FCC Offers 'Regulation Lite' for Broadband Providers, Pleasing Few

This came despite agency promises not to impose most of the heavy regulations that currently control phone service in the United States.

The move to reclassify broadband services under the part of the law that regulates phone companies was quickly met with skepticism from Wall Street and strong words from Republicans who say the FCC will be destroying jobs and wants to take over the internet.

But the FCC said it was simply finding stronger footing for its long-accepted ability to keep broadband providers from unfairly blocking websites or telling users what kinds of devices they can use on their networks, a series of principles issued in 2005 that were known as the Four Freedoms. At the time, the FCC said it would enforce those rules, despite having freed cable and DSL providers from oversight.

But when the FCC tried to enforce those policies after the cable broadband giant Comcast was found to be secretly blocking peer-to-peer file sharing, Comcast took the agency to a federal appeals court over the matter. Last month the D.C. Court of Appeals ruled the FCC no longer had any real authority over broadband because the Bush administrations FCC had classified broadband as an information service (think Gmail or Facebook), not a telecommunications service (think Ma Bell).

That left the FCC toothless when it came to broadband.

The court found the FCC did not have the authority that we believed we had and that the industry thought we had, said FCC general counsel Austin Schlick in a press call Thursday. Reclassification is simply a way to return to the status quo, he added.

The internet will not be regulated, added FCC spokeswoman Jen Howard, emphasizing that the rules wouldn't apply to online services, such as news sites or e-mail providers, including those offered by broadband providers.

But in announcing the change, FCC chairman Julius Genachowski said broadband is increasingly essential to the daily life of every American and is becoming the primary way we as Americans connect with one another.

That, he said, is why the FCC needs to prevent the pipes from being abused by their owners.

Consumers do 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, Genachowski said. It is widely accepted that the FCC needs backstop authority to prevent these companies from restricting lawful innovation or speech, or engaging in unfair practices, as well as the ability to develop policies aimed at connecting all Americans to broadband, including in rural areas.

Only a handful of so-called Title II rules will be applied, according to the FCC. Namely, the FCC would have the right to keep broadband providers from unreasonable practices and fees and force them to protect consumer privacy and provide access for the disabled. Consumers would be allowed to file complaints about unjust practices and the FCC could use the money in the Universal Service Fund currently designed to help low-income citizens get cheap phone service to pay for broadband.

Free-market groups appreciated that the proposal included only a few of the Bell monopoly-era rules, but still called the idea flawed.

“I fear this well-intentioned but nonetheless problematic third way forward will engender increased regulatory uncertainty, decreased investment and adverse effects for consumers," said Barbara Esbin of the Progress and Freedom Foundation.

AT&T, which has made no secret it would like to charge online services like YouTube extra to get preferential treatment on its network, came out swinging.

“Make no mistake the FCC is, in fact, and for the first time, regulating the internet itself", vice president Jim Cicconi said. “We believe this is without legal basis."