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FCC chair floats 'Third Way' to regulate net

'Narrow and tailored'

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US Federal Communications Commission chairman Julius Genachowski has issued his much-anticipated response to the April federal appeals court decision that threw a spanner into the works of his net-neutrality crusade.

That decision said that the FCC had exceeded its authority when it ordered Comcast to stop choking BitTorrent and other P2P services back in 2008. According to the appeals court, the FCC does not have the authority to "regulate an Internet service provider's network management practices."

Internet pipe providers such as Comcast, Time Warner Cable, and Cablevision applauded the April decision. Pipe users such as Google and Skype - not so much. Genachowski, whose office had just released its long-awaited National Broadband Plan, found himself suddenly shorn of the range of powers he needed to implement it.

And so on Thursday, Genachowski revealed his response, a "narrow and tailored approach" to broadband regulation that will fully please neither pipe owners nor pipe users. The FCC chairman dubs his approach "The Third Way."

Genachowski contends that there is a broad national consensus that the FCC's role in internet-access regulation should be limited - but not absent. His Third Way envisions what he refers to as a light-touch approach. "Heavy-handed prescriptive regulation can chill investment and innovation," he writes, "and a do-nothing approach can leave consumers unprotected and competition unpromoted."

But the Comcast decision, Genachowski writes, makes it difficult for the FCC to do its job because it "creates serious uncertainty about the Commission’s ability ... to perform the basic oversight functions, and pursue the basic broadband-related policies, that have been long and widely thought essential and appropriate."

From his point of view, the debate over what to do about this conundrum has focused on two primary solutions. The first, named after Title I of the FCC-enabling Communications Act, would be to simply accept what has become known as the FCC's "ancillary" authority, which classifies the internet not as a telecommunications service but as an information service, a classification that gives the commission only limited powers.

The second solution, Title II, would be for the FCC to reclassify internet communications as telecommunications, thus bringing them under the same direct FCC authority as are phone companies.

"I have serious reservations about both of these approaches," Genachowski writes.

The first solution would, in his opinion, "involve a protracted, piecemeal approach" that would as likely as not result in multiple court battle - and also as likely as not ending up with the same result as the Comcast case.

The second, since it would treat internet-access providers like phone companies, would "subject the providers of broadband communications services to extensive regulations ill-suited to broadband."

And so Genachowski suggests his aforementioned "Third Way," a legal framework drawn up by FCC General Counsel Austin Schlick. In a nutshell, the Third Way is a compromise between the "ancillary" and reclassification approaches, and provides the FCC with a limited extension of regulatory powers.

The next step, Genachowski writes, will be a "public process seeking comment on this narrow and tailored approach" - but the FCC chairman didn't have to wait long for that process to begin. Of the five-person FCC board, the two Republicans, Robert McDowell and Meridith Baker, issued a joint statement (PDF) that characterizes Genachowski's approach as a "dramatic step to regulate the Internet," and which says it crosses "a regulatory Rubicon" to bring the Internet under Title II.

Which, of course, is exactly what Genachowski says his Third Way doesn't do. But McDowell and Baker apparently don't believe him, calling his proposal "a stark departure from the long-established bipartisan framework," "onerous," and "an attempt to foist burdensome rules excavated from the early-Ma Bell-monopoly era onto 21st Century networks [that] will usher in a tumultuous new age of regulatory uncertainty," pose "serious ramifications across the globe," and invite a "stinging rebuke" from the courts for "attempting to shatter the boundaries" of the commission's authority.

Comcast's VP of government communications, Sena Fitzmaurice, was more diplomatic: "While we are disappointed with the inclination not to lean in favor of Title I regulation, we are prepared to work constructively with the Commission to determine whether there is a 'third way' approach that allows the Commission to take limited but effective measures to preserve an open Internet and implement critical features of the National Broadband Plan, but does not cast the kind of regulatory cloud that would chill investment and innovation by ISPs."

Fitzmaurice also noted that "We ... appreciate the Chairman's desire to take extremes off the table and to try to develop a path to providing ISPs and others in the Internet ecosystem with clear rules of the road about what consumers expect of them, including the Commission's need to have authority to address complaints should any arise, while avoiding the elements of Title II that are destructive to our business."

While Fitzmaurice may appreciate Genachowski's desire to take extremes off the table, the FCC chairman may be hoping that the two Republicans on his panel might do the same. In any case, though, he needs only three votes on the Comission to approve his Third Way: his own, and those of his two fellow Democrats, Michael Copps and Mignon Clyburn.

And those votes are apparently in the bag. Copps issued a generally supportive statement, but noted: "Frankly, I would have preferred plain and simple Title II reclassification." Clyburn showed his hand when speaking Thursday at the New Media Entrepreneurship Conference, asking his audience: "Exactly what kind of Internet do you want going forward? One that is yours or one that is controlled, policed, and regulated by industry? For me, the choice is simple."

And that choice isn't the internet preferred by fellow commissioners McDowell and Baker. ®

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