FCC Gets Thousands More Comments on Broadband Reclassification Plan

FCC officials say it’s unclear when a vote will be taken on a reclassification order. The commissioners remain sharply divided along party lines, the three Democrats supporting reclassification and the two Republicans opposed. Since the first comment round, the FCC made a failed run at trying to find consensus among various industry players. Google and Verizon agreed on a legislative proposal for net neutrality, which has dominated the headlines since the first reports of the pact surfaced Aug. 4.

A compromise remains possible, FCC officials said Friday. But there have been no new negotiations, even one-on-one, among those who took part in the talks at the commission. “A number of possibilities still exist, for instance a brokered consensus could emerge thus rendering commission action moot,” an agency official said. “Or the commission could delay action or have the effectiveness of an order not ripen until a point in the distant future, giving Congress more time to craft legislation."

MoveOn.Org held a rally in front of Google headquarters in Mountain View, Calif., Friday afternoon to protest the company’s agreement with Verizon. About 100 protesters showed up, Free Press said.

The Open Internet Coalition, one of the parties to the negotiations brokered by FCC Chief of Staff Eddie Lazarus, said the commission should ignore the warnings sounded by AT&T and NCTA, two of the other principals at the table. “A ’third way’ regulatory approach is a conservative regulatory option that would not automatically result in regulation of the Internet; rather, this approach would result in appropriate and needed regulation only of the essential transmission input that makes it possible for users to access the content and services available through the Internet,” OIC said. “The Commission’s proposed ’third way’ approach will not, and certainly should not, lead to Title II regulation of broadband-enabled Internet content, applications and services.” Free Press and Public Knowledge, members of the coalition, agreed in separate comments that the FCC should move forward with limited reclassification.

AT&T called reclassification “pointless,” because Title II wouldn’t authorize the FCC to adopt “extreme net neutrality rules” sought by left-leaning public interest groups. And the U.S. “can achieve all the main goals” of the broadband plan under existing authority, the carrier said. NCTA said it found “broad consensus” in initial comments “that subjecting broadband Internet service to the full regulatory weight of Title II would be a very bad idea.” The FCC should stick with Title I or get legislation from Congress, it said.

Fresh from its pact with Google, Verizon said reclassification would do even more harm if wireless were included, especially when wireless providers are “aggressively” deploying 4G networks that President Barack Obama has called critical to economic competitiveness and people’s lives. Applying common-carrier rules to wireless also would be illegal, the carrier said. “The plain language of section 332 of the Act affirmatively bars the Commission from imposing common carriage regulation on wireless broadband Internet access service."

If the FCC decides to reclassify broadband, it faces “steep, if not insurmountable, legal hurdles,” CTIA warned. “Commenters’ attempts to goad the Commission into an ends-driven Declaratory Ruling manufacture a crisis, misstate the legal authority of the Commission, flatly contradict the findings of the Commission’s National Broadband Plan, suffer from serious legal infirmities, and should be soundly rejected,” the group said. “The proper course of action, both from a legal and policy perspective, is to continue the Commission’s proven bi-partisan, market-tested, and court-approved Title I deregulation of broadband Internet access services, particularly of mobile broadband services."

CTIA and other wireless commenters said wireless is different from wireline and should not be subject to the same rules. “Contrary to the claims of a few commenters, the record demonstrates that wireless and wireline broadband Internet services are not similar services,” said T-Mobile, which took aim at comments by NCTA. “The essential input for any wireless network -- spectrum -- is a finite resource that limits providers’ ability to expand capacity,” T-Mobile said. “Communication paths are also subject to unpredictable external factors, both natural and manmade, that can create interference and reduce capacity. These challenges do not exist for wireline networks, despite attempts by some cable commenters to blur the distinction."

"Wireless network operators currently are constrained by limited spectrum availability, and wireless broadband data services are still developing,” said the CDMA Development Group. “Based on the substantial evidence to date, the CDG believes that the Commission should, with respect to mobile broadband, continue to rely on a regulatory regime under Title I to ensure the continued growth of this market.”

