Does The Internet Need A Beat Cop?

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Washington — The Federal Communications
Commission’s effort to reclassify
a portion of broadband service ran into a
major setback in the form of a cable-andtelephone
company-backed lobbying effort
to get Congress to step in instead.

Last week, House Democrats and Republicans
warned the FCC in separate letters
to halt its plan to reclassify broadband
to exert more control over Internet access.
Meanwhile, four key House Democrats announced
plans to update the Communications
Act with a new law.

Reclassifying broadband “is not something
that should be taken lightly and should not
be done without additional direction from
Congress,” said a letter from 73 House Democrats
to FCC chairman Julius Genachowski
(see Viewpoint).

Multichannel New May 31 cover story

If last week was round three in the Title
II fight, the round goes to incumbent
Internet-service providers looking to head
off common-carrier regulations applied to
broadband. Title II refers to the Communications
Act regulations for common-carrier
services like legacy phone service, meant to
ensure nondiscriminatory rates and practices
in basic telecommunications service.

Sanford Bernstein analyst Craig Moffett
called it a preference for the “surgical” strike of
legislation over the “blunt instrument” of Title
II. The likely time frame for congressional action
is months — perhaps not even this year —
as legislators prepare to head home to campaign
for re-election. The FCC’s change to a Title II regime
could take weeks to a couple of months.

Last week, Genachowski signaled that he
would schedule a vote on a notice of inquiry
and plan for forbearance at the FCC’s June

The FCC outlined its reclassification plan
with a narrow focus on discrimination of
services two weeks ago, much to the applause
of network-neutrality advocates and
some legislators (though some of that applause
was muted because they did not think
the FCC had gone far enough.)

The warning letters from legislators
from both political parties, including
former House Energy and Commerce
Committee Chairman John Dingell
— together with a call from top Democrats
to launch a rewrite of the Communications
Act and a lead editorial in the powerful
Washington Post slamming reclassification
— seemed to put the momentum in the
direction of cable and phone ISPs, and a bipartisan
push for a more deliberative legislative
response over the FCC’s plan of relatively
swift action. Calls by four top Democrats for a
rewrite of the 1996 Communications Act appeared
to be a long-term proposal not meant
to supersede the FCC.

Theoretically, in the wake of the Comcast-
BitTorrent decision, ISPs are pretty much free
to do what they want in terms of managing
their networks, according to National Cable
& Telecommunications Association president
and CEO Kyle McSlarrow. (A federal appeals
court in April vacated an FCC order concerning
how Comcast managed its network with
regard to file-sharing service BitTorrent.)

But they have pledged to hold the to the FCC’s
existing Internet guidelines and don’t plan on
going on an Internet blocking and degrading
binge, McSlarrow said, adding that such a
move wouldn’t even be in their interest.

The FCC, in effect, is saying “trust us” not
to enforce the vast majority of commonby carrier regulations under Title II authority,
including rate regulations and unbundling.
The industry is skeptical.

Meanwhile, a growing chorus in Congress
is telling the FCC not to start walking
that new Internet beat without express orders
from the boss — them.

The FCC’s light-touch approach of classifying
broadband as an information service was
a bipartisan effort, begun during the Clinton
administration under FCC chairman William
Kennard and continued under Republican
and Bush appointee Michael Powell. But
the FCC’s Internet-openness guidelines were
meant to give it the power to crack down on
anyone abusing the relative freedom Title I
classification granted them.

The April BitTorrent decision jeopardized
that enforcement power.

Scott Cleland, who heads up the industry-
backed group,
says there are already several cops
on the beat and suggested the FCC would
be one too many. “The FCC claims it needs
to be the cop on the beat to deter potential
discrimination, even though the FTC and
DOJ both have the authority to address any
anti-competitive behavior if it occurred,”
he said.

Reclassification, in Cleland’s view, would
essentially jeopardize, well, everything
about broadband. “The stakes are huge,” he
said, “because everything about broadband
and the Internet — infrastructure investment,
business models, business practices,
pricing, terms, conditions, innovation incentives
— presumes that it is unregulated and
competitively determined. Reclassification
would literally pull the rug out from under
the sector.”

Advocacy group Free Press, which has
been on the front lines of the fight for network-
neutrality regulation, suggested that
without the FCC and its Title II nightstick,
there would be nothing to prevent censorship
and anti-competitive practices.

