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How Should the FCC Regulate Broadband? A Roundup of ‘Third Way’ Comments

in FCC/FCC Comments/Net Neutrality/Net Neutrality Comments by

WASHINGTON July 16, 2010 - After the D.C. Circuit Court of Appeals’ decision upholding Comcast’s ability to thwart broadband traffic over the peer-to-peer file-sharing software BitTorrent, the Federal Communications Commission was faced with uncertainty in regulating broadband.

In order to give the FCC firmer ground to regulate internet services, agency Chairman Julius Genachowski announced a proposal that has been dubbed the “Third Way” between regulating and deregulating internet services.

Thursday was the deadline for comments from the public regarding the notice of inquiry which was issued in June. Consumer groups and content makers praised aspects of the “Third Way,” while internet service providers were largely opposed.

Supporters of the “Third Way” claimed that the FCC needed to reclassify broadband in order to allow for consumer protection.

Free Press, a media advocacy group, supports this reclassification, saying “a  limited Title II classification will uphold  the  commonly  shared  principles  of  universal  service,  competition,  interconnection, nondiscrimination, consumer protection, and reasoned deregulation — principles that created the Internet revolution.”

Title II refers to that portion of the Telecom Act that allows the FCC to regulate telephone companies as common carriers. Under a series of deregulatory moves in the 1990s and in the past decade, the FCC has placed internet services – as opposed to telecommunications services – under the less-regulatory framework of Title I.

These advocacy groups also contend that the “Third Way” will withstand judicial review. They cite the Supreme Court’s 2005 decision in Brand X Internet Services v. FCC decision, which granted the FCC the authority to make classification determinations.

“The  Supreme  Court  has  instructed  that  in  matters  of  administrative  policy, “change  is  not  invalidating,”  and  that  the  forces  of  change  do  not  always  or necessarily  point  in  the  direction  of  deregulation.   “Revisiting  the  classification determinations is an appropriate and much-needed exercise”

Internet telephone company Vonage supported the “Third Way.” but also said that the FCC had power under ancillary authority – or Title I – to achieve appropriate regulation of companies like Comcast.

The National Association of State Utility Consumer Advocates supported reclassification, and said that the original classification of cable services as an information service was wrong.

NARUC said that this classification “has become ever more incorrect, inadequate, and destructive of broadband progress with each passing year.”

The Ohio Public Utility supported the “Third Way,” but wanted the ability to regulate some issues at the state level, such as universal service and E911, or advanced location-based 911 services.

The main opposition to the “Third Way” came from broadband providers including Verizon Communications, AT&T and Cox Communications.

Verizon called the third way “a return to the old way of antiquated common carriage regulation that was developed in the 1800s for monopoly transportation and utility services.”

The company said that the imposition of the “Third Way” would increased regulatory uncertainty. It also warned against applying these rules to the wireless broadband market, a relatively new market.

Verizon said that the FCC does not have the legal authority to make this change. “As the Commission itself has repeatedly determined, and the Supreme Court has affirmed, retail broadband Internet access offered to consumers is an integrated ‘information service,’ not a ‘telecommunications service’ subject to common carriage regulation under Title II.”

AT&T also expressed opposition reclassifying broadband under Title II. They said:

Reclassification of those providers as Title II “common carriers” would be unnecessary to advance any valid policy objective, would present risks and harms that dwarf any putative benefits, and would all but scuttle the Administration’s ambitious broadband agenda.”

AT&T said that “there is a far better way to achieve that agenda than trying to cram today’s broadband Internet access providers into an ill-fitting 20th century regulatory silo, as the NOI’s ‘third way’ proposal would do.”

Rather, Congress should update the Communications Act to “encourage greater consumer-oriented transparency by broadband providers.”

The Institute for Policy Innovation also opposed the “Third Way.” It said that increased regulation will simply hamper innovation. Instead, it proposed the creation of “Broadband Enterprise Zones.”

“In areas designated as “Broadband Enterprise Zones” (based on broadband mapping), broadband providers would receive federal tax credits which could be used to offset the company’s overall federal tax burden. And vouchers could be issued to homeowners to pay for installation and setup within the Enterprise Zone.”

