FCC Plows Ahead with Plan to Regulate Internet

Published May 6, 2010

Exactly one month after a federal court ruled the Federal Communications Commission lacks the authority to regulate the Internet, the agency’s chairman nonetheless unveiled a plan to implement his ambitious National Broadband Plan—an avenue he called a “third way.”

FCC Chairman Julius Genachowski said agency lawyers found a way for the commission to impose strict net neutrality rules on Internet service providers (ISPs) even though the April 6 Comcast v. FCC decision by the United States Circuit Court for the District of Columbia said the FCC did not have the authority to do so.

While admitting “the Comcast decision has created a serious problem,” Genachowski claims the ruling still leaves wiggle room for the FCC to regulate ISPs with what he promises will be a “light touch.”

Robert D. Atkinson, president of the Information Technology and Innovation Foundation in Washington, DC, scoffed at Genachowski’s “light touch” formulation.

“While the FCC is attempting to create a regulatory framework suitable for the ever-changing Internet ecosystem, its proposal is tantamount to going duck hunting with a cannon,” Atkinson said.

Piecemeal Title II Application

The Comcast v. FCC decision clarified broadband is an “information service” that falls under the commission’s loose “ancillary” Title I rules, not a “telecommunications service” subject to much stricter Title II authority. Any change in that status, said the court, would require explicit congressional authority.

Yet Genachowski said he took that as a cue to implement a “narrow and tailored approach” to governing ISPs. His plan would “apply only a handful of provisions of Title II that, prior to the Comcast decision, were widely believed to be within the Commission’s purview for broadband.”

In addition, to ensure the FCC’s regulations are not “heavy-handed,” the chairman says he’d erect “meaningful boundaries to guard against regulatory overreach.”

Crossing a ‘Regulatory Rubicon’

The two Republicans on the five-person commission, Robert McDowell and Meredith Baker, did not sign on to Genachowski’s proposal, characterizing it as “a journey to cross a regulatory Rubicon.”

“This proposal is disappointing and deeply concerns us. It is neither a light-touch approach nor a third way,” McDowell and Baker said in a joint statement. “Instead, it is a stark departure from the long-established bipartisan framework for addressing broadband regulation that has led to billions in investment and untold consumer opportunities.

“This proposal risks the credibility of our institution: Government agencies simply cannot create new legal powers beyond those granted by Congress,” they wrote.

Sharp Criticism of ‘Third Way’

Bartlett Cleland, director of the Institute for Policy Innovation Center for Technology Freedom in Lewisville, Texas, said Genachowski’s proposal “on its face is almost laughable” and “smacks of the response of a sore loser.”

“After losing its case in court, the FCC—responding only to the wailing of a distinct minority, out-of-the-mainstream activists—will now try to craft another way that they can still seize control of the Internet,” Cleland said.

“This misguided and harmful effort undermines the legitimate policymaking process and jeopardizes the future of broadband, job creation, and investment in the industry,” he added.

Distorting the Marketplace

Ryan Radia, associate director of Technology Studies at the Washington, DC-based Competitive Enterprise Institute, said, “The FCC’s latest attempt to expand its powers in the name of consumer protection will undermine the future of broadband and distort the communications marketplace.”

“Title II reclassification of Internet providers will yet again place the FCC in dubious legal territory, especially since today’s broadband market is as competitive as ever and growing more so all the time,” Radia said. “Competition and consumer choice come from innovation and market entry, not from regulation and reclassification.

“Reclassification paves the road for a future FCC to further subjugate the broadband market to political interference,” he added. “Worse, it erodes the very freedom and regulatory restraint that have been essential to the growth of the Internet as we know it today.”

‘A Radical Departure’

Barbara Esbin, director of the Center for Communications and Competition Policy at the Washington, DC-based Progress & Freedom Foundation, said “there is much to commend” in Genachowski’s proposal, “particularly its decision to avoid the most extreme options being foisted upon it by advocates at both ends of the spectrum.”

“The new proposals are far less intrusive, for example, than the FCC’s previously proposed ‘Open Internet’ rules, which would have prohibited even ‘just and reasonable discrimination’ in the handling of Internet traffic,” Esbin said. “Another encouraging detail is the FCC’s indication that restrictive regulation of Internet service providers’ network management practices is to be avoided.”

But Esbin disagreed with Genachowski’s claim that his plan is “a simple return to the status quo” before the Comcast decision.

“It is a radical departure for the cable industry, the largest providers of residential broadband Internet access,” she said. “Will the courts view this as reasoned decision-making, taken within the FCC’s congressionally delegated powers, or a transparent end-run around the effects of an unfavorable judicial ruling?”

‘Deeply Disappointed’

Jim Cicconi, senior executive vice president at AT&T for external and legislative affairs, said he is “deeply disappointed” with Genachowski’s proposal, and he hinted at future litigation challenging the plan by adding “this is without legal basis.”

In his May 6 announcement, Genachowski insisted the FCC will not be “regulating the Internet itself.” Cicconi doesn’t believe him.”Make no mistake,” he said.

“When it regulates the networks that comprise the Internet, the FCC is in fact, and for the first time, regulating the Internet itself. The fact remains that Congress has never given the FCC explicit authority to regulate the Internet under Title II.”

Jim Lakely ([email protected]) is co-director of the Center on the Digital Economy at The Heartland Institute and managing editor of InfoTech & Telecom News.