ISPs Warn FCC Might be Working Without Net on ‘Third Way’
The FCC will have to be lithe as a circus performer to pull off Chairman Julius Genachowski’s so-called “third way” for regulating broadband, said officials from industry and a free-market think tank at a Progress & Freedom Foundation event Friday morning. And the approach would create significant market uncertainty if applied, they said. Genachowski revealed his plan to seal the commission’s broadband Internet authority on Thursday (CD May 7 p1).
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The commission must do “contortions” to reclassify broadband under Title II while applying only certain parts, said USTelecom CEO Walter McCormick. The FCC will have to “torture” the Communications Act “to make it fit the Internet,” agreed Link Hoewing, Verizon Internet and technology assistant vice president. Breaking a “transport” piece out of Internet services will be one of the toughest tasks, both said.
It’s a regulatory “high-wire act” that Genachowski is attempting, said Barbara Esbin, PFF senior fellow. The commission wants to declare “markets to be insufficiently competitive so it can regulate, but sufficiently competitive so that it can refrain from regulating,” she said. Peeling away certain aspects of Title II may not be so easy because the FCC must first satisfy the statutory requirements for forbearance on each unwanted regulation, she said. The three-pronged test forces the FCC to prove that the regulation isn’t in the public interest, isn’t required to protect consumers, and isn’t needed to prevent charges and practices that are unjustly or unreasonably discriminatory. Complications related to preempting state jursidiction could also arise, she said.
Businesses will suffer from market uncertainty created by the chairman’s planned approach, said Verizon and USTelecom executives. “The uncertainty that has been unleashed by the FCC launching this proceeding” has stymied market analysts and undermined “any momentum the commission had with regard to the larger National Broadband Plan, because now everyone is fixated on this debate,” said McCormick. The uncertainty isn’t limited to ISPs and could spread to other companies in the Internet ecosystem, said Hoewing.
But doing nothing may have created greater uncertainty, countered Michael Calabrese, New America Foundation vice president. Without a concrete legal foundation the FCC likely would struggle to make regulations that hold up in court, he said. The “third way” approach at least restores the status quo upset by the Comcast decision in the U.S. Court of Appeals for the D.C. Circuit, he said.
The right approach is for Congress to rewrite telecom laws, said ISP officials. A “new policy framework” is needed, said Hoewing. It’s time “to set new goals,” agreed McCormick: “We think that the action that was taken yesterday was without statutory authorization” and the planned approach has nothing to do “with what consumers really expect with regard to the Internet."
Hoewing and McCormick were optimistic a telecom law overhaul could happen in the next three to five years. The conversation has begun, and there’s a “very clear” need to cement the FCC’s jurisdiction, McCormick said. There’s “more consensus than people think,” as shown by Verizon’s recent joint statement with Google, said Hoewing. But other panelists seemed less certain. Work probably will start but not finish any time soon, said Calabrese. “It depends what happens in the courts,” said Peter Pitsch, Intel associate general counsel. But more work by industry to build consensus could speed things up, he said.