Cox Communications also opposed the reclassification on the grounds that the FCC has repeatedly determined broadband internet service as an information service.

“Those determinations were based, properly, on the service provided to the customer, a service that uses telecommunications to provide classic information service functionalities.  Attempting to change course now would be inconsistent with the facts and the law, and would have unintended consequences.”

The third set of comments assert that the FCC does not have the statuary authority to reclassify.  The National Religious Broadcasters said , that the FCC needed to wait for statutory authority from Congress.

The Communications Workers of America said that the FCC’s proposal will face years in court, and that the best solution was targeted legislation. However, they said they understand that the FCC seeks to act. They endorsed the concept of using ancillary authority under Title I.

Alcatel-Lucent said that the FCC is moving too quickly and does not have the information or the authority to reclassify broadband services. The maker of telecommunications equipment said they would like Congress to debate the issue and then come to a legislative solution.

Rahul Gaitonde has been writing for since the fall of 2009, and in May of 2010 he became Deputy Editor. He was a fellow at George Mason University’s Long Term Governance Project, a researcher at the International Center for Applied Studies in Information Technology and worked at the National Telecommunications and Information Administration. He holds a Masters of Public Policy from George Mason University, where his research focused on the economic and social benefits of broadband expansion. He has written extensively about Universal Service Fund reform, the Broadband Technology Opportunities Program and the Broadband Data Improvement Act


  1. This is a horrible idea. If the collapse of the financial industry taught us anything, it is that the government sucks at regulating anything. They couldn’t even effectively regulate the financial industry and that is the cornerstone of our society, so why would you think that they will take over regulation of ISPs and suddenly all of your problems will disappear? If that example doesn’t sit with you, how did the government respond to 9/11, Katrina, or even the Gulf oil spill?

    This is simply a chance for the government to regulate (Aka TAX) Internet services, which they have been dying to do for some time. Just wait until you start being taxed on the emails you send/receive, for posting on Facebook, or for trying to get a new recipe for meatballs. What will you think of net neutrality then? And how else do you think the government is going to pay for this initiative when they are already well over budget?

    Net neutrality laws wont even matter when ISPs are not permitted to add QoS to prioritize traffic, because nothing will work because the networks will become so congested. Good luck getting Vonage to work when your ISP cant prioritize it as Voice traffic and give it priority over the 3TB Bit Torrent transfer your neighbor has going.

    The fact is that Routing and traffic filtering is a core need in networking because as much as we do not wan to admit it, not all bits are created equal; and if the government is saying that it wants to be responsible for creating neutral route plans for every ISP in the country, then lets see them try, if it goes as smoothly as the banking regulation, you wont have to worry about slow traffic, because you wont be able to send any traffic.

    Bottom line, things have been fine as is since the inception of the Internet. The only reason this discussion came up is because people who use more bandwidth than they pay for were slowing down traffic for their neighbors so ISPs attempted to throttle the bit torrent traffic so other subscribers services werent degraded. This affects maybe .01% of Internet users, so adding intense regulation because of this is similar to grounding all air traffic because one plane runs into turbulence and crashes.

  2. To summarize my earlier post, this is simply an opportunity for government entities to get their hands on Internet traffic, so they can TAX IT!!!!!! Right now they dont have the mechanisms they need to effectively TAX Internet related things like emails, blog posts, etc… but if we give them the ability to regulate Internet, they will have to pay for that somehow, and how does the government pay for anything… with NEW TAXES!

    Think about it:
    They regulated mail delivery, then taxed it by adding the need for stamps.
    They also regulated Phone service, then taxed it.
    They tax Cell phones and Cell phone data plans.
    They want to tax health care.
    Internet services are next.

    BE CAREFUL WHAT YOU WISH FOR – Net neutrality could come with a price greater than a slight temporary decrease in download speeds, the govt charges a tax on data plans for mobile phones so it is only a matter of time before they tax all data no matter what device it originated from.

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