FCC Goes Too Far (Once Again)

Robert D. Atkinson May 6, 2010
May 6, 2010

The Federal Communications Commission, the government agency charged by Congress with regulating communications by air and wire, announced today a sweeping new program that goes far beyond its mandate. The FCC’s move is likely to lead to a lengthy and unnecessary legal battle, create needless uncertainty in the market, and detract from the FCC’s important work in implementing the recently unveiled national Broadband Plan. While the FCC is attempting to create a regulatory framework suitable for the ever changing Internet ecosystem, its proposal is tantamount to going duck hunting with a cannon.

This is a story that has become all too familiar. In the recent past, the courts have struck down punitive FCC orders against the Super Bowl "wardrobe malfunction" and on, April 6, an overwrought ruling against cable operator Comcast, who sought to preserve good Internet performance for those of its customers who use Voice over Internet Protocol (VoIP) services such as Skype and Vonage. This most recent example of FCC over-reach is a proposal that would take broadband Internet services out of their present status as lightly-regulated "information services" (Title I) and plunk them into a regulatory system devised for the monopoly telephone networks of the 1930s (Title II).

The regulatory system the FCC now seeks to abandon was not established in a reckless or ill-conceived manner. The selection of the "information services" classification came from a sober reading of the applicable law that has been upheld by the U.S. Supreme Court. Reclassification is certain to bring about a protracted legal battle that the FCC is unlikely to win. In addition, that battle will create confusion for stakeholders and introduce needless and damaging uncertainty into the market. The Commission is, by its own admission, reacting to its most recent defeat (in the Comcast case) with what amounts to an attempt to change the law under which it operates. This is going too far.

The FCC represents this action as an attempt to find a moderate "Third Way" to regulate Internet services that is neither as loose as the information services defined by Title I of the Communications Act nor as tight as the telephone services defined by Title II. ITIF supports Third Way regulations for the Internet and a revision to the Communications Act that would create a new framework appropriate not just for broadband services, but for Internet-enabled innovations such as VoIP. It has long been evident that Vonage is overburdened by telephone regulations, and competitive services such as Skype are forced to pretend they aren't offering telephone services at all in order to escape the taxes, fees, and other requirements of traditional telephony.

Talking the “Third Way” talk is not the same as walking the walk, however. Whatever the details of a “Third Way,” it cannot be created by the FCC. Putting the Internet in a regulatory straightjacket of Title II and then not enforcing much of it is not the path to a “Third Way.” Only Congress can create a new chapter in the library of communications law. The best the FCC can do to facilitate the exercise is propose a framework. That is the only way new law can be created for a system as novel and innovative as the Internet. ITIF appreciates the FCC's use of the “Third Way” concept we have embraced. However, “third way” is not simply an elegant and highly-nuanced phrase. Rather, the light-touch Third Way is meant to be a serious effort to craft new law appropriate to the needs of innovators and users of new technologies.

In addition, the FCC argues that the Internet is in imminent danger of multiple theoretical harms without "reclassification." The facts suggest otherwise. The FCC's action in the Comcast case was gratuitous since Comcast had already decided to replace the system the FCC didn't like with a new one long before the FCC issued its punishment. One after one, the alleged examples of Internet abuse by ISPs have proved to have been built on hot air or corrected without Commission action. If a serious abuse of consumer trust were to take place in the future, the Federal Trade Commission has authority independent of communications law to take corrective action, and the FCC still has ancillary authority that can be used more judiciously than in the past. Indeed, the DC Circuit gave the FCC guidance in the Comcast order about how this may be done.

The Internet has its own self-regulatory systems to protect users from harm and abuse by other players in the ecosystem. Rather than engage in protracted battle over the extension of its regulatory powers, the FCC should direct its limited time and energy to implementing the well-crafted national Broadband plan. This would better serve the public interest. To the extent the FCC feels compelled to address issues such as net neutrality, transparency for consumers, and other related matters, it can and should work with industry and public interest stakeholders to expand cooperative arrangements for co-regulatory systems, including a technical advisory board of experts and other stakeholders advice the FCC.

When the power of Internet stakeholders is combined with that of responsible regulators, a new system of co-regulation will emerge. Given the global nature of the Internet, co-regulation is the only practical and effective way to ensure that the Internet continues to thrive, prosper, and grow.