FCC’s Third Way

From the Fall 2010 issue of The News Media & The Law, page 36.

The Federal Communications Commission says it does not want to control your ability to use the Internet to inform the public. It claims it is not interested in regulating online content, e-commerce sites or Web-based services and applications. Chairman Julius Genachowski has said his commission has a vested interest in preventing Internet providers from limiting speech. But still, members of the media are finding reason to be unnerved.

Their discontent is rooted in the chairman’s recent announcement that laid out the commission’s framework for proposed broadband regulation.

Termed the “Third Way,” the plan outlines an attempt to allot the FCC more authority in regulating Internet service providers, while striking a balance with maintaining the freedom of the online environment.

However, the proposed change, as explained by the FCC, is only intended to regulate the companies that provide an “on ramp” to the Internet, not the Web itself.

The announcement came in direct response to a ruling of the U.S. Court of Appeals in Washington, D.C., that slapped what was seen as the overreaching hand of the FCC.

In 2007, the commission said it became aware of secret actions that Internet service provider Comcast Corp. was using to interfere with subscribers’ use of BitTorrent and peer-to-peer applications.

These programs allow users to share large files — often copyrighted works such as movies and video games —  directly with one another without going through a central server, consuming large amounts of bandwidth, the amount of data transfer space with which networks have to work.

Comcast argued that its intervention was necessary to manage its network capacity, but the FCC issued an order in 2008 finding the company in violation of federal Internet policy under the Communications Act of 1934. The commission claimed that Comcast was unjustified in restricting its subscribers’ access to the Internet. Comcast claimed that the FCC was unjustified in attempting to restrict its network management.

In April, the court found in favor of Comcast in Comcast v. FCC, ruling that the FCC failed to prove its assertion of authority was tied to any statutorily mandated responsibility. The commission’s reliance on the Communications Act, which states that it may “perform any and all acts, make such rules and regulations, and issue such orders . . . as may be necessary in the execution of its functions,” was not enough to overcome the fact that the commission pigeon-holed itself in 2002 when it classified the Internet as an information service, greatly limiting its ability to regulate the Web.

Under the Communications Act, different forms of media fall into varying levels of regulation. Title I of the act applies to information services, is not subject to any statutory rules and allows the FCC limited authority. Title II, however, is used for telecommunications and allows for far more stringent regulation. The court found the FCC attempted to use provisions under Title II in the Comcast case where they didn’t apply.

In May, following the court’s decision in the Comcast case, Genachowski presented his Third Way, calling for a hybrid of Titles I and II. It would provide “a legal anchor that gives the commission only the modest authority it needs to foster a world-leading broadband infrastructure for all Americans while definitively avoiding the negative consequences of a full reclassification and broad application of Title II,” he said in his memorandum.

The idea is to keep most of the Internet free from regulation, but to also pick and choose provisions of Title II that would allow the commission to protect “against anti-competitive or otherwise unreasonable conduct by providing the broadband access service.”

Genachowski has promised to apply only a handful of Title II provisions and to forbear from regulatory overreach. But not everyone is convinced.

“Chairman Genachowski promises to forbear and he very well may mean to forbear in every manner he sees fit. But once you move it under Title II, all the regulations apply and Chairman Genachowski’s parameters might not be the next chairman’s parameters,” said Seton Motley, editor-in-chief of StopNetRegulation.org, an online advocate for less government regulation of the Internet.

The Third Way is feared by many to be a well-meaning idea that sits atop a slippery slope to the valley of government censorship.

“My biggest concern is that by reclassifying broadband as a Title 2 service, the FCC creates a very dangerous precedent that has First Amendment implications,” said First Amendment attorney Kathleen Kirby.

The First Amendment applies differently to all forms of media, she said. Broadcasters have limited First Amendment protections because, traditionally, the FCC parcels out limited broadcast spectrum, allowing the government to have some role in regulating content. Government agencies have a far more limited role in regulating content on cable and an extremely limited ability to regulate print content. Reclassifying the Internet as a telecommunication service will leave it open to the applicable regulations, even if Genachowski does have the best of intentions.

In proposing the Third Way, Kirby said, the chairman is asking the public to trust him, but who is willing?

“The very notion of the FCC reclassifying some kind of information service to give the government the ability to regulate it strikes a bit of fear in my heart,” she said.

The FCC is reviewing 50,000 responses it received from a notice of inquiry it posted in June asking for comments on what it should do next. The commission outlined three options: 1. Do nothing and allow the Internet to remain unregulated under Title I; 2. Entirely reclassify the Internet as a telecommunication service under Title II; and 3. Take up the Third Way. Some in the media hold to the notion that if it isn’t broke, don’t fix it.

“I have not heard from anyone engaging in journalism that there exists a problem that needs to be remedied by government intervention on them getting their information out over a free Internet at this point,” Kirby said.

An FCC spokesperson, who said that the commission’s staff is under strict orders to remain off the record, explained that the commission’s goal is to protect the Internet as it is.

So why change the game plan?

“By anyone’s understanding of the English language, to keep something the same, you don’t have to add anything,” Motley said. “These companies have spent upwards of a trillion dollars building up this infrastructure. This is their network; they should be able to manage it if they want.”

The FCC holds that Internet service providers currently have all the power and can do what they wish with their networks. This may mean creating a tiered service model, removing competition, creating artificial scarcity of service and limiting access.

“The way to increase access is to allow the Internet to remain free of regulatory entanglement so they can continue to build out, continue to get cheaper, because that’s how you do it,” Motley argued. “I think the Internet has been an amazing explosion of innovation and creativity . . . and I think that has happened due to the fact of the time frame of 1996 and now there hasn’t been any regulation of the Internet.”

Chairman Genachowski, a U.S. District Court, 299 members of Congress, Motley and Kirby agree on at least one thing: The FCC does not currently have the jurisdiction to regulate the Internet.

“What we need to do is we need to revisit via Congress new legislation to properly delineate the role of any agency over the Internet,” Motley said.

The Communications Act, which established the FCC, was enacted in 1934 and saw its first major overhaul in 1996. At that time, most Internet users — and there were far fewer than today — connected to the Web using dial-up service. There seemed to be a consensus among those interviewed for this story that the rules regulating the government’s involvement in the online world are simply behind the times.

“I do agree that perhaps the Communications Act is outdated and is in need of some examination by Congress, but I’m never for government involvement in any vehicle for dissemination of information to the public, particularly absent any crisis in that area,” Kirby said.

A net neutrality bill drafted by Rep. Henry Waxman, D-Calif., was easily stamped out in late September when it failed to garner the support of key House Republicans and there is reportedly nothing being drafted to revamp the Communications Act at this time. Absent an act of Congress, the FCC will have to choose to abstain from mingling in affairs for which it does not have expressed authority or continue to face service providers in court.