Worth ReadingBy Cecilia Kang
The Federal Communications Commission is considering aggressive moves to stake out its authority to oversee consumer access to the Internet, as a recent court hearing and industry opposition have cast doubt on its power over Web service providers.
The FCC, which regulates public access to telephone and television services, has been working to claim the same role for the Internet. The stakes are high, as the Obama administration pushes an agenda of open broadband access for all and big corporations work to protect their enormous investments in a new and powerful medium.
"This is a pivotal moment," said Ben Scott, director of policy at the public interest group Free Press. The government wants to treat broadband Internet as a national infrastructure, he said, like phone lines or the broadcast spectrum. But federal regulators are grappling with older policies that do not clearly protect consumers' access to the Web, their privacy or prices of service.
The issue may have reached a turning point last week when a federal appeals court questioned the limits of the FCC's authority in a 2008 case involving Comcast. The agency had ordered the Internet and cable giant to stop blocking subscribers' access to the online file-sharing service BitTorrent. But in an oral hearing last Friday, three judges grilled an FCC lawyer over whether the agency had acted outside the scope of its authority.
The appeals court is still hearing the case, but analysts predict that the FCC will lose and that the ruling could throw all of its efforts to oversee Internet access into question. A loss could undermine the legality of FCC Chairman Julius Genachowski's push for policies that would prohibit service providers from restricting customers' access to legal Web content -- the concept known as net neutrality -- and throw into doubt the agency's ability to oversee pricing and competition among Internet service providers.
The agency said it will continue to argue that it had the authority to rule against Comcast, but it is making plans to deal with a loss.
"If the court removes the legal basis for the current approach to broadband, the commission may be compelled to undertake a major reassessment of its policy framework . . . or Congress will have to act," said Colin Crowell, senior adviser to Genachowski. "Any policies the commission pursues for the broadband marketplace will be rooted in the pro-consumer, pro-competitive structure of the 1996 Telecommunications Act, regardless of how the court ultimately decides."
Specifically, that could mean the agency will reverse policies from the past decade that put cable and DSL Internet services in a special category over which the agency has only "ancillary jurisdiction." Those policies were intended to deregulate Internet services in order to promote competition and innovation in the young industry as it developed. Consumer groups argue that they instead reduced competition and drove prices higher.
Analysts said the FCC may look to put broadband services back into a category alongside phone services that is clearly under the authority of the government.
At issue, some FCC officials say, is the future of how Americans will communicate and receive information. One in five U.S. homes has swapped landline telephone service for wireless. Most of those phones have Web browsers that are fast enough to watch videos and navigate traffic in real time. Consumers are also adopting ultra-high-speed Internet services over fiber and cable for 3-D games and videoconferencing.
"While I am still hopeful that we'll win the case, I am absolutely certain that consumers expect protection against gatekeeper control," said Commissioner Michael Copps, a Democrat. "That's why we need to move forward with whatever tools we have at our disposal to ensure an open Internet."
A move to reclassify broadband services would almost certainly be opposed. The telephone category is steeped in decades-long rules that are meant to prohibit blocking of services, protect consumer prices and spur competition. Such rules would be a stark change for Internet service providers that invest billions of dollars each year in networks but also receive high rates of consumer complaints over prices and services.
"To the extent that we need more regulation, we think less is more," said Kyle McSlarrow, head of the National Cable and Telecommunications Association, a trade group. "The more granular and more regulatory we become with practical and legal issues, we can go too far."
The agency also could ask Congress to grant it explicit authority over Internet service providers. But that approach would also face significant barriers, analysts said.
"The odds are against it," said Paul Gallant, an analyst at Concept Capital, a research firm. "Net neutrality is the most controversial issue in the telecom media world, and even with a Democratic majority, it's not easy to pass."