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FCC Looks to Reclaim Its Broadband Mojo

The Federal Communications Commission (FCC) has opened a formal Notice of Inquiry (NOI) that will probe a handful of possible legal options the agency can pursue to help it reestablish its authority over broadband rules and policies and keep the fire under the National Broadband Plan stoked. (See FCC Declares War on Broadband .)

The FCC is looking to develop a new legal framework for broadband after its current legal approach was put in doubt when a court overturned an earlier Commission order against Comcast Corp. (Nasdaq: CMCSA, CMCSK) regarding the MSO's earlier treatment of some peer-to-peer Internet traffic. The court thought the FCC's enforcement order had gone too far by relying on its "ancillary authority" over broadband. The court opinion left the door open for the FCC to check its options. (See Net Neutrality Ruling: FCC Loses, Comcast Wins and The National Broadband Plan.)

"We need to reclaim our authority," FCC Commissioner Michael J. Copps said during today's meeting, noting that the Comcast decision puts the Commission's broadband plan "in jeopardy" and "potentially on hold."

The NOI could be followed by a formal rule-making procedure. In the meantime, the inquiry will seek comments on how existing or new legal frameworks can help the FCC reestablish its authority on broadband. It won't look to change the Commission's treatment of content distribution networks and backbone services, since they are already outside the scope of the FCC's authority over broadband. At the start, the NOI will weigh these three options, and ask for comments on other possibilities:

  • Title I: This option would maintain the status quo on cable modem service and retain its Title I classification as an information service. On this point, the FCC wants to evaluate whether keeping this classification intact would enable it to reach its policy goals when it comes to elements such as universal service, privacy, access for people with disabilities, and harmful practices by ISPs (the Comcast example).

  • Title II: This much stronger option, sometimes called the "nuclear option," would apply all Title II (telecommunications service) provisions to broadband services. The FCC wants to know about the potential consequences of this approach and how it could affect innovation and investment in broadband services.

  • "Third Way": This approach, which appears to be the most popular one heading in, is generally modeled on how cellphone services are governed today. This revised approach aims to forebear from enforcement of all of the rules found under the Title II classification. Under the FCC's initial proposal, this Third Way would apply only to the "transmission component" of broadband services, including things such as denial of service, and protection of privacy. And it wouldn’t look to install rate regulations or require MSOs to unbundle their networks. (See Third Way or Third Rail?)

    This soft-touch, "bare minimum" approach, some in the Commission hope, will offer "increased predictability" for the broadband industry and avoid a reduction in ongoing infrastructure investment.


It's not known if or when today's action will morph into a full blown rule-making procedure, but the FCC has set a July 15 deadline for initial comments on the NOI, with reply comments due by August 12.

Commissioner Copps is among those who want the FCC to have a much stronger say in how the nation's broadband policies are enforced and want the agency to seek out a stronger, more blanket approach to establish its authority rather than taking things on only when new issues emerge.

"Case-by-case inevitably becomes court case by court case," he said. "It would be death by a thousand cuts."

There haven't been many voices that are calling for a full Title II classification on broadband, and even the Third Way has had its critics.

Sanford C. Bernstein & Co. Inc. analyst Craig Moffett has noted that "forbearance can, in theory, be reversed at any time." Merrill Lynch & Co. Inc. analyst Jessica Reif Cohen thinks those fears are overblown because forbearance is difficult to overturn, noting that the FCC hasn't reversed forbearance in more than 20 years. (See Did the Market Overreact? )

Regardless, some carriers are already squawking that tighter regulations could curb future broadband investments. Earlier this week, AT&T Inc. (NYSE: T) reportedly said it might cut back U-verse-related spending if the FCC went forward with its plan to reclassify broadband.

Comcast has already expressed that it thinks the existing Title II classification is sufficient, but said it's prepared to work with the FCC on a Third Way approach so long as it does not "cast the kind of regulatory cloud that would chill investment and innovation by ISPs."

Free Press , an organization that was front and center in the Comcast-FCC case, thinks the Third Way offers a measured response to helping the Commission get back its broadband mojo.

