Facing a communications universe well beyond anything contemplated by the drafters of the Communications Act in 1934, or even the authors of the 1996 update, the FCC has been forced to improvise – most recently by taking a page from Goldilocks, looking for a “third way” that’s Just Right. On June 17, the FCC took the first formal step in what is likely to be a contentious process intended to determine how, if at all, the FCC will regulate the Internet.

But before we lift the curtain on the next episode of the drama, let’s recap:

A federal agency like the FCC has only the powers that Congress’s statutes bestow on it. Included in the Communications Act are two “titles” arguably relevant to broadband Internet regulation.

Title I lays out the FCC’s general powers, among them, the power to “perform any and all acts, make such rules and regulations, and issue such orders . . . as may be necessary in the execution of its functions.” When the FCC tried to proceed under this provision against Internet provider Comcast for selectively blocking customers’ content, the federal appellate court in D.C. slapped it down, with a ruling that the language is insufficient to support network neutrality regulation. See our further analysis here.

Title II, in contrast, originated in 1934 as a vehicle to regulate telephone companies. Because telephony was then a monopoly, Title II includes detailed provisions allowing the FCC to regulate rates and terms of service, among other things. Most of those are now obsolete, even as to telephony.

With the Comcast court having taken Title I off the table, any FCC effort to regulate network neutrality must turn to Title II. There, though, the FCC is hobbled by its own prior actions. Its 1976 Computer II decision limited Title II regulation to the transport of data, and excluded content from Title II coverage. And then, in a series of rulings through the early 2000s, the FCC removed Internet broadband delivery from Title II altogether.

In response to the Comcast decision, and as reported here previously, and also here, the FCC is now contemplating a small step backwards. It has released a Notice of Inquiry asking for comment on its proposed “third way” approach: to re-regulate the transport component of broadband Internet service, but to impose only those rules needed to implement “fundamental universal service, competition and small business opportunity, and consumer protection policies.” This included network neutrality.

The proposal is extremely controversial, here in Washington (like pretty much everything else, here in Washington). Two of the five FCC Commissioners argued against it, as will most Internet providers. Many others will argue in favor. (Want to tell the FCC what you think? Drop us an email and we’ll tell you how.)

And now stay tuned for the next (but almost certainly not the final) episode of “The Third Way”.