Third Way or Third Rail?

5:00 PM -- When it comes to net neutrality, there has never been a middle ground.

But that's what Federal Communications Commission (FCC) Chairman Julius Genachowski says the agency will now seek.

By Genachowski's definition, the "third way" of doing things means not relying on the FCC's current regulatory authority and not going full bore to reclassify broadband as a telecom service, subject to full regulation. Instead, the FCC wants only to reclassify the "transmission component of broadband access service" and to agree at the outset to rules that restrict what the FCC can regulate. (See FCC Declares War on Broadband .)

The chairman gets kudos for trying something new, but as he's about to learn, new ideas don't really fly where net neutrality is concerned.

Already, everyone has assumed their traditional positions. Net neutrality proponents are saying the "third way" is better than nothing but doesn't go far enough to protect consumers, and service providers are objecting to any new level of regulation.

Wall Street has also reacted, with cable and telecom stocks falling and Verizon Communications Inc. (NYSE: VZ)'s stock, already under pressure, hitting a 52-week low today.

The worst possible outcome for big ISPs is a prolonged period of regulatory uncertainty, but that is exactly what the "third way" proposition is likely to create. Stock prices could fall much further, which would create a ripple effect across the industry, stifling the innovation that net neutrality proponents want to enable.

It would be nice if, for once, there could be reasoned discussion of the compromise Genachowski is proposing, but that can only happen if each side agrees to give a little ground.

The big ISPs could do themselves a favor here and move quickly to work with the FCC on new rules that maintain the lightest touch possible, while meeting Genachowski's concerns for consumer protection and broadband penetration. But I suspect what we are going to see instead is massive lobbying by the big cable and telecom players on the one side and the Internet and content players on the other.

— Carol Wilson, Chief Editor, Events, Light Reading

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