Policy

Coming To Terms With Title II

5/18/2010 10:53 AM Eastern

While extremists on both sides
of the debate over whether to reclassify
high-speed Internet service under Title II
common-carrier regulations traded barbs
here last week, the tone at The Cable Show
2010 in Los Angeles was cautiously respectful,
even conciliatory.

Federal Communications Commission
chairman Julius Genachowski
and general
counsel Austin
Schlick,
who both
made appearances
at
the National Cable & Telecommunications
Association’s annual convention, promised
that rate regulation and forcing cable operators
to make their networks availabe to the
competition would not be part of any new regime
to regulate broadband transmissions
under Title II.

Even Federal Trade Commission chairman
Jon Leibowitz, an avowed advocate
of network neutrality, took aim at both the
gloom-and-doom and Pollyanna predictions
for reclassification.

In Washington, both the Democratic chairman
and ranking Republican on the House
Communications Subcommittee proposed
legislative fixes to the problem, but ones that
would take very different approaches.

In short, it was round two in the Title II
fight, with opponents respecting each other’s power and strategizing their next moves.

The battle was prompted by the FCC’s decision
two weeks ago to reclassify the transmission
portion of broadband service as a Title II
common-carrier service in order to clarify its
power to prevent the blocking of legal content
or applications, expand and codify its other
Internet-openness principles, and implement
key portions of the national broadband plan.
Billing it as a compromise, Genachowski and
Schlick promised the commission would forbear
(choose not to apply) the vast majority of
the Title II regulations.

In a public-policy panel at The Cable Show,
Schlick — who headed the legal team that
came up with the Title II reclassification proposal
— praised the industry for its “responsible
tone” in operators’ initial response to
the FCC intention to classify the broadband
business under Title II.

Schlick, who was quick to affirm the agency’s
authority, took pains to say that one of the
most critical aspects of the plan is forbearance,
which effectively allows the agency to
disregard more stringent parts of the policy,
such as rate restrictions and mandatory unbundling.

OPS REMAIN CONCERNED
But for all of the chairman’s and Schlick’s
assurances, cable operators remained concerned
— and with some reason — that reclassification leaves open the possibility for
some future commission to decide it needs
to apply rate regulations or to mandate unbundling.
Schlick conceded the possibility,
but pointed out that the commission has
never gone back on a forbearance pledge.
That would include the reign of Kevin Martin,
whose regulatory philosophy was once
summed up by National Cable & Telecommunications
Association president Kyle
McSlarrow as a vendetta.

“It has never happened, and it strikes me
as a rather difficult challenge to the commission,”
Schlick said.

Genachowski pledged that some of cable’s
key regulatory concerns with Title II were off
the table.

The caveat in all this is that the FCC is looking
to catch its flies with honey rather than vinegar,
so cable operators had no expectation that
the chairman would travel to Los Angeles and
adopt a “my way or the highway” tone. Nonetheless,
the promises of forbearing rate regulations
and unbundling were clearly encouraging
words to an industry concerned about a regulatory
chill that could decrease investment.

Last week, Sanford Bernstein analyst Craig
Moffett downgraded key cable stocks including
Comcast and Time Warner, citing the Title
II uncertainty. That came
before the chairman’s words of reassurance.

Did that change minds at Sanford Bernstein?
“The report still holds; nothing has
really changed in our view,” said a source
familiar with the analyst’s thinking.

FTC chairman Jon Leibowitz also made the
trip to Los Angeles. While his message was
mostly a cautionary tale about behavioral
advertising self-regulation, he also put in a
plug for ratcheting down the rhetoric.

While he said he remained committed to
some form of network neutrality, and backed
Genachowski’s effort, he also said he took the
cable industry at its word that it was not going to
discriminate against content or applications.

NCTA members pledged to continue to
abide by the FCC’s current Internet-openness
principles, whose underpinnings were called
into question by the BitTorrent decision.

Leibowitz said that cable-operator promise,
combined with a “paucity of obvious
network-neutrality violations,” begged a
question: “Isn’t the rhetoric on both sides a
little overheated?”

Elsewhere in his keynote speech to an advertising
session, Leibowitz said in another
context that “to ask the question is to answer
it.” That also seemed to apply in this case as
well. (One arguably overheated example
from an e-mail headline last week: “Industry
Front Group Plans Campaign of Lies.”)

While the talk in L.A. was about Title II “light,”
Congress was weighing in with its own fix.

Genachwoski and Schlick have described
their approach as a “third way,” but Rep.
Rick Boucher (D-Va.), chair of the House
Communications Subcommittee, suggested
a fourth way, an industry/advocate compromise
on openness principles that Congress
could bless in a bill, avoiding the whole Title II
fight. But given the aforementioned rhetoric,
that would be a tough slog. In the other corner
was net neutarlity reg critic Cliff Stearns
(R-Fla.), ranking Republican on the subcommittee,
who last week introduced a bill that
would require the FCC to jump through various
hoops and hurdles before reclassifying, a
process that would take years and essentially
be a poison pill to delay reregulatory eff ort.

While the bill has a half-dozen sponsors, it
was mostly a shot across the bow at the forces
of Title II reclassification, though one that was
applauded by the cable and telco industries.

CLARIFICATION

When the Speed2 broadband channel
launches on Time Warner Cable in Charlotte,
N.C., in June, it will be available to sports-tier
customers. A May 10 story said it would be
available to all subscribers who get Speed.


Mark Robichaux contributed to this report
from Los Angeles.
March