FCC Issues Notice of Inquiry to Reassert Regulatory Authority over Broadband Internet Access Service
The Federal Communications Commission (FCC) today adopted its widely anticipated Notice of Inquiry in response to the D.C. Circuit’s ruling in the Comcast case, which held the FCC had not justified its assertion of “ancillary” authority over broadband Internet access network management practices. (Our alert regarding the Comcast ruling is available here). The Notice seeks comment on three ways to re-establish authority over broadband, including Chairman Julius Genachowski’s “Third Way” proposal to treat “wired broadband Internet connectivity” as a telecommunications service under Title II of the Communications Act, then forbear from applying some of the specific obligations that would arise from that status. (Our Broadband Law Advisor piece on the Chairman’s proposal is available here, and an opinion on the Chairman’s proposal is available here).
As expected, the FCC established a quick comment cycle, with initial comments due on July 15, 2010, and replies due Aug. 12, 2010. This accelerated schedule could enable the FCC to act on this matter, if not before the November elections, at least prior to January 2011 when a new Congress will be seated.
The substance of the Notice contains few surprises. The FCC concludes that Congress wants it to play an active and continuing role in the deployment and regulation of retail broadband Internet access. Therefore, according to the FCC, it is necessary to reestablish its authority over broadband service. The Notice then seeks comment on three approaches to achieve this goal:
- Rely on its “ancillary” jurisdiction, as it has traditionally done, but with a clearer and more detailed explanation of the specific statutory authority to which jurisdiction over broadband would be “ancillary”;
- Reclassify broadband as a telecommunications service, subject to the full rigors of Title II of the Communications Act; and
- Reclassify broadband as a telecommunications service, but forbear from all but certain “core” provisions of Title II. The key provisions that would continue to apply would be Section 201 (mandating just and reasonable rates and practices); Section 202 (banning unreasonable discrimination); Section 208 (permitting the Commission to adjudicate complaints); and Section 254 (universal service), as well as, perhaps, Section 222 (protection of consumer privacy) and Section 255 (access by persons with disabilities).
No one expects the FCC to seriously entertain the second alternative. All three democrats on the Commission have supported the third alternative. That said, it is notable that at least on its face, the FCC seems open to continuing to rely on its “ancillary” jurisdiction to regulate broadband, albeit under a more robust statutory analysis, which would avoid some of the potential pitfalls of reclassifying the service as subject to Title II (see below). For example, based on some language in the Comcast decision, the Notice requests comment on the prospect of reinterpreting Section 706 of the 1996 Act (which calls on the FCC to promote and encourage broadband deployment) as containing a grant of regulatory authority sufficient to support the assertion of “ancillary” jurisdiction over broadband, while maintaining its classification as an information service.
The Notice also makes clear that the FCC is not seeking to impose regulatory obligations on anything other than retail broadband Internet access. It specifically notes that it is not seeking to impose Title II classification on services such as Voice-over-Internet-Protocol (VoIP), Internet backbone transmission, content delivery networks (such as those provided by Akamai), or Internet applications (such as Google). This is consistent with the Chairman’s earlier statements on this topic, but leaves open the question whether the logic of a decision to extend Title II classification to retail Internet access might nonetheless have significant regulatory implications for these services, or others, in the future. In addition, while the third alternative would entail forbearance from all but the “core” Title II requirements noted above, with the intention of reestablishing the status quo rather than imposing new obligations on broadband, it is possible that the required forbearance rulings would not be forthcoming, would be struck down by the courts, or would be reversed in the future. With those prospects in mind, some key potential Title II issues include unbundling and resale requirements, application of universal service charge assessments on broadband revenues, and Commission authority over the rates and terms of broadband offerings, including a clearing the way for network neutrality requirements.
Finally, conspicuous by their absence from the Notice are three topics of particular concern to cable operators providing broadband Internet access: the impact of reclassification on state-level taxes and fees that might apply to telecommunications services that do not apply to broadband today; the prospect that reclassification might embolden third-party ISPs to demand transport services to consumers using a cable operator’s physical network; and the impact of possible reclassification on pole attachment rates (although the Notice did obliquely raise this issue by questioning the scope of the FCC’s authority to forbear from the application of Section 224 of the Act, which governs those rates). These and numerous other issues will almost certainly need to be addressed in comments and reply comments on the Notice.
If you would like to discuss how the proposals contained in the Notice would affect your business operations, whether to file comments, or any other matter raised by the Notice, please contact us.