In a speech today, Federal Communications Commission (FCC) Chairman Julius Genachowski announced that he intends to propose that the FCC issue a public notice (which we believe will be a Notice of Inquiry or NOI) to seek comment on a new legal framework to govern broadband Internet access providers. Chairman Genachowski characterized his goal as an effort to "restore the broadly supported status quo consensus that existed" concerning regulation of broadband Internet access providers prior to the Comcast v. FCC decision (Comcast). Chairman Genachowski characterized his approach as consistent with the "bipartisan consensus" that the FCC should adopt a restrained approach to regulating broadband communications, but emphasized that "consumers need basic protection against anticompetitive or otherwise unreasonable conduct by companies providing the broadband access service (e.g., DSL, cable modem, or fiber) to which consumers subscribe for access to the Internet." Significantly, the Chairman's proposal leaves open the possibility that it may compel broadband Internet access providers to separately sell a transmission service similar to the requirements under the Commission's Computer Inquiry proceedings.

Chairman Genachowski contrasted his proposed approach with the two "extreme" positions that parties have pressed since the Comcast decision. According to Chairman Genachowski, parties have advocated for either continued reliance on Title I and ancillary jurisdiction, or "reclassification" of broadband Internet access as a telecommunications service under Title II. The Chairman dismissed the former as legally questionable after Comcast and vulnerable to piecemeal litigation and the latter as too regulatory because it leads to dozens of compulsory regulatory requirements under Title II.

The Chairman described his "third way" approach as follows:

  • Recognize the transmission component of broadband access service-and only this component-as a telecommunications service;
  • Apply only certain specific provisions of Title II (Sections 201, 202, 208, 222, 254, and 255) that, prior to the Comcast decision, were widely believed to be within the Commission's purview for broadband;
  • Simultaneously renounce-that is, forbear from-application of the many sections of the Communications Act that are unnecessary and inappropriate for broadband Internet access service; and
  • Put in place up-front forbearance and meaningful boundaries to guard against regulatory overreach.

Chairman Genachowski supported his approach with the following six points: (1) this approach puts the FCC on the soundest legal footing because it would allow broadband policies to rely on the Commission's direct authority over telecommunications services while using ancillary authority as a fallback; (2) it will treat only the transmission component of broadband Internet access service as a telecommunications service, and leave web-based services unregulated; (3) it restores the legal status quo before Comcast but does not increase regulation to include "unbundling" or "price regulation;" (4) the FCC would invoke only the few Title II provisions necessary to achieve its goals; (5) it is consistent with the approach the FCC took when wireless services where emerging in 1993; and (6) it allows the FCC to fulfill its fundamental mission under the Act which is to protect consumers and promote competition without the need for additional legislation.

Chairman Genachowski emphasized that FCC policies should not include regulating Internet content, constraining reasonable network management practices of broadband providers, or stifling new business models or managed services that are pro-consumer and foster innovation and competition. FCC policies should also recognize and accommodate differences between management of wired networks and wireless networks, including the unique congestion issues posed by spectrum-based communications.

In a companion release, the FCC's General Counsel Austin Schlick characterized the effect of the Comcast decision and sought to provide additional legal support for the Chairman's Third Way approach. Schlick provided a detailed analysis of the U.S. Supreme Court's decision in National Cable and Telecommunications Association v. Brand X Internet Services, Inc., but principally relied on Justice Scalia's dissent, which was joined by Justices Souter and Ginsburg, which argued that "computing functionality" and the broadband transmission component of retail Internet access service must be acknowledged as "two separate things." According to Schlick, adopting Justice Scalia's bifurcated view of broadband Internet access service is permitted by the majority opinion because the majority recognized that the statute afforded the Commission some discretion to choose the best regulatory approach under the statue.

Schlick concluded that the majority opinion thus provides the Commission the leeway to apply Title II to the transmission component. Importantly, Schlick recognized that an agency reassessment of the classification issue would have to include a fresh look at the technical characteristics and market factors present in the broadband Internet access services market. As such, the Commission leaves open the possibility that it may compel broadband Internet access providers to separately sell a transmission service similar to the requirements under the Commission's Computer Inquiry proceedings.

Schlick further explained that the Commission could create a deregulatory framework under Title II by using its forbearance authority to foreclose application of the vast majority of Title II's provisions with the exception of sections 201 (all charges and practices shall be just and reasonable), 202 (prohibiting unjust and unreasonable discrimination), 208 (commission authority to hear complaints), 254 (universal service), 222 (customer proprietary network information), and 255 (accessibility to individuals with disabilities). Schlick analogized this new legal construct for broadband Internet access to Congress's approach in 1993 to the regulation of CMRS. Section 332(c) provides that CMRS providers shall be regulated as common carriers except that the Commission has discretion to forbear from the application of most common carrier rules.

Schlick further noted that "wireless broadband may be distinguishable from cable and telephone company broadband access services on account of differences in the technical and consumer aspects of wireless broadband service, as well as the Commission's direct jurisdiction over licensing of wireless services under Title III of the Communications Act." But he stated that identifying "a distinct transmission component within wireless broadband service might be essential to supporting deployment and wider adoption of wireless broadband under section 254."

According to Schlick, the imposition of Title II would neither lead to unbundling nor compulsory price regulation, particularly since its forbearance authority will allow the Commission to impose only the regulations listed above, and its forbearance decisions will be difficult to overturn.