Faster Forward: What's next for FCC authority?

By Rob Pegoraro
Wednesday, April 7, 2010; 3:23 PM

The Federal Communications Commission saw most of its authority to regulate Internet access sawed off by a federal court decision yesterday. Now what?

As my colleague Cecilia Kang explains in a front-page story today, the U.S. Court of Appeals for the D.C. Circuit ruled unanimously that the FCC exceeded its mandate when it cracked down on Comcast for interfering with customers' access to some lawful Internet services.

The 36-page ruling (PDF) rejects the FCC's argument that it derived "ancillary" authority to regulate Comcast's network management from its congressional mandate to "make available ... a rapid, efficient, Nation-wide, and world-wide wire and radio communication service with adequate facilities at reasonable charges." Although the FCC advanced several different arguments in support of that, the court cast them all aside, commenting acidly that one line of reasoning "would virtually free the Commission from its congressional tether."

This ruling not only vacates the FCC's action against Comcast (although the Philadelphia cable firm says it no longer targets particular services or sites when coping with heavy Internet traffic and reiterated that stance yesterday). It also knocks the legs out from underneath the network-neutrality proposals FCC Chairman Julius Genachowski outlined last September.

In other words, if your Internet provider serves up something less than the full Internet, there's nothing the FCC can do about it except strenuously object.

That's an unsettling conclusion. But although I'm not sure I agree with every argument in the court ruling, I understand and respect its overall principle. FCC overreach is a serious risk -- five years ago, I cheered a court ruling that vacated the loathsome "broadcast flag" copy-control regulations passed by an earlier FCC.

Here's the problem, though. The primary argument against FCC regulations -- against government regulations of any sort -- is "the market will settle this." But that assumes healthy competition, which many people don't have. As the FCC's own research established, 78 percent of American households have access to only two land-based broadband providers, and 13 percent have only one option. Just 4 percent can pick from three different broadband services.

Yet the same FCC broadband plan that cited those dismal statistics offers few proposals to increase customer choice anytime soon, as I noted in a critical column last month. And most of the proposals that could increase customer choice -- such as "open access" rules adopted by many other countries that require broadband carriers to resell their capacity at wholesale rates -- would themselves get knocked out by this ruling's logic.

In a blog post this morning, Cecilia notes three possible next steps for the FCC. The commission could appeal the court's ruling -- but that might only prolong the inevitable. It could wait for Congress to pass a law explicitly authorizing it to write net-neutrality regulations -- though that would require Congress to agree and act, which seems to be a problem these days.

Or -- and here's where things could get interesting -- the FCC could move on its own to reclassify Internet providers as "Title II" common-carrier services, just like phone carriers. (Congress has lent the FCC different degrees of regulatory authority in different areas; for example, Title III of the Communications Act of 1934, as amended, covers radio services and Title V addresses cable companies. There is no title governing Internet access.) Statements released after the ruling by FCC commissioners Mignon Clyburn and Michael J. Copps backed that idea, while their colleagues Robert M. McDowell and Meredith A. Baker rejected it. (All links in previous sentence are PDF files; sorry, that's how the FCC site works.)

Lesser measures might solve this problem in the short run; for example, you could still bring a false-advertising case against Internet providers for not disclosing bandwidth caps or access restrictions, as this post on the Techdirt policy blog suggested yesterday. The FCC and other government bodies also have a decent track record at using public shaming to get telecom firms to change their act ... well, in particularly egregious cases.

In the long term, a Title II reclassification would have some logic and precedent on its side; phone companies' digital-subscriber-line connections fell into that category until the FCC reclassified them as "information services" in 2005. But that move would drive telecom firms crazy, subject the commission to a storm of lobbying, and could also bring jurisdictional and regulatory issues of its own.

Doing nothing, however, is not an option. When a broadband Internet connection can so easily substitute for wired phone service (or, with a greater degree of difficulty, for your TV service), it makes less and less sense to apply different regulations to one and the other. Either we should impose the same -- and, it's to be hoped, the simplest possible -- rules on land-based Internet and phone services, or we should deregulate both and hope for the best.

The history of telecom firms gives reason to worry about the second course of action; the history of unanticipated consequences of new government rules gives reason to doubt the first. But that's where the court's ruling leaves matters. And that's why Comcast may yet regret picking this fight.

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