overly burdensome, potentially requiring service providers to file price tariffs for broadband offerings or even requiring cable companies to reconstruct their networks. But according to the plan that Genachowski outlined, the FCC would “forbear” from enforcing some Title II regulations, such as pricing requirements, on broadband. Instead, he said, the plan would be only to apply six Title II provisions.

In a separate statement issued today, the FCC’s general counsel, Austin Schlick, said those six provisions are the ones requiring service providers to protect confidential information and make services and equipment accessible to individuals with disabilities, as well as those covering Universal Service and forbidding unreasonable denials of service. The latter will likely be the basis for whatever Net neutrality guidelines the FCC will attempt to implement.

 Net neutrality is a broad topic — and Genachowski’s comments hinted that the FCC might attempt to impose certain Net neutrality guidelines and not others. Service providers have been most concerned about guidelines that would limit their ability to manage Internet traffic or to offer differentiated classes of service — and they may be at least somewhat encouraged by Genachowski’s comment that FCC policies
should not include “constraining reasonable network management practices of broadband providers or stifling new business models or managed services that are pro-consumer and foster innovation and competition.”

He suggested, however, that service providers might have to inform consumers about their network management practices, commenting that the FCC would be able to implement policies “protecting consumers and promoting competition by ensuring transparency regarding broadband access services.” He also made a comment, however, that the FCC would be able to make policies “preserving the free and open Internet” — which could open the door to broader policy moves.

Wireless providers will be pleased to learn that Genachowski recommended a lighter regulatory touch toward them, noting that FCC policies “should recognize and accommodate differences between management of wired networks and wireless networks, including the unique congestion issues posed by spectrum-based communications.”

Internet content companies such as Google also will be happy because the FCC does not plan to regulate aspects of the Internet in which those companies are involved.

The FCC’s authority to implement Net neutrality guidelines was called into question by the Supreme Court’s recent Comcast decision, and stakeholders have speculated about what approach the FCC might take to establish, or some would say re-establish, its authority. Genachowski called his recommendation a “third way,” which he said would be preferable to two other alternatives that have been proposed, including reclassifying the entire broadband connection, including its content, as a telecommunications service or attempting to establish the FCC’s “ancillary” authority over some aspects of broadband.

Reclassifying the entire broadband connection would entail too many regulations, while the ancillary authority approach would have a serious risk of failure in court, Genachowski said.
Genachowski added that he would ask other FCC commissioners to join him soon in launching a public process seeking comment on the “third way” approach.

Two influential industry analysts, including Craig Moffett of Bernstein Research and Rebecca Arbogast of Stifel Nicolaus, questioned whether the FCC would be able to legally forbear from enforcing certain Title II provisions and not others. In a report issued yesterday when rumors of Genachowski’s impending move were circulating, Moffett said, “forbearance can, in theory, be reversed at any time, making it unclear how long this forbearance will obtain.”

In a report issued today, Arbogast argued that the guidelines are not as bad for service providers as might be expected. Nevertheless she said she believes the telcos and cable companies will challenge the proposed moves — and statements issued by several service providers and service provider organizations today support that view

A statement issued today by Tom Tauke, executive vice president of public affairs, policy and communications for Verizon, confirmed that view, arguing that Genachowski’s proposal could harm consumers and inhibit innovation and investment. “In enacting the 1996 Telecommunications Act, Congress intentionally excluded Internet services, like broadband Internet access, from the scope of Title II’s regulatory burdens,” Tauke said. “Those regulations were designed for different services delivered by different networks in different times. We believe that the chairman’s stated approach is legally unsupported.”

Jim Cicconi, senior executive vice president of external and legislative affairs for AT&T, posed a similar argument. “Congress has never given the FCC explicit authority to regulate the Internet under Title II,” Cicconi said. “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.” 

And Kyle McSlarrow, president and CEO of the National Cable & Telecommunications Association, argued that: “Nothing has occurred either in the marketplace or in broadband technology to change the fact that our broadband services are ‘information services,’ and not ‘telecommunications services.’ ... We will continue to make the case that the better course is to develop a solution that reflects the longstanding and bipartisan view that all components of the Internet should be subject at most to limited regulation under Title I.”