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5/11/2010 5:13 AM Eastern

Washington — Can you be
a little bit pregnant?

The Internet-regulation version
of that question was much on the
minds of broadband network execs
after the Federal Communications
Commission said last week it was
planning to put some of the broadband
“ecosystem” under Title II
common-carrier regulations.

The FCC wants to put the transmission
element of broadband
under Title II when it comes to Internet-
access services, but leave
the content component under
the lightly regulated Title I. That,
the agency said, will allow it to
underpin its codification and expansion
of its network-neutrality
principles and to implement the
national broadband plan.

But the commission also promised
to forbear (not apply) the majority
of the 48 title II to regulations,
which apply to phone service, to
avoid what one senior FCC official
called “regulatory overreach.”

In essence, the FCC is co-opting
the dissenting voice in the
Brand X
case. That was the case
in which the Supreme Court upheld
the FCC’s classification of
broadband Internet as an information
service not subject to any
of the access regs of Title II.

In his dissent, Justice Antonin
Scalia said there was both a telecommunications
(transmission)
and an information (computing )
component that the FCC should
have to take into account. The
FCC last week agreed, but said
it was modifying that by forbearing
most of the Title II regulations
that apply to traditional
phone service.

The result was a proposal that
that was generally praised by network-
neutrality fans and prompted
strong criticism from industry
groups and the FCC’s Republican
wing as a heavy hand of regulation
on the Internet for the first time.

AT&T said the decision is without
legal basis and will hurt jobs
and investment. Verizon Communications
agreed. And National
Cable & Telecommunications
Association president Kyle McSlarrow
said the case for new Internet
regulation had not been made,
and that any reclassification would
pose “real risks” to the goals of the
FCC’s national broadband plan.

Even before the FCC officially
unveiled its proposal, Title II was
drawing criticism as a potential
disincentive to investment and
a gilt-edged invitation to, potentially,
years of litigation. On
the other side, network-neutrality
groups argued that the FCC
might be forbearing too many
consumer protections.

In any event, the process will
take months to shake out.

The FCC will first vote on a notice
of inquiry on the proposal — likely
within the next month or so — then
that will be released for comment.
After that, if the commission decides
to proceed, it will issue a declaratory
ruling that it is reclassifying the
transmission element as a Title II
service, but also a forbearance notice
spelling out the all the Title II
obligations that it will not apply.

An FCC official said last week
the commission would not reclassify
without specifically forbearing
those elements it would
consider regulatory overreach.

In fact, the commission said only
six of the 48 regulations would be needed to insure that the commission
could exercise the oversight over network
management and access it thought it had
before the court struck down its Comcast-
BitTorrent decision.

According to FCC general counsel Austin
Schlick, those six would cover: unreasonable
denials of service (the BitTorrrent complaint);
promoting universal service; protecting confidential information; and requiring accessibility
of equipment, including customer
premises equipment, to the disabled.

Schlick said what would not be included
in the third way is any new unbundling
authority, rate regulation or, likely, mandatory
access by unaffiliated ISPs to cable
modem service. “The commission has not
taken any action to implement mandatory
access to cable broadband networks,” said
Schlick, “and a consensus seems to have
developed that it should not be ordered.”

While Comcast said it was willing to
work with the FCC on whether such a third
way plan was feasible, its response was no
ringing endorsement.

Definitely in the nonendorsement category
were commission Republicans, who
slammed the decision as a disappointing
and deeply troubling act that threatened
the institution’s credibility, was in response
to no systematic failure, was a regulatory
overreach into powers not conferred by
Congress, “[T]he appellate courts are likely
to hand the Commission another stinging
rebuke for attempting to shatter the
boundaries of its statutory authority,” said
commissioners Robert McDowell and Meredith
Attwell Baker, likely previewing their
dissent when the notice comes to a vote.

“We firmly believe that the case for new
regulation of the Internet has not been
made,” said National Cable & Telecommunications
Association president Kyle
McSlarrow. “Nothing has occurred either
in the marketplace or in broadband technology
to change the fact that our broadband
services are ‘information services,’
and not ‘telecommunications services.’ ”

Schlick told reporters that had the FCC
not tried to reclassify, each of the FCC’s
orders would have been challenged and
there would be “years of issue-by-issue litigation.”
He said this approach wrapped
the jurisdictional question into a single
proceeding that he said could be completed
quickly. He said he would not be surprised
to see it wind up in court, but at least
it was only one proceeding.

He also said the FCC has a good record of
defending its forbearance authority in court.

Free Press saw things quite differently: “The
FCC has demonstrated in its national broadband
plan that the broadband marketplace
is not competitive, and that much work must
be done to ensure open, affordable, and universal
broadband access — work that would
prove impossible under a Title I framework.”

A broadband network executive who asked
not to be identified saw a crossfire of lawsuits
as the result: “Competitive local-exchange
carriers will never accept forbearance from
unbundling rules, the consumer advocates
will never accept forbearance from pricings.
We will fight the Title II piece of this. So, we
are going to end up in court and we’re not
going to know the real answer until we get
through the court of appeals. So, that cloud
of uncertainty is going to continue for the
next five years.”

Genachowski has his Democratic majority
for the move. Michael Copps supports it,
though he warned against a “forbearance
binge,” while commissioner Mignon Clyburn
called Title II reclassification “essential.”

It proved to be a roller-coaster of a week
for Internet classification.

After a report that FCC chairman Julius
Genachowski was leaning toward not
going the Title II route — the FCC would
neither confirm nor deny the report —
the chairman was branded an appeaser
by some net-neutrality proponents, and
high-profile Democratic legislators advised
him to keep the Title II-plus-forbearance
approach on the table.

It was unclear whether that initial first report
had been off the mark, or the chairman
had a change of heart. According to a source,
there were some people inside the FCC who
believed the chairman was not going to take
on the industry via the Title II route.

The FCC’s announced “third way” compromise
bore a striking resemblance to the suggested
legal underpinnings pushed by the
chairs of the FCC congressional oversight committees
in a letter to the chairman last week.

Internal briefings with some commission
staffers about the reclassification plan
didn’t happen until after a senior official
had confirmed the decision to reporters.

The result of this decision will likely be
months of heated debate and aggressive
lobbying in the latest contentious chapter
in the network-neutrality saga.

September