Genachowski Reclassification Plan Circulates as Hill Opposition Mounts

"The open Internet proceeding is about establishing basic rules of the road that would govern the Internet,” Schlick said. “The ’third way’ is about establishing a solid legal foundation for whatever policy the commission decides to adopt.”

Schlick compared those two proceedings to building a house. “One way to look at it is that the open Internet proceeding is the part of the house that represents commission policy,” he said. “The ’third way’ is about having a strong foundation for that house. What the chairman has suggested is that the ’third way’ is not at all about changing what’s in the house, what the house looks like. We're not redecorating. What we're doing is working underneath the house to be sure that whatever we do … is going to be legally sustainable in court."

Schlick was asked about industry and Wall Street concerns that the reclassification plan is the “toe in the door” that will lead to more regulation and “untold problems.” “To the extent that those concerns are founded on a belief that this is some sort of sea change from prior commission policy, I would say go back and look at our orders, go back and look at the 2002 cable modem order, go back and look at the 2005 telephone company broadband order,” Schlick said. “What will you see in both cases is an information services classification followed by a rulemaking to ask exactly the kinds of questions we're asking here.”

Schlick said the reclassification proposal for the first time draws clear lines on how broadband will be regulated. The commission “would recognize the connectivity aspect of Internet service as telecom service, keep the information component entirely unregulated and draw a cleaner line, which supports the current policy of not regulating Internet content and applications,” he said.

At the same time, the proposal makes use of the forbearance authority Congress gave the FCC in the Telecommunications Act to take the rules of Title II “down through our forbearance rulings to a minimum set of provisions that implement the policies that we believe in 2002 should have [been] applied to broadband.”

By forbearing from all but six of the 48 sections of Title II, the FCC would preserve its oversight of Universal service, privacy protections, basic consumer protections and access to the disabled, Schlick said. “The chairman believes that the use of this forbearance tool which Congress established especially to allow us to conform Title II to modern advanced services … is a way that we can tailor the requirements of Title II to this modern service,” he said.

Schlick said the reclassification proposal is critical in light of the Comcast decision. “The Comcast decision dispelled our belief that ancillary authority allowed us to simply implement the policies,” he said. “It said that ancillary authority is limited to implementing specific provisions of the Act like those found in Title II.”

The reclassification proposal asks a number of questions, said a background document from the commission. They include “whether the Commission’s ‘information service’ classification of broadband Internet service remains legally sound and adequate to support effective performance of the Commission’s responsibilities” and what the “legal and practical consequences” of applying all of Title II would be. The notice seeks comment on the appropriate classification of wireless and satellite broadband Internet services, among other issues. The FCC is sharply divided on the reclassification proposal, with Republicans Robert McDowell and Meredith Baker expressing strong opposition.

Dingell urged the FCC to abandon reclassifying broadband transport under Title II. “For both legal and policy reasons … I have strong reservations about the course the Commission is presently taking with respect to the regulation of broadband access services,” Dingell wrote in a letter Thursday to Genachowski. “I have arrived at this conclusion both as a supporter of the principle of network neutrality and as one who remembers what the Congress intended when it created the distinction between ’telecommunications services’ and ‘information services’ in the 1996 Act.

Dingell asked Genachowski to explain what has changed since a 1998 report by FCC Chairman William Kennard found telecom and information services to be mutually exclusive and later FCC decisions concluding that broadband over cable modems, DSL, and other pipes to be an information service. Congress has made no law to change the FCC’s 1998 interpretation, Dingell said. Dingell also questioned why, in justifying its approach, the FCC relied on a dissent by Justice Antonin Scalia in the Brand X case. “Please cite any other Commission decision or order that has relied so heavily upon a minority opinion in a Supreme Court case."

The FCC’s planned approach “risks reversal by the courts” and endangers “past and future investments, perhaps to the detriment of the Nation’s economic recovery and continued technological leadership,” Dingell said. It may also “paralyze more holistic regulatory efforts to keep the Internet open to consumers, advance cybersecurity, protect consumer data privacy, and ensure universal access to and deployment of broadband,” he said. The commission should instead work with the Congress on a legislative answer, he said. Dingell joins a growing number of Democrats who oppose reclassification. Earlier this week, 74 House Democrats, including senior Reps. Bobby Rush, D-Ill., and Ed Towns, D-N.Y., sent a letter condemning Genachowski’s plan.

Democratic Reps. Ed Markey, Mass., and Ana Eshoo, Calif., backed the FCC approach in a letter sent Thursday to Genachowski. “Decisive action is necessary to counter the uncertain regulatory environment” created by the Comcast ruling “and we believe that your ‘Third Way’ approach represents a tailored, commonsense path forward,” they wrote.

Schlick’s comments were followed by a panel on the proposal, highlighting the continuing disagreements over whether the FCC should even partially reclassify broadband as a Title II service.

"When Austin talks about it, of course, as general counsel, it sounds like these very dry abstractions about law,” said Harold Feld, legal director at Public Knowledge. “What’s really at stake here is, now that we all depend on the Internet, how is it going to keep growing.” The Internet is growing and could be critical to turning around the downturn in the U.S. economy, he said. “We also recognize that there are a lot of people who are not getting access to the Internet or they're not sure they getting what they've paid for and they worry about whether when you sign up for a service that you're actually going to get what you pay for and it’s going to stay dependable,” Feld said. “The question here, and what’s at stake is how do we keep all the good stuff we like and we keep it growing … and how do we avoid the things that we don’t want to see.”

Feld said industry groups argue that regulation would deter investment. “But when something really bad happens you need some clear rules, you need some clear rules of the road … to make sure that everybody knows what they're getting and everybody has a right to expect what they've paid for,” he said. The financial meltdown, the BP oil spill and recent coal-mine deaths “all stem from the same idea -- that if government just gets out of the way industry will take care of everything,” he said.

Feld is right -- the Internet is open at this point and is working well, replied Link Hoewing, Verizon assistant vice president for Internet and policy issues. “We're not arguing that there isn’t a role for government,” he added. “What we have been saying is that the role for government can’t be the old model of common carrier regulation that applied to telephone networks. … We've not been saying no role -- we've been saying an appropriate role that fits the way the Internet works and, frankly, continues to encourage investment.”

"What’s at stake in this debate is whether administrative agencies, which are created by Congress to carry out laws that Congress wrote, can simply make it up as they go along if they find that for one reason or another their identified policy goals cannot be carried out under the law as it’s written,” said Barbara Esbin, an attorney at Cinnamon Mueller. “I think that’s what the Comcast decision is all about, and as I'm listening to the general counsel’s description of the ’third way’ it strikes me that we're in the same ballpark of creative legal interpretation for an administrative agency to implement polices that it finds important regardless of whether Congress has authorized it to act on these issues in this manner.”

Esbin noted that the FCC has had a policy of regulating broadband with a light hand for 14 years. “I don’t think there are any examples on the magnitude of either the financial meltdown or the oil spill in the Gulf of failure in this marketplace that is threatening the public interest.”