Summer Storms Over the Potomac

Guest Room

Summer Storms Over the Potomac

By TMCnet Special Guest
Laura Phillips
  |  August 01, 2010

This article originally appeared in the August 2010 issue of INTERNET TELEPHONY.

In the spring the Federal Communications Commission announced an ambitious National Broadband Plan. While much in that plan to bring pervasive high-speed broadband to nearly everyone in the United States depended upon the actions of executive branch agencies, state and local governments and even private actors, the FCC (News - Alert) assumed at the time it adopted the plan’s main principles that it possessed rules of the road authority over facilities-based broadband Internet access providers. The FCC also assumed it had the authority to impose net neutrality and other policies in support of the National Broadband Plan.

The FCC in 2005 regarded classified broadband Internet access as an information service and effectively deregulated it, declaring that henceforth the agency would regulate only as necessary under its Title I ancillary authority provided to it under the Communications Act. In a companion policy statement, the FCC espoused several general principles of good behavior it would expect of market participants. Then came the D.C. Circuit’s stinging rebuke of this use of Title I authority in the form of the Comcast (News - Alert) v. FCC opinion issued in April. Suddenly the FCC’s leadership was left with serious questions about the basis for its authority to require, for example, facilities-based Internet access providers to stop blocking peer-to-peer or other applications run over their platforms or to engage in business behaviors that might be considered privately beneficial, but potentially publicly detrimental. 

It did not take long for the FCC to regroup. Within weeks, Chairman Julius Genachowski (News - Alert) and his general counsel, Austin Schlick, began a public dialogue on what they termed to be a “third way” to reassert a more traditional form of regulation over the transport and connectivity elements of any facilities-based broadband Internet access provider. Since the Comcast case rejected the FCC’s reliance on its Title I ancillary jurisdiction under the Act as a legitimate basis for regulation, the next best option to retain more or less the status quo, according to the chairman, was to reassert the Title II, telecommunications services classification for the transport/connectivity element of broadband access – not the monopoly or duopoly price and terms regulation structure of old Title II, but an updated, savvy forbearance from unnecessary regulation.

Despite vigorous dissents from the two Republican commissioners who view this proposal as upsetting the status quo, the FCC on June 17 voted to issue a Notice of Inquiry seeking comment on possible reinterpretations of the agency’s legal authority over facilities-based broadband access. While Commissioners Baker and McDowell noted as some consolation that one of the options contained in the NOI is to use elements of Title II as a basis for continuing to assert ancillary jurisdiction, they objected to the alternative proposal to assert Title II jurisdiction while applying statutory forbearance on all but the “core” Sections 201, 202, 208 and 254 of the Act to ensure adequate universal service, competition and consumer protections.

As part of making the case for the third way, the NOI cites the wireless industry as a prime example of a lightly regulated telecommunications provider that has prospered despite living under a partially deregulated federal scheme, suggesting that similar light regulation of the transport/connectivity portion of the broadband Internet offering to the public would not be onerous and would pave the way forward to achieve other elements of The National Broadband Plan.

As the NOI was widely anticipated, many commentators warned already of the potential for creeping regulation and market uncertainty that a reassertion of even of core Title II provisions might bring. While the NOI contains assurances that Internet content and applications would remain generally unregulated under the third way and seeks comment on many issues related to regulatory reclassification, that assurance does not mollify critics. The very rapid comment cycle (July 15 for comments, August 12 for replies) strongly suggests that the chairman intends to move quickly to reach a conclusion by fall. Mid-term elections and Congressional politics could well be playing a role in this timing. For those expecting a Notice of Proposed Rulemaking and years of wrangling over details, the chairman and his general counsel have stated that this process is an interpretation of regulatory classification that does not require the formality of rule making public notice and comment prior to an FCC vote. 

It could be a stormy summer around the Potomac for those who view this fight as pivotal to decisions about broadband investment, future competition and the fate of net neutrality.

Laura Phillips is a partner with Drinker, Biddle & Reath LLP (

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Edited by Stefania Viscusi