Wireless carriers may have network capacity constraints, but so do wireline providers, said the Independent Telephone and Telecommunications Alliance. “The same principle applies to any technology that depends upon shared resources in the last mile, but that should not exempt network providers from equivalent regulations.” Windstream added that last week’s “net neutrality ‘compromise’ … by Verizon and Google, business partners in the delivery of mobile wireless services, suffers from the same deficiencies as comments that would have the Commission regulate wired broadband but exempt wireless."

Qwest said separating wireless and wireline “will only create an additional basis for legal challenge.” CenturyLink agreed it’s “imperative that wireline and wireless broadband be treated the same, particularly at the framework level even if there may be differences in application to accommodate technological needs.” The midsize wireline carrier said “all broadband providers must play by the same rules as a matter of basic fairness and equity among consumers.” Different rules “will inevitably skew the market away from the most efficient and productive allocation of resources."

Broadband providers big and small continued to reject reclassification, urging the FCC to defer to Congress. “The Commission would be acting unlawfully if it attempted to regulate the broadband transmission component of broadband Internet access service as a ’telecommunications service’ under Title II,” said USTelecom. “Such a regulatory paradigm would violate the Administrative Procedure Act, contravene the Commission’s statutory authority, and run afoul of the Constitution.” The American Cable Association said the “third way” proposal “will have an immediate and significant economic impact on small broadband Internet service providers."

Level 3 worries that reclassification will extend to Internet-based traffic on the Internet backbone. The FCC may not “intend” to “reach that far,” but “the practical, definitional difficulties will be daunting when trying to limit reclassification to only parts of the Internet infrastructure,” the backhaul provider said. Providers “may not be able to rely on the permanence and stability of the Commission’s planned statutory forbearance.” Similarly, while not supporting reclassification, Vonage urged the commission to make clear that Title II would apply only to broadband transmission services if the FCC moves ahead.

"The unintended regulatory consequences may not stop at the U.S. border,” warned MetroPCS. “Many countries around the world take their cue from the United States when crafting their own Internet policies. … By proceeding with its reclassification proposal, the Commission may in fact provide unwelcomed support for the idea that the International Telecommunication Union, and therefore the United Nations, may properly exercise jurisdiction over the Internet internationally."

A coalition of 23 telecom manufacturers said they worry that broadband providers won’t invest, and there will be less business for equipment makers as a result. Proponents of the “third way” haven’t adequately backed up their claim that regulation wouldn’t hurt investment, they said.

But XO Communications backed Genachowski’s proposal. “There now is an extensive record demonstrating that the light-touch ‘Third Way’ framework described in the NOI would provide the greatest legal and regulatory certainty going forward, while best balancing government oversight with pro competitive, deregulatory principles, consistent with decades of FCC precedent,” said the competitive local exchange carrier. Transmission and information components of broadband “are not inextricably intertwined,” and the FCC should “promptly” declare that facilities-based providers offer a transmission service, and Internet connectivity is a telecommunications service, it said.

The National Association of State Utility Consumer Advocates said the FCC shouldn’t be surprised by comments filed by reclassification opponents. Opponents “are principally the owners of the networks, whose interest (financial and otherwise) is for those networks and the services provided over those networks to be subject to minimal regulation,” NASUCA said. “Those commenters also include various doctrinaire free-market academicians, for whom virtually any regulation is anathema and destructive of economic welfare.” NASUCA questioned assertions by carriers that they are less likely to invest in broadband should the FCC change how it is regulated. “This is not merely a self-fulfilling prophecy,” the group said. “It is more like a threat from the network owners, who do not wish to be regulated, so let it be known that if there is regulation, they will cut back or cease investment.”

NASUCA would have the FCC go further than proposed by Genachowski, suggesting instead a “way 2.5” approach. “NASUCA fully supports classification of Internet connectivity service as a Title II service, but questions whether the degree of forbearance suggested by the Commission is necessary, wise or workable."

