Commissioners signal intent to impose modified Title II common carrier regulation on broadband Internet

This FCC is not letting any grass grow under its feet. Only a month ago, the U.S. Court of Appeals for the D.C. Circuit pulled the rug out from under the FCC’s authority to regulate the Internet. In the intervening weeks, there was much speculation about what the Commission should or would do to bring the Good Ship Internet back on course.   Suggestions included turning the entire matter over to the Federal Trade Commission, seeking a change in the Communications Act to expressly grant the FCC the authority to regulate the Internet, appealing to the Circuit Court en banc or the Supreme Court to reverse the Comcast decision, or trying to more solidly justify its ancillary authority over the Internet.

The most widely discussed option, however, was simply re-classifying broadband Internet access as a telecommunications service.

While this would require some major backtracking by the Commission (it had previously solemnly declared broadband Internet access to be an “information service” and thus exempt from Title II regulation), it is not uncommon for administrative agencies to change their minds.   The re-classification would deposit broadband Internet access safely back in the nest of common carrier services which no one disputes the Commission has authority to regulate. The only question then would be whether to employ the heavy hammer of full Title II monopoly style regulation or the light feather of minimal regulation applied to wireless carriers, or something in between.

On May 6, the Commission telegraphed which way it’s going, but it did so not by an official order but by a flurry of battling press releases.

Chairman Genachowski began the process by issuing a press release indicating his intention to re-classify broadband Internet (or at least the so-called transport component) as a telecommunications service. This would establish the FCC’s authority to regulate under Title II of the Act. He also indicated that the regulation would be as light as possible – just enough to mandate net neutrality and curb abuses of the Internet. In other words, the FCC would forbear from most forms of common carrier regulation but would insist on certain basic principles. Those basic principles would include: reasonable and just interconnection; non-discriminatory terms and conditions of service; access to Universal Service Funds; protection of private customer information; and access by the disabled to telecommunications equipment and services.

The FCC’s General Counsel, Austin Schlick, then released a legal memo laying out the legal basis for the approach the Chairman had espoused. They both refer to this as a “third way” of regulating the Internet because only the “transport” component of Internet communications will be subject to Title II regulation; the information component will remain unregulated (or maybe still somehow subject to ancillary jurisdiction).

Inquiring minds would love to know what elements of the Internet will be deemed “transport” and what “information” – that difficult line remains to be drawn. (Remember, the FCC itself had opined that broadband Internet was a single integrated unitary offering, so it will have some ’splainin’ to do when it now divides broadband into separate components.) The Schlick Memo pragmatically pointed out that one benefit of the “Third Way” is that it will require only one Court review – far more efficient than the dozens of case-by-case adjudication that would have been necessary if the Commission had tried to justify each regulatory provision under its limited ancillary authority.   Since everyone can agree that regulatory uncertainty is bad, any process that gets things settled quickly has at least one thing going for it.

Commissioner Copps quickly chimed in with a press release mostly supporting the Chairman’s Title II approach but, as always, wanting to know the details.   Hot on the heels of that release came a joint communiqué from Commissioners Baker and McDowell decrying the Chairman’s approach.  At this point the press release balloting was even. Much later in the afternoon, Commissioner Clyburn weighed in with her press release supporting the Title II approach of the Chairman.   By a 3-2 vote, the FCC’s policy is now set.

While governing by press release is unusual, it did have the salutary effect of calming everybody down, stopping the rampant speculation, and pointing the way that the FCC intends to go. The one small problem is that the Administrative Procedure Act requires the FCC to at least go through the motions of proposing rules and letting the public comment before it adopts a regulation. So we presume that the Commission will open a rulemaking proceeding post-haste using the framework set out in the Schlick Memo to justify re-classifying broadband Internet.

Some important details will need to be filled in, and the rulemaking proceeding can serve that function.   And at some point the Commissioners need to go through the formality of actually voting one way or the other on the matter after having kept an open mind during the course of the proceeding.   Having been given a full, free and fair trial, ancillary jurisdiction will then be hanged.