ILECs Disappointed in FCCs New Net Neutrality Move

FCC Chairman Julius Genachowski has decided to regulate Net neutrality, after all, but in a way perhaps many people did not expect. The news comes after several days of back-and-forth during which, at times, it seemed Genachowski would choose not to pursue open Internet rules at all.

That all changed on Thursday, when the FCC said it will institute a balanced approach to Net neutrality, one that won’t require Congressional action.

In a Confucian attempt at a middle way, Genachowski has decided against a complete “Title II” approach. (Title II is the classification for telecommunications services, which are more regulated than Title I, or information, services such as Internet access.) Instead, the FCC proposes to view just the transmission component of broadband access as a telecommunications service and “apply only a handful of provisions of Title II … that, prior to the Comcast decision, were widely believed to be within the commission’s purview for broadband,” said Genachowski. At the same, the FCC intends to install “meaningful boundaries” to guard against “regulatory overreach,” he added.

Incumbents, cable operators and some associations decried the move as heavy-handed and a threat to network investment. But Genachowski himself wrote that “extreme alternatives” when it comes to regulation “are unacceptable.” Nevertheless, many operators view any sort of government oversight as anathema and see attempts at even a middle-ground approach as reason to delay or halt capex. That means Genachowski’s proposal is unlikely to take effect any time soon. Carriers, cablecos and others will almost certainly sue the government, in what promises to become a years-long legal struggle.

The FCC’s new, “third way” approach to the Net neutrality dispute follows a federal appeals court ruling that said the FCC had overstepped its bounds in 2008 by trying to punish Comcast Corp. (CMCSA) for throttling P2P traffic. Many observers interpreted the ruling as the death of Net neutrality, while others pushed for the FCC to reclassify broadband as a telecommunications service, to give the agency more oversight over companies. But Genachowski, who has worked as a tech entrepreneur, is searching for a happy medium – neither hands-off nor clamping down.

“Heavy-handed prescriptive regulation can chill investment and innovation, and a do-nothing approach can leave consumers unprotected and competition unpromoted, which itself would ultimately lead to reduced investment and innovation,” he wrote in a lengthy statement.

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