Cable Tees Off on FCC's 'Third Way' Proposal

The cable industry's two main lobbying arms took swings at the Federal Communications Commission (FCC) 's proposed "Third Way" for reclassifying broadband services, with the largest of the two, the National Cable & Telecommunications Association (NCTA) , arguing that the basic underpinnings of the idea are "fundamentally flawed" and would likely be overturned in court.

The FCC, in a 3-2 vote, opened a formal Notice of Inquiry (NOI) into the matter in June, asking for help as the agency aims to reestablish its authority on broadband rules and policies. The FCC is taking this step because some at the agency, including chairman Julius Genachowski and commissioner Michael J. Copps, believe the Commission's authority and National Broadband Plan was put in jeopardy after a court overturned an earlier FCC order against Comcast Corp. (Nasdaq: CMCSA, CMCSK) over the MSO's earlier treatment of some peer-to-peer Internet traffic. (See FCC Looks to Reclaim Its Broadband Mojo , FCC Declares War on Broadband , Net Neutrality Ruling: FCC Loses, Comcast Wins, and The National Broadband Plan.)

"We need to reclaim our authority," Copps said at the time.

The FCC hasn't issued a formal rule-making procedure on the creation of a new framework for broadband rules, but the NOI is looking for several options that the agency might pursue. However, three possibilities already have been outlined:

  • Title I: Retaining status quo classification that defines cable modem service as an information service.

  • Title II: Changing broadband classification into a full-blown telecommunications service that would be subject to stricter rules.

  • "Third Way": A proposal championed by Genachowski that would apply only the "transmission component" of broadband services, including things such as denial of service and protection of privacy. Third Way, as described, would steer clear of elements such as install rate regulations or network unbundling requirements, and be closely modeled on how the FCC has regulated the mobile phone industry. (See Third Way or Third Rail?)

Applying full Title II rules are sometimes referred to as the "nuclear option." Those in favor of Third Way think it gives the FCC the authority it needs to be effective without having to wield a heavy regulatory hand. Others argue that the option would open the door to broad regulations, cause market uncertainty, and stymie network investments by broadband ISPs. (See Did the Market Overreact? .)

No way on Third Way
The NCTA said it accepts the FCC's intent to create a "legally sustainable" light touch on broadband service regulations, but believes "that the [Third Way] proposal's underlying assumptions are fundamentally flawed. [A] regulatory about-face would likely be reversed in court, and even if implemented exactly as proposed, would not come close to the 'light' regulatory touch that exists today."

Using history partly as its guide, the NCTA is for the status quo, noting that the Commission has examined the matter five times (in 1998, 2002, 2005, 2006, and 2007) and come to the same conclusion -- that cable modem service should be classified under Title I. The classification, the NCTA pointed out, was also affirmed by the Supreme Court in the 2002 Brand X decision.

On that point, the NCTA argued that "nothing material" has changed about broadband Internet access that would now justify a reversal or change in how broadband services are classified in the FCC's eyes.

In the dark
The NCTA also questioned whether the FCC would be able to forebear (not enforce) some of the heavier-handed Title II provisions under the Third Way proposal, claiming that the FCC has yet to offer clear definitions on the matter.

The American Cable Association (ACA) , an organization that represents nearly 900 independent cable ops, echoed that opinion in its comments, urging the FCC to delay the effective date of any reclassification ruling until the Commission can establish the substance of the Title II regulations that it will require carriers to follow.

The ACA also reminded the FCC that it can't proceed with a "self-styled" Third Way approach without first conducting a formal rule-making and complying with the Regulatory Flexibility Act (RFA), which requires the Commission to quantify the burdens reclassification would have on small operators and what steps the agency could take to improve those burdens.

"As it is, the FCC has left ACA and its members in the dark about the precise extent of the new regulatory burdens associated with common carrier status for broadband Internet services, and this uncertainty affects both operations and investment incentives," ACA president and CEO Matthew Polka said.

Thursday (July 15) was the deadline for the first round of NOI comments. Reply comments are due by August 12.

— Jeff Baumgartner, Site Editor, Light Reading Cable

Jeff Baumgartner 12/5/2012 | 4:29:43 PM
re: Cable Tees Off on FCC's 'Third Way' Proposal

Cable, by the way, wasn't the only carrier-side industry that's not hot on Third Way.  This round up notes that Verizon also thought it would boost regulatory uncertainty and signify a "return to the old way of antiquated common carriage regulation that was developed in the 1800s for monopoly transportation and utility services.”

AT&T also thinks it's unnecessary, calling on Congress, not the FCC, to update the Communications Act.

Advocacy groups such as Free Press that are in favor of Third Way reclassification think it will withstand court review.  Like the NCTA, Free Press invoked the Brand X decision, but argued that it granted the Commission the authority to determine how broadband policies are classified.

Also, the majority of responses from citizens, with many using pre-cooked form letters, want reclassification. JB

fgoldstein 12/5/2012 | 4:29:39 PM
re: Cable Tees Off on FCC's 'Third Way' Proposal

The FCC was trying very hard to avoid making their intentions clear.  The so-called "Third Way" was built on a lie.  It was supposedly exercising their right to regulate trnsmission for the sole purpose of regulating content!

Before 2005, ILEC transmission was regulated.  Hence there was always a choice of ISPs, if you could get DSL from the ILEC.   Cable and WISPs were never regulated. The ILECs got a false equivalence made, and had their regulatory status lowered to non-common carrier.  So they pretend that the basic doctrine of common carriage is obsolete.  Funny; the Bill of Rights is even older than CA34.  Do they want to throw that one out too?

Under "Third Way', transmission remains vertically integrated with routing and other higher-level computing functions.  It claims to regulate transmission solely to create a "nexus" to Title II, to meet one court objection to the overturned Comcast Order.  Oh, and it applies USF taxation to more things, like WISPs, DSL, and cable modems.  So a WISP can be taxed to subsidize the ILEC who competes with it, and who will be relieved of their current common carrier obligations (needed to get USF money, but won't be under the FCC's Broadband Plan.).  ISPs will still not be able to rent ILEC DSL.  So the transmission itself is not regulated.  Computing is to be regulated based on the fact that it uses transmission and thus has a nexus.

I explained this in more detail in my Ionary Consulting comment in this docket (10-127), but it's hard to find any real Comments because of the thousands of spams put in by FreePress and one other pressure group that I forget.  Spamming ECFS should be prohibited.  Maybe the FCC needs to put in a CAPTCHA or something.

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