Dish Network urged the agency to quickly assert its authority under the “third way” rather than tolerating private agreements, like Google and Verizon, that threaten “to establish a multiple-lane information highway with only one lane (the slowest lane) subject to nondiscrimination rules,” it said in its reply comments. The agency can’t afford to wait for clarification from Congress that it can properly regulate broadband access under Title II, it said. The FCC’s 2002 Cable Modem Order, which opponents of the agency’s regulation of the Internet point to, is hinged on “consumer perception” and as a result the agency may revisit the decision to “forego Title II regulation,” said Dish. The facts underlying the order have changed, since consumers “no longer rely on their access providers for many of the services the commission believed constituted the ‘offer’ of information services,” said the DBS provider.

Separate treatment of broadband access and content services would make the FCC’s regulatory framework more consistent with the 1996 Telecommunications Act, which defines an information service as an offering of a capability to make, acquire, process or make available information via telecommunications, said Dish. “When service is defined as provided ‘via’ something else, it is separate from the conduit through which it flows,” it said. The same parsing is used by other federal agencies, said Dish. For instance, rail transport on a common carrier is regulated, but the same transport isn’t regulated when provided on the basis of a negotiated contract between the carrier and the shipper, it said. Essentially, “virtually every other federal agency separates regulated and unregulated activities without viewing them as components of a single unregulated (or less regulated) service,” it said.

The FCC should continue to regulate broadband as an information service under Title I, Hughes Network Systems, Inmarsat, Intelsat, SES World Skies and Spacenet said in a joint filing. Reclassification under any Title II regime would have unintended consequences for satellite broadband providers, the companies said. Reclassification would require many Title III satellite and earth station licenses to be converted from non-common-carrier to common-carrier, triggering Communications Act provisions on foreign ownership. As a result, some licensees would need to reorganize their ownership structure or get agency approval for foreign ownership. Also, because many satellite companies use the same satellite or earth station for broadband and for other services, they would be subject to two different regulatory regimes and that would be “administratively awkward,” they said. Satellite broadband providers “need to be able to manage congestion on their spectrum-based networks” and “have no incentives to discriminate against the applications that can be accessed over their Internet service in order to favor an affiliated business,” they said. ViaSat and its subsidiary WildBlue said if the agency decides to classify wireline and wireless technologies differently, satellite broadband should be treated as a wireless service since they face many similar issues.

Some free-market-oriented groups also weighed in, urging the FCC to back off on the reclassification proposal. “The Commission’s ‘Third Way’ proposal would be harmful to broadband innovation and investment, and, lacking evidence of market failure or any pattern of consumer abuse, it makes no sense in today’s dynamic competitive market to go backwards,” said the Free State Foundation. Instead, the FCC “should work with Congress to pass a new, narrowly-circumscribed legislative framework. As a majority of U.S. House members recognize, it is preferable for Congress to enact legislation granting such express authority rather than have the Commission impose a reclassification plan so fraught with problems.”

"Expansive bureaucratic controls over broadband will hamper network innovation, disrupt needed private investment in infrastructure, and ultimately undermine job growth that is crucial to states’ economies,” said the American Legislative Exchange Council. “The Internet has thrived under existing policy that treats broadband as a lightly-regulated ‘information service.’ The Commission can point to no existing or imminent problem with the Internet that requires ending this policy, and existing Commission authority supplies ample means for the Commission to address matters such as universal service and access for persons with disabilities."

Georgia Gov. Sonny Purdue and Utah Gov. Gary Herbert, Republicans, urged FCC restraint in reply comments each filed on reclassification. “According to Connected Nation, Georgia could lose more than $3.9 billion and more than 71,000 jobs if broadband deployment is not increased,” Purdue said. “With your new proposal to regulate broadband services under Title II regulation, I fear the growth that could boost my state’s economy will be stifled. Our residents have too much to lose if the FCC decides to regulate broadband under Title II.” Herbert said “the momentum of expanding broadband must continue. Additional regulatory burdens discourage, rather than, promote additional broadband access.”