"Based on their overheated rhetoric, the phone and cable companies would seem to prefer to keep the broken legal framework adopted by the Bush-era FCC rather than consider whether better, sounder options exist. Objecting to merely asking these questions is absurd," said Free Press policy counsel Aparna Sridhar, in a statement.

— Jeff Baumgartner, Site Editor, Light Reading Cable

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paolo.franzoi 12/5/2012 | 4:31:58 PM
re: FCC Looks to Reclaim Its Broadband Mojo

 


I guess it is time for me to write my ex-parte that requests Title II for Broadband with a demand for Universal Service.


 


seven

Jeff Baumgartner 12/5/2012 | 4:31:58 PM
re: FCC Looks to Reclaim Its Broadband Mojo

 

Not every one on the Commission was on board with the NOI, which passed 3-2. Chairman Genachowski, Commissioners Copps and Clyburn voted in favor, while Commissioners McDowell and Baker dissented.

 

McDowell, in his statement   (I ended up missing it because the FCC Web video feed blinked out), said he disagreed with the premise of the proceeding. "Not only is the idea of classifying broadband Internet access as common carriage under Title II unnecessary, already it has caused harm in the marketplace."

 

He also doesn’t believe the Comcast decision unhinges the FCC's ability to reallocate spectrum, "one of the central pillars" of the National Broadband Plan, or undermine the FCC's authority to reform the Universal Service program. 

 

Baker expressed fears that the proceeding "has been prejudged."

 

"The Chairman has publicly endorsed the so-called “Third Way” approach in the days leading up to this Notice, and I cannot support such a conclusion."

 

Genachowski, a champion of the Third Way approach, said

, the NOI is being done in an open and balanced way.

 

"The  Notice of Inquiry we adopt puts out for comment, even-handedly, several possible solutions to the challenge created by the court case—including a Title I path, a full Title II path, and a middle-ground solution—the Third Way approach that I have previously described.  The Notice also solicits new ideas. The Third Way approach was developed out of a desire to restore the status quo light-touch framework that existed prior to the court case," he said.

 

And this is just the NOI… expect the level of dissent and arguments to grow stronger during the comment process and if this does turn into a formal rulemaking proposal.   JB

 

 

theschnack 12/5/2012 | 4:31:57 PM
re: FCC Looks to Reclaim Its Broadband Mojo

"The FCC wants to know about the potential consequences of this approach and how it could affect innovation and investment in broadband services".


Right wrong or otherwise, Genachowski could start by deciding whether to be Good Frodo or Power-Mad Frodo.  Regulatory uncertainty is restraining business in many markets, broadband being the focus here.


Either decide to declare Broadband a national right as pure (and over-piped) as Vegas Casino Oxygen, or lay off, letting a free, non-coerced, transparent, market compete openly (without Federal preferences) for consumers.

paolo.franzoi 12/5/2012 | 4:31:56 PM
re: FCC Looks to Reclaim Its Broadband Mojo

 


Okay, so I am generally a free market guy.  When is this free market going to occur in broadband access and how would it happen?  There simply are not 10 providers competing or even 4.  So, the real question is not can we have a free market it is how can we effectively regulate a duopoly and get them to build out.


Those are 2 separate issues:


- If we go to common carriage, then net neutrality should not be an issue.  The issue really is oversubscription models and how we manage them.  I think we don't need to just think through Access Bit rates but application usage models and their impact on the metro network.  That might allow folks to offer differentiated levels of service at different pricing based on some standardized traffic mixes.


- We can regulate 100% availability into existance.  In reality, this is what happened with phones and has not yet happened in cable.  If you build a house, it is the law that somebody shows up to offer you phone service.  Nobody is required to offer you cable service, except where they want to.  You want to get 100% coverage, make it the law.


The reality is that the bit pipe providers don't want common carriage or universal service requirements.  Consumers don't know any better, but will be better served this way.


seven


 


PS - If you are worried about lack of investment, then make it the law.  Require the universal service to have high rates that increase over time.  If anybody looks at Comcast, Verizon, AT&T or Cox they will realize they are making plenty of money.

optodoofus 12/5/2012 | 4:31:52 PM
re: FCC Looks to Reclaim Its Broadband Mojo

"We need to reclaim our authority,"



This quote says it all.  Not "We need to do what's right for the people", but ""We need to reclaim our authority,". This makes me question their real motivation.


optodoofus

Duh! 12/5/2012 | 4:31:50 PM
re: FCC Looks to Reclaim Its Broadband Mojo

You should read this as "we need to reclaim our authority" to do the right thing for the people. 


