The Wall Street Journal
Is FCC chairman in over his head?
Is FCC chairman in over his head?
The head of the Federal Communications Commission on Thursday outlined a proposal for regulating the Internet that he described as a "third way," or middle ground between "heavy-handed" regulation and a do-nothing approach that could hurt competition and leave consumers unprotected.
FCC Chairman Julius Genachowski is proposing to promote competition and preserve the free flow of Web traffic by applying to broadband Internet service certain provisions of rules designed to regulate traffic on copper-wire telephone networks.
Big phone and cable companies, which provide much of the nation's broadband service, expressed dismay at the FCC chairman's decision to extend his regulatory authority to broadband, predicting it would damp investment and lead to court battles that could last years.
"We are very concerned about the direction this is going," said Grant Seiffert, chief executive of the Telecommunications Industry Association, an industry lobbying group.
Industry executives said privately that they didn't trust the notion that the FCC would take only a limited approach to the new regulations, applying just six sections of Title II of the Communications Act to broadband while not enforcing others.
They also expressed concerns about the legality of the proposal. "We believe that the chairman's stated approach is legally unsupported," said Tom Tauke, executive vice president of Verizon Communications Inc., in a statement.
Broadband policy has evolved into a deeply partisan issue in Washington. Democratic lawmakers applauded Mr. Genachowski's stance Thursday, but Republicans blasted his plan, saying it would cost jobs.
Senate Republicans began recirculating legislation proposed in 2009 by Sen. John McCain (R., Ariz.) that would prohibit the FCC from regulating the Internet. House Minority Leader John Boehner (R., Ohio) called the decision a "government takeover of the Internet" and a "job-killing big government scheme."
An FCC spokeswoman declined to comment.
The FCC's two Republicans also dissented. "This proposal is disappointing and deeply concerns us," said Commissioners Meredith Attwell Baker and Robert McDowell, in a joint statement. They argued that the FCC was overstepping its authority.
Mr. Genachowski doesn't need congressional approval or the votes of his Republican colleagues to adopt the proposal. The other two Democrats on the FCC's five-person board have said they will support his efforts.
Consumer groups applauded some aspects of Mr. Genachowski's plan, but some groups, including Public Knowledge and Consumers Union, expressed concerns that the FCC plan doesn't go far enough to ensure greater competition among Internet-service providers.
Six Sections to Apply:
* Section 201—Requires Internet providers to interconnect and charge reasonable rates
* Section 202—Prevents price or service discrimination
* Section 208—Sets up FCC complaint process
* Section 222—Protects customer privacy and proprietary commercial information
* Section 254—Allows use of Universal Service Fund for broadband
* Section 255—Ensures disability access
Mr. Genachowski said the FCC needed to take action to protect consumers after a federal appeals court last month questioned the agency's authority to enforce rules that require broadband providers to treat all Internet traffic equally, prohibiting them from deliberately slowing or blocking such traffic.
These so-called net neutrality guidelines are strongly supported by the Internet-commerce industry. Broadband providers have said rigid net-neutrality rules aren't desirable because that restricts their freedom to manage their fast-evolving networks.
The appeals court ruled in April that the FCC overstepped its bounds in deciding to sanction Comcast Corp. for deliberately slowing some broadband subscribers' traffic in 2008. The court's ruling essentially threw into question much of the agency's efforts to set rules for broadband providers over the past eight years.
The FCC's proposal seeks to provide "a solid legal foundation for achieving the policy goals that benefit consumers and our economy in the most effective and least intrusive way," Mr. Genachowski said Thursday.
The FCC chairman said he doesn't intend to regulate rates for Internet service or require service providers to share their lines with rivals at government-regulated rates.
The agency would require broadband providers to allow data to travel from the Internet to a subscriber's computer without meddling. However, it isn't planning to regulate material sent over the Internet, like email, online videos or games.
That's an important distinction for Silicon Valley, where a handful of companies including Google Inc., Amazon.com Inc. and Netflix Inc. sent Mr. Genachowski a letter Thursday applauding his "middle ground approach" to regulation.
"This is a great way to move forward," said Paul Misener, vice president of global public policy at Amazon.
The move catches the communications industry, and phone companies in particular, at a difficult time.
Phone companies and cable operators are spending billions of dollars slugging it out to snare broadband and TV subscribers. Wireless service, the growth engine of phone companies for the past decade, has become a mature market.
The FCC proposal adds another layer of uncertainty that industry executives say will cause them to delay investments in land-based and wireless Internet infrastructure. Any such cuts in capital spending could lead to job losses and hurt the Obama administration's plan to extend faster broadband service across the country. Investors are worried about the potential fallout as well.
Under questioning from an analyst on a conference call after its first-quarter earnings release Thursday, Cablevision Systems Corp. Chief Operating Officer Tom Rutledge said a move to reclassify broadband lines under "1930s laws, utility-type regulation" would be disappointing. "We operate in a highly competitive environment," he said.
These so-called net neutrality guidelines are strongly supported by the Internet-commerce industry. Broadband providers have said rigid net-neutrality rules aren't desirable because that restricts their freedom to manage their fast-evolving networks.
The appeals court ruled in April that the FCC overstepped its bounds in deciding to sanction Comcast Corp. for deliberately slowing some broadband subscribers' traffic in 2008. The court's ruling essentially threw into question much of the agency's efforts to set rules for broadband providers over the past eight years.
The FCC's proposal seeks to provide "a solid legal foundation for achieving the policy goals that benefit consumers and our economy in the most effective and least intrusive way," Mr. Genachowski said Thursday.
The FCC chairman said he doesn't intend to regulate rates for Internet service or require service providers to share their lines with rivals at government-regulated rates.
The agency would require broadband providers to allow data to travel from the Internet to a subscriber's computer without meddling. However, it isn't planning to regulate material sent over the Internet, like email, online videos or games.
That's an important distinction for Silicon Valley, where a handful of companies including Google Inc., Amazon.com Inc. and Netflix Inc. sent Mr. Genachowski a letter Thursday applauding his "middle ground approach" to regulation.
"This is a great way to move forward," said Paul Misener, vice president of global public policy at Amazon.
The move catches the communications industry, and phone companies in particular, at a difficult time.
Phone companies and cable operators are spending billions of dollars slugging it out to snare broadband and TV subscribers. Wireless service, the growth engine of phone companies for the past decade, has become a mature market.
The FCC proposal adds another layer of uncertainty that industry executives say will cause them to delay investments in land-based and wireless Internet infrastructure. Any such cuts in capital spending could lead to job losses and hurt the Obama administration's plan to extend faster broadband service across the country. Investors are worried about the potential fallout as well.
Under questioning from an analyst on a conference call after its first-quarter earnings release Thursday, Cablevision Systems Corp. Chief Operating Officer Tom Rutledge said a move to reclassify broadband lines under "1930s laws, utility-type regulation" would be disappointing. "We operate in a highly competitive environment," he said.
