How the FCC Plans to Regulate Broadband

The Federal Communications Commission today laid out its plan for solidifying its authority to regulate broadband after an appeals court seemingly neutered it by ruling that the FCC didn’t have the authority to censure Comcast (s cmcsa) for throttling P2P files. The plan — laid out in two statements from FCC Chairman Julius Genachowski and its general counsel, Austin Schlick, respectively — seeks to define high-speed Internet access as a (heavily regulated) telecommunications service under Title II of the Telecommunications Act, but would also exempt it from many of the more onerous telecom rules, such as those that would enable the agency to set the rates that ISPs can charge.

The FCC is trying to walk the line between a heavy-handed regulatory approach that could theoretically lead to the agency mandating that ISPs open up their pipes, and a hands-off approach that could lead to ISPs violating net neutrality rules with impunity. Genachowski in his statement said:

[T]his approach would restore the status quo. It would not change the range of obligations that broadband access service providers faced pre-Comcast. It would not give the FCC greater authority than the Commission was understood to have pre-Comcast. And it would not change established policy understandings at the FCC, such as the existing approach to unbundling or the practice of not regulating broadband prices or pricing structures. It would merely restore the longstanding deregulatory—as opposed to “no-regulatory” or “over-regulatory”—compact.

So here’s how the process will work. As I laid out in a GigaOM Pro piece in mid-April (sub req’d), the FCC is going to reclassify high-speed Internet access — the transport of the bits — as a Title II service, which would make it subject to heavier authority from the agency than it is under its current classification. However, so as not to overregulate, the FCC will exempt the high-speed access component from some of the Title II regulations. As its general counsel said in a statement:

This course would also sync up the Commission’s legal approach with its policy of (i) keeping the Internet unregulated while (ii) exercising some supervision of access connections. The provisions of Title II would apply solely to the transmission component of broadband access service, while the information component would be subject to, at most, whatever ancillary jurisdiction may exist under Title I.

The agency will then issue a request for comments (likely through a Notice of Inquiry) on its plan, which means we’ll have to wait a few months before they’re read and responded to and the FCC issues an ruling saying that it has in fact reclassified broadband under Title II.

As part of that process, a separate procedure over which aspects of Title II regulation that the FCC will exempt from its authority, or forbear from regulating, will occur. That will be kicked off with a Notice of Proposed Forbearance, which will be issued at the same time as the Notice of Inquiry on reclassification. There are 48 provisions that apply to Title II services, but Schlick estimates that applying just six of them to high-speed Internet access would create the regulatory authority the FCC is seeking. The six the FCC would keep as part of its authority over broadband are:

  • Sections 201, 202, and 208: These provisions collectively forbid unreasonable denials of service and other unjust practices, and allow the Commission to enforce their prohibition. This is pretty much what the net neutrality docket is trying to codify, and the major ISPs have made clear they agree in principle that such practices are bad. They don’t agree that the FCC should be in charge of that effort, though, as seen in the net neutrality filings.
  • Section 254: Keeping this section makes it possible for the FCC to reform the Universal Service Fund to pay for broadband access. It requires the Commission to pursue policies that promote universal service goals including “access to advanced telecommunications and information services…in all regions of the Nation.” However, major ISPs have proposed alternative methods to reform the USF that don’t involve placing high-speed Internet access back under the Title II classification.
  • Section 222: Title II requires providers of telecommunications services to protect the confidential information they receive in the course of doing so. Applying this to broadband access would require that ISPs continue to keep the information on broadband customers confidential.
  • Section 255: This provision ensures that ISPs make their services and equipment accessible to individuals with disabilities unless doing so is not reasonably achievable.

Already the ISPs and consumer groups are weighing in with their opinions, which range from Comcast’s “disappointment” that the FCC couldn’t work things out while keeping broadband under the Title I classification to Public Knowledge’s praise of the action, with the caveat that it wishes the FCC would retain the authority to force ISPs to open their networks.

Soon after the original court decision I explained how Comcast’s court victory might come back to haunt ISPs by forcing the agency to reclassify broadband and subject them to greater regulatory oversight. There will be fierce debate throughout this process and undoubtedly lawsuits challenging the order after it’s complete. But action needed to be taken so the FCC could continue with its plans to codify net neutrality and implement portions of the National Broadband plan without having to kowtow to the ISPs at every turn. All in all, the process the FCC is proposing is a moderate one, although I worry that might mean the FCC has left itself little room to negotiate with the ISPs.

More than being consumer-oriented, I think of the current Commission as being Internet- and startup-oriented. In most cases consumers benefit from Genachowski’s efforts, but he’s not going to push the ISPs very far, either, which is why open access isn’t even on the table in the National Broadband plan, and why the FCC resorts to sending letters as a means to get carriers to change their business practices rather than forceful actions. So this “third way” on reclassifying broadband is par for the course with Genachowski’s FCC. I just hope he can stay the course.

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