“The phone and cable companies want to
keep the broken legal framework adopted by
the Bush administration’s FCC, which gave
away the agency’s ability to protect consumers
or promote an open, fast and aff ordable
broadband internet,” said Free Press spokeswoman
Liz Rose. “Without making this legal
fix, the phone and cable companies will
be free to censor us online, block the Web
sites we want to see, and track the Web
sites we visit without disclosing their

She agrees with Cleland in one respect:
The stakes are high. “There is
broad agreement that without clarifying
the FCC’s authority over broadband, the commission
can not implement the National Broadband
Plan and connect rural and low-income
communities up to the Internet,” she said.

Well, not exactly universal agreement. Cable
operators, through the NCTA, have repeatedly
said they think the FCC has the power to migrate
that service without any “clarifying.”

But Genachowski has said reclassifying
the transmission element of broadband under
a few, select provisions of common-carrier
regulations is necessary to ensure the
commission has the authority to implement
elements of the National Broadband
Plan — like privacy protections and subsidizing
broadband deployment via the Universal
Service Fund — as well as prevent
unreasonable network management and
enforce other elements of its Internet-openness

At a press conference about the FCC’s reclassification
effort two weeks ago, FCC
general counsel Austin Schlick would not
comment on whether that move would prevent
another Comcast/BitTorrent — where
the cable operator impeded file uploads —
but did say it would have allowed the agency
to enforce its finding against Comcast. The
U.S. Court of Appeals for the District of Columbia
Circuit ultimately threw out the decision,
because it said the agency had not
sufficiently justified the move under the
lighter regulatory touch of Title I.

“Comcast was blocking a transmission
connection for selective transmissions without
adequate notice to its customers,” he
said, “and that sort of discrimination in the
transmission function is exactly what this
approach would bring within the unreasonable
practices prohibition” under Title II.

Schlick argued that because the plan would
only reclassify the transmission element, not
the content, “a provider of Internet content
would remain just as unregulated after a reclassification as they are today.” He also said
that the FCC could be done with the reclassification — including a comment period and a
vote — within the next six to eight weeks.

But legislators in numbers too big to ignore
have been moved — by ISP lobbying muscle,
Free Press and others say — to try to put the
brakes on that effort. “The letters are a pretty
clear message that this is Congress’ prerogative,”
Cleland said. “There is a clear majority in
the House against Title II. That’s the message.”

Two weeks ago, Rep. John Boehner of
Ohio, the House Republican leader,
called the move a “job-killer” in a
letter to the chairman. And Republican
FCC commissioner Robert McDowell has
remained steadfast in his argument that
Title II is a solution in search of a problem.

“In January, the Department of Justice’s Antitrust
Division filed comments regarding the
broadband market which were downright optimistic
about [its] competitive and dynamic
future,” he told Multichannel News last week.

“Furthermore, several government investigations
have uncovered no evidence of
systemic market failure — and certainly none
that would warrant classifying Internet access
services as monopoly phone service under Title
II. Absent new Congressional directives,
any attempt to force broadband to operate under
the onerous mandates of Title II would likely
be thrown out by the appellate courts.”

But it is the Democratic pushback that has
Title II opponents talking about the will of
Congress trumping that of the FCC chairman.
Seventy-three House Democrats and
171 Republicans signed similar letters to the
commission last week that warned that reclassification
would hurt jobs and investment,
echoing arguments made by major
cable and phone companies.

“We cannot expect broadband providers
to continue investing tens of billions of
dollars a year into their networks when they
don’t know how much ability they will have
to manage and protect that investment,” Rep.
Gene Green (D-Tex.) said in releasing the letter
to the media. “This uncertainty not only
slows deployment and expansion of broadband,
it costs jobs associated with laying the
lines and connecting households.”

On the same day those letters were
released, the powerful heads of the
FCC’s oversight committees and subcommittees
announced they needed to start
revising the Communications Act, starting
with meetings with stakeholders next month.
That letter, too, was driven by concern over
the FCC’s post-BitTorrent authority, but a
source close to one of those legislators, Sen.
John Kerry (D-Mass.), the Communications
Act update is not intended to undermine the
FCC’s Title II effort.

But he also said that there would be conversations
with colleagues over the next
several days about whether short-term legislation
might be needed, as well, to buttress
the FCC’s Title II arguments. “You could do
something very narrow that would deal specifically with the questions raised by reclassification and nothing else, or you could do
something broader, or you could do both,
one quickly and then have a longer discussion
about the latter.” He said those decisions
have not yet been made.

“In essence, the FCC’s Title II reclassification
approach was a workaround in the absence
of a clear mandate from Congress,” said
Sanford Bernstein analyst Moffett in handicapping
the new developments. “The fact
that Congress is now promising to explicitly
express its will makes it more difficult for the
FCC to proceed with reclassification.”