ANALYSIS - FCC concocting strategy to defend broadband powers

WASHINGTON Sat Apr 3, 2010 2:29am IST

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WASHINGTON (Reuters) - With a looming court case that could derail his broadband agenda, Julius Genachowski, the top U.S. communications regulator, and his circle of advisers are weighing options to put the centrepiece of his administration on a solid footing.

His alternatives appear limited if the U.S. Court of Appeals for the District of Columbia Circuit decides that the Federal Communications Commission (FCC) lacks sufficient authority to regulate broadband services.

Within the next few months, the three-judge panel is expected to issue a ruling based on oral arguments held in January involving a case in which Comcast Corp challenged the FCC's power to regulate management of online content.

The case centres on a 2008 decision by the FCC to censure Comcast for throttling bandwidth-hogging online file sharing services for video and TV shows.

At the January hearing many of the judges' questions went further by probing whether the agency has the power to regulate broadband based on established rules or on direct authority from Congress.

The outcome may have major implications for future regulation of Internet access in the United States and consequences for the FCC and Genachowski who has made broadband the centrepiece of his chairmanship.

The FCC, which contends it has broad authority, last month unveiled an ambitious plan to upgrade Internet access for all Americans and shift spectrum from television broadcasters to wireless carriers with burgeoning smart phone supplies.

OPTION: APPLY TELEPHONE RULES TO BROADBAND

Experts say there are two undesirable options for the FCC if the court rules the regulator overstepped its authority.

The FCC could appeal the case to the Supreme Court which might not hear the case or take years to deliver a final ruling. Congress could alternatively rewrite the laws to explicitly state the FCC's powers over broadband access and content.

"I don't think Congress is able to pass a major telecommunications bill, and an appeal would take a long time," said Amit Schejter, professor of telecommunications policy at Penn State University.

Both options could drag on for years and create uncertainty for the industry and markets.

The third and most viable option for the FCC is to take matters into its own hands by reclassifying broadband services under an existing set of rules governing telephone services rather than the current status as a lightly-regulated information service.

That would be a bold move likely to draw lawsuits from telecom giants AT&T Inc and Verizon Communications Inc. With such a move, the two firms fear they might be forced to share lines with competing Internet service providers.

Others note that the FCC would not likely apply controversial provisions in any reclassification move.

"WORLD WAR III"

A court loss followed by FCC actions to implement broadband policies would inevitably invite challenges by companies willing to unleash their legal budgets to take the FCC to court while the agency pushes its broadband plan and an open Internet agenda.

The industry "has made it very clear that this will be World War III," said Susan Crawford, former special assistant to President Barack Obama for science, technology, and innovation policy.

A move like that by the FCC could also undo years of regulatory decisions that, with the push from the industry, resulted in moving broadband access away from rules governing common carriers and cable providers.

But unhappy with any of the possibilities, Verizon has called for a wholesale look by Congress at the Telecommunications Act, which took five years to amend in 1996 under President Bill Clinton.

Verizon, which has a business partnership with Google Inc while also competing against the Internet search giant, has said the current rules for broadband are "murky" at best.

Tom Tauke, Verizon executive vice president for public affairs, policy and communications, said in a March 24 speech that efforts to find common ground on these key issues are becoming more difficult.

"It is clear to me that we need a fresh look at what the role of government should be in the Internet ecosystem, and specifically at the statute governing the communications industry," Tauke said.

CLEAR SIGNALS

Many experts say that to mitigate the threat of lawsuits and reach the goal of reclassification, the FCC would need to send clear signals they plan a light regulatory touch.

"It doesn't have to be a heavy-handed model," said Rob Frieden, a telecommunications professor also at Penn State.

But the FCC would need to build a case and collect data to show that broadband should be treated like a transmission service such as telephone services because consumers are fixated on two aspects which also happen to be the items companies market: speed and price.

"The FCC has the power to reclassify on its own," Crawford said. "It just has to give a good reason for changing its mind."

(Editing by Andrew Hay)

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