FCC to Move Forward on Broadband Plan While Classification Debate Continues

A sharply divided FCC Thursday approved a notice of inquiry that asks a battery of questions on regulatory reclassification, particularly Chairman Julius Genachowski’s “third-way” reclassification proposal (CD June 18 p1).

"The commission has published a schedule for implementation of the broadband plan and that schedule is one that we've begun to implement this spring and will continue through the summer, generally through notices of inquiry and notices of proposed rulemaking,” Schlick said. “You really don’t have to decide on the jurisdictional foundation for the order until you do the final order. Under the schedule, those final orders are more [likely] this coming winter.” The expedited schedule the FCC has established for making a decision on reclassification “should allow us to reach the kind of legal decisions that we need to have a foundation for whatever policies we choose in early 2011,” he said.

Schlick said the FCC may skip issuance of a rulemaking notice, following up on the NOI. “That’s procedurally entirely appropriate,” he said. “If the commission does reclassify, that is not a rulemaking. It is instead an interpretation of the statute. It’s called an interpretive rule as opposed to a legislative rule. Because it’s an interpretive rule the notice of proposed rulemaking procedure doesn’t apply. That applies when we're making the law. Likewise forbearance is not a rulemaking proceeding at the commission. We do not change our rules when we forbear. So we could go directly from a notice of inquiry to an order that classifies and forbears.”

Schlick said he would welcome consensus on net neutrality but that doesn’t mean the FCC would have the kind of clear jurisdiction it’s seeking in the classification order. Unless Congress acts “we have to match the consensus to our legal authority,” he said. “If we have something that everyone agrees is a good idea, I'm assuming that someone out there would challenge it in court if we adopted it as a rule. So we would have to be sure that the legal framework that we have in place is sufficient to support it and that’s really the challenge.”

The FCC can encourage cooperation, for example through the recently announced Broadband Internet Technical Advisory Group (CD June 10 p1), but can’t require industry and special interest groups to come to the table, Schlick said. “If you're talking overseeing negotiations probably we can’t do that,” he said. “We can’t do that because there’s something called the Federal Committee Advisory Act that prevents us from forming groups to attempt to seek consensus on our behalf.”

Schlick said the FCC majority is aligned with the thinking of the chairmen of the major committees in Congress. “Consideration of legislation is entirely appropriate,” he said. “The [FCC] chairman yesterday pledged full support from the commission for Congress’ legislative efforts. But we think that we have a duty under the statutes that Congress has given us today to move forward and carry out the mandates of the Communications Act, the mandate of the Recovery Act, which calls for the National Broadband Plan."

Meanwhile, comments continue to roll in on the reclassification NOI.

Congressional action effectively blocking FCC approval of Genachowski’s reclassification proposal appears unlikely, Stifel Nicolaus said in a research note. “The FCC’s Democratic majority made it clear that it believed the status quo was problematic, and we continue to expect the agency will move toward adopting the chairman’s ’third way’ proposal to reclassify certain cable/telco broadband services under its broad Title II authority minus most telecom mandates,” Stifel Nicolaus said. “We expect vigorous debate, including over what specific Title II regulations should apply and the treatment of wireless, but we believe the FCC is likely to adopt a reclassification order unless some outside force intervenes.”

"The Democratic-led FCC’s decision to launch a Notice of Inquiry will likely continue to foster regulatory uncertainty and industry angst, though we suspect investors by now are better comprehending,” Medley Global Advisors said. “We believe the FCC will ultimately opt for a light-touch common carrier broadband framework that it likens to the regulatory regime Congress in 1993 overlaid on the wireless industry with great success."

The U.S. Chamber of Commerce was sharply critical of the reclassification proposal. “Regulating the dynamic, competitive broadband industry with rules originally designed for monopoly-era telephone service should not be an option,” the Chamber said. “The FCC is pursuing a path that jeopardizes the tremendous investment, innovation, consumer choice, and job creation evidenced in today’s broadband marketplace."

Scott Cleland, chairman of NetCompetition.org, put together a “Believe or Not” list on the NOI, based on Ripley’s Believe It or Not. “The FCC insists that its Title II reclassification effort to regulate broadband networks is not “regulating the Internet,” when the law, the Supreme Court and the FCC all define the Internet to include broadband networks!,” he said. “The FCC, an administrative agency created, funded, and overseen by Congress, completely ignored a majority of Members of Congress who wrote the FCC opposing FCC reclassification of broadband as a common carrier! The FCC plans to justify new broadband Title II regulation with some regulatory forbearance by arguing that the market facts simultaneously warrant both more, and less, broadband regulation -- at the very same time!”