FCC Voted to Adopt Notice of Inquiry on the Framework for Broadband Internet Service

June 17, 2010

Today, the Federal Communications Commission (“FCC”) voted 3-2, along partisan lines in favor of adopting a Notice of Inquiry (“NOI”) that will begin the process of considering possible legal frameworks for reclassifying broadband Internet service, including a regulated, common-carrier component. The NOI seeks to implement new rules for enforcing network neutrality rules, redirecting phone subsidies, and implementing other pieces of the FCC’s National Broadband Plan. Comments to the NOI will be due July 15, 2010, and replies due August 12.  In the press conference following the meeting, Chairman Genachowski stated that he would not commit to a specific timeline for resolving the proceeding. 

The NOI seeks comment on three alternative, mutually exclusive approaches for asserting FCC regulatory authority over broadband Internet access service: (1) continuing to classify broadband Internet access as an integrated offering without a separate telecommunications service component under the FCC’s Title I “ancillary” authority; (2) the legal and practical consequences of reclassifying broadband access to include a Title II telecom service transmission component, with full application of common-carrier regulation; and (3) the Chairman’s “Third Way” of reclassification which includes reclassifying broadband Internet access to include a telecom service transmission component but also forbears from applying all but the core provisions of Title II in a manner similar to the regulatory framework governing the commercial mobile radio service market. 

Under the first proposal, the FCC would continue to rely primarily on its Title I ancillary authority to implement the Commission’s broadband policies, and seeks comment on whether the FCC’s ancillary authority continues to provide an adequate legal foundation. In addition, the FCC asks whether it can reform its universal service program as set forth in the Broadband Plan, to support broadband Internet service by asserting direct authority under Section 254, combined with ancillary authority under Title I. The FCC also seeks input on the best approach for ensuring privacy for broadband Internet service users under the Commission’s current information service classification; whether the FCC can exercise ancillary authority to ensure access for people with disabilities; how the FCC can ensure the security, reliability and resiliency of wired broadband Internet services; and how to address harmful practices by ISPs. 

Under the second proposal, the FCC seeks input on whether the legal and policy developments and the facts of the current broadband marketplace suggest a need to classify Internet connectivity as a telecommunications service, so as to trigger authority under Title II, and whether this approach would be consistent with the FCC’s goals of promoting innovation and investment in broadband, or if it would result in overregulation.

Under the “Third Way,” as proposed and sponsored by the FC Chairman, the FCC seeks comment on whether it should forbear under Section 10 of the Communications Act from applying all provisions of Title II other than those handful of sections that are needed to implement universal service, competition and small business opportunity, and consumer protection policies that have received broad support. The primary goals of the “Third Way” are to create net neutrality rules prohibiting broadband providers from selectively blocking Web content, to reform the Universal Service Fund, and to require broadband providers to give customers more information about the speeds and quality of service they receive.

The NOI also seeks comment on the appropriate classification of terrestrial wireless and satellite broadband Internet services and whether such classification should differ from terrestrial broadband services. The NOI makes clear that the FCC is not attempting to regulate Internet applications, or the content of Internet communications. The FCC also will not be addressing in this proceeding other Internet facilities or services that currently are lightly regulated or unregulated, such as the Internet backbone, content delivery networks, over-the-top video services, or voice-over-Internet-Protocol telephony services.

In the separate statements by the commissioners, Democratic Commissioner Copps urged the Commission to adopt regulations that do not impose “needless gatekeeper control” while simultaneously providing safeguards for consumers. Commissioner Copps stated that Title I is “too vague” to provide the FCC with a strong foundation to assert authority over broadband. In contrast, Republican Commissioner McDowell urged the FCC not to interfere with Internet management issues and voiced his disagreement with the overarching premise of proceeding. Commissioner McDowell expressed concern that imposing Title II regulations upon broadband access would chill investment and innovation; and is unnecessary for the FCC to obtain the goals set forth in the National Broadband Plan, including measures to reallocate spectrum and apply USF regulations to broadband. He urged the FCC to wait first for Congress to act in this space. In the absence of new rules, Commissioner McDowell suggested that the FCC’s Technical Advisory Group could be tasked to spotlight and manage industry misconduct. 

Democratic Commissioner Clyburn supports the Chairman’s “Third Way” and discounted the reports predicting a decrease in network investment. She noted the amount of investment and growth in the wireless market, which is subject to both Titles II and III, and urged the Commission to use the success in that market as a guide for the Commission to craft its broadband rules. Republican Commissioner Baker opposed the NOI and urged the FCC to use the existing classification of broadband, and noted that the Comcast decision does not require the FCC to revisit its broadband classification. Like Commissioner McDowell, she stated that only Congress has ability to provide FCC with clear jurisdictional footing. 

Lastly, Chairman Genachowski stated that the Comcast decision created uncertainty in a previously settled area, and that his “Third Way” approach would continue the same light touch policy towards broadband, which will encourage investment and will permit the U.S. to become a global leader in broadband services.

This is one of a series of reports by Bingham’s Telecom, Media, and Technology practice group focusing on specific aspects of the FCC’s National Broadband Plan and Net Neutrality. If you would like to receive our reports on other topics, or to consult with us about how theses proceedings may affect your business, please contact:

Andrew D. Lipman, Partner, 202.373.6033

Russell M. Blau, Partner, 202.373.6035

Ronald W. Del Sesto, Jr., Partner, 202.373.6023

This article was originally published by Bingham McCutchen LLP.