Genachowski Says Net Neutrality Order ‘Just Right,’ Doesn’t Cover Comcast-Level 3 Spat

The agency “acted to bring some resolution and certainty,” FCC Chairman Julius Genachowski said. He said the order found a balance that was “just right.” Clear rules were needed to encourage investment, said Commissioner Mignon Clyburn. But Republican Commissioner Robert McDowell said the order “creates a lot of confusion in the marketplace.” Commissioner Meredith Baker said, “We would all love certainty,” but only congressional action can create certainty. “The certainty is actually more uncertainty with the rule we adopted,” she said.

The FCC isn’t intervening in the dispute between Level 3 and Comcast over peering of traffic between the two companies’ networks, Genachowski said. The net neutrality order stated it doesn’t change anything with respect to peering arrangements, he said. “It applies to Internet access service provided to consumers and small businesses.” The Comcast-Level 3 fight is “a commercial dispute,” he said. Genachowski said he hopes “those parties settle it and resolve, but it’s not something that we have facts and data on."

House Republicans have flashed several weapons to kill the order, including amendments to the Continuing Resolution, two pieces of legislation and the Congressional Review Act process. But Subcommittee Ranking Member Anna Eshoo, D-Calif., said those and legal challenges against the order “will inevitably create market uncertainty and delay future innovation in broadband technology.” Not surprisingly, FCC Democrats said they opposed overturning the net neutrality order via the Congressional Review Act. Baker and McDowell wouldn’t give a full endorsement, but noted they dissented from the order and would defer to Congress.

Genachowski believes the order will hold up in court, he said: “It’s consistent with the Communications Act, with Supreme Court precedent in this area, and with the D.C. Circuit Comcast decision last spring.” McDowell said he thinks it will fail. The FCC decision was a “Title II order in disguise,” and consumers already were protected by antitrust laws, he said. Commissioner Michael Copps said he wanted to strengthen net neutrality rules by reclassifying broadband under Title II of the Communications Act. “The Title I road that we went down has a substantially better chance in court” than the Comcast order that was rejected by the D.C. Circuit U.S. Court of Appeals in April, Copps said: “But my best reading of the statute and the legislative history and the court decisions is that this belongs within Title II.”

Comcast agreed to comply with the net neutrality rules in a voluntary commitment for its purchase of control in NBC Universal, which the commission approved last month, with Copps dissenting. Eshoo asked why the cable company would do that if the rules were bad. McDowell replied that Comcast was “desperate to get their merger done” and cut a deal with the chairman’s office. Comcast declined to comment. Company officials said Comcast worked with all five commissioners’ offices to get final approval.

An FCC official later sought to “clear up any misconceptions” from testimony during the hearing, noting that complying with the net neutrality order was a condition of Comcast-NBC Universal. “It was made a condition as result of the approval or concurrences of the chairman and three commissioners,” the official said. “Only one commissioner dissented, and therefore the open Internet condition is fully enforceable by the” FCC, the person said. “Contrary to the claim made by Commissioner McDowell, there was no ’side deal’ made between the chairman and the applicants. The process was conducted in a full and fair manner, and we are pleased that Commissioner McDowell, on his [own] will, voted in favor of the transaction with all conditions.” Copps voted against the deal.

The GOP’s main concern is that the FCC issued rules without authority from Congress, said Rep. Lee Terry, R-Neb. House Communications Subcommittee Chairman Greg Walden, R-Ore., said the regulator seems to think that “its authority is bounded only by its imagination.” If the net neutrality order is “left unchallenged, this claim of authority would allow the FCC to regulate any matter it discussed in the National Broadband Plan.” Committee Chairman Fred Upton, R-Mich., said the order is part of “a troubling trend” at the agency. “Rather than serving as an impartial expert and authority, the commission seems to be advancing a policy agenda of its own -- often, by twisting the arms of those who come before it."

Committee Democrats said the FCC actually showed restraint in the order. The commission adopted a “light-touch” compromise that AT&T and Comcast -- two of the biggest ISPs -- have supported, Eshoo said. The rules “are not perfect,” but “an important step forward,” she said. Net neutrality “rules of the road” were needed to protect consumers, said Committee Ranking Member Henry Waxman, D-Calif. “No regulation means less freedom for the consumers."

Rep. Joe Barton, R-Texas, sharply disagreed with Waxman. It’s “Orwellian in the extreme” to say that regulations can’t take away individual freedom, he said. The current FCC may have no intention of imposing price controls, but the order opens the door for a future commission to do so, he said.

Several committee Republicans asked why the order lacked a market analysis. McDowell said previous analyses didn’t find failures in the market. But Genachowski said that while there was no market power finding, the commission’s order contained an “extensive” market analysis based on comments from “market participants, economists and others.”