The problem, as I've been saying all along, is first a legal problem, then a policy problem.  Comcast stripped the FCC of authority to regulate broadband, or, rather, exposed and collapsed the extremely shaky legal framework created when the Martin era FCC classified it as a Title I service. 


The policy problem is that the unresolved legal problem eliminates the FCC's capacity to consider any policy issues.  The "net neutrality" proceeding is largely theatre, effectively seeking to prohibit broadband operators from doing things that they have neither plans nor incentive to do.  On the other hand, other proceedings are also clouded by the legal issue.  In particular, the broadband speed proceeding is important not just as a consumer protection, but also as a spur to competition.   I'll also concur with Seven on Universal Service reform.  And it seems inevitable that evolution of entertainment video from the model incorporated into the video regulations into the broadband space is going to create new tussles that will require the FCC to resolve.


It is a bit surprising that there is so much opposition to reasonable regulation in broadband, after the recent experiences in the financial, mining and oil industries with the effects of excessive deregulation.

theschnack 12/5/2012 | 4:31:50 PM
re: FCC Looks to Reclaim Its Broadband Mojo

First, let's agree that wherever you see an actual monopoly or market with limited competition, it's due not to predations of "the market", but rather the regulators rigging the game in favor of a select few at the expense of others.  This "monopoly" of access providers will disappear once the favors are removed.


Now, once these favors are removed, what then, with what strings & sticks? Will the (un-invested) powers that be declare new rules that apply to how the providers should invest, where, offering what, to whom, and at what prices? Will they pony up their dictates with someone else's dollars?  Or will the regulators simply level the field in favor of no single company or segment, and let capital flow toward delivering services that people - rural or metro, business or consumer, fiber to the home or through the air - are willing to pay?


This isn't black or white. But the market has the tools to work much more rapidly, with better results. Let's find ways to make that true.


 

jepovic 12/5/2012 | 4:31:50 PM
re: FCC Looks to Reclaim Its Broadband Mojo

Allow me to get quite cynical. As all organizations, FCC want to grow in size and importance. That requires the regulator FCC to do a lot of regulation. Both of your extreme alternatives would require quite little in terms of FCC involvement. It's simply in FCC's interest to keep matters complicated and vague.

Jeff Baumgartner 12/5/2012 | 4:31:49 PM
re: FCC Looks to Reclaim Its Broadband Mojo

There was money pouring in for that third wire in the late 1990s and early 2000s, but there were far more failures than successes that came from that overbuilder era. As Duh! points out, RCN and Knology are among a fortunate two that made it out alive. IN fact, RCN did do a Ch. 11 reorg just to get its house back in order... and now it's gone private. Knology appears to be holding its own now and looking to expand using a fill-in strategy by stretching its network into underserved edges  and tries to boost its potential sub base that way.


The costs for those builds are prohibitive and the ROI anyone can expect to get is long, long term.   Although there's plenty of backhaul infrastructure required (though it can be leased/bought from existing wires) maybe the true third wire of any competitive substance will in fact be a wireless one. JB  


 


 





 

nelson3748 12/5/2012 | 4:31:49 PM
re: FCC Looks to Reclaim Its Broadband Mojo

"the effects of excessive regulation..." the financial collapse was caused by people borrowing money they could not repay; that money was loaned because of a combination of government regulation (CRA), government implied guarantees and government subsidies-- otherwise, no one would have sold mortgages to deadbeats. completely unrelated to unregulated capitalism which was not involved. you think more regulations would have prevented the deep water horizon blowout or spill? duh! indeed.


seven is right about cost, we must regulate the airwaves enough to allow the AT&Ts of the world to invest billions; however, history clearly demonstrates that, at a certain point, regulation will lead to less innovation, less investment and less capital growth in the long run. why do you think europe and japan are swirling down the toilet the last twenty years? net neutrality? so irrational and emotional that you cannot attack it intellectually, brilliant! call me mean and net neutrality stupid.

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