Where there is a will there is a way… or a “third way” in U.S. Federal Communications Commission (FCC) lingo.

In its June 17 open meeting, the FCC released a Notice of Inquiry in order to re-examine the regulatory classification of broadband Internet. Here, we will look at the FCC’s third way approach to broadband Internet, which proposes a middle ground between the carrier-like regulation of telecommunications services and the light regulation of information services.

In July, we looked at the FCC’s classification of services as either “telecommunications” (transmission-based) or “information” (primarily content-based) for the purposes of regulation. This dichotomy reflects opposite poles of regulatory intervention. Today, broadband Internet is currently classified as an information service, an issue settled in the 2005 Brand X Supreme Court decision and subsequent FCC orders.

In the April Comcast vs. FCC decision, the D.C. Court of Appeals ruled that the FCC did not have the authority to regulate the network management practices of Comcast. This is because the FCC regulates information services under the “ancillary authority” of the Communications Act, a vague provision with no clear mandate from Congress with regards to network management practices. In a response to Comcast, the FCC now proposes to reclassify Internet broadband as a telecommunications service — where the mandate from Congress is clear.

However, there are two twists to the FCC’s proposed reclassification of broadband Internet:

1. Broadband Internet could be legally separated into its transport and data-processing components with each component classified as a telecommunications and information service respectively; and

2. The FCC would abstain from exercising the full suite of obligations to the telecommunications component, a practice called forbearance that allows the FCC to cherry pick regulations so long as it is in the public interest. 

Potential Challenges to the Third Way

The third way proposal is not without defects. In fact, the Comcasts, ATTs and Verizons of the world are sure to challenge any reclassification of Internet broadband, perhaps all the way to the Supreme Court. The FCC sees a reclassification as the almost inevitable step toward taking back control because the current way of regulating broadband as an information service is a “mere recipe for prolonged uncertainty,” thus leaving the national broadband plan on shaky ground. 

Comcast’s Illusory Victory

While the large carriers are still celebrating the Comcast decision, the FCC has been at work planning its response. In fact, the DC Court of Appeals decision is quite narrow, since it only prevents the FCC from regulating the network management practices of cable Internet providers.

What is more significant is that the decision comes early in the game while the national broadband plan is in its planning stages. It also provides clear guidance to the FCC as to where to go and what to do to take back control. History will tell, but Comcast’s court challenge might eventually amount to shooting itself in the foot. The FCC likely will issue an order implementing its third way, and the network providers will no doubt challenge the FCC’s third way in court. 

Revisiting Brand X

In Brand X, where the classification of cable broadband Internet as an information service was in question, six out of nine justices said they would defer the choice of classification of services to the FCC. In essence, the Supreme Court said that the FCC was better equipped than the court to make such technical decisions, and that the FCC’s interpretation was not carved in stone. That is, the FCC could change its mind in the future. The remaining three judges dissented, instead suggesting that Internet broadband should be split into transport and data processing components. Therefore, if the question were to go back to the Supreme Court regarding the FCC’s reclassification of broadband internet as a telecommunications service, as many as all nine justices could agree with the FCC.

With regard to finding authority to implement its net neutrality policies and the goals of the national broadband plan, the FCC could very well get its way… its third way that is.

Raul Magallanes runs a Houston-based law firm focusing on telecommunications law. He may be reached at +1 (281) 317-1397 or by email at raul@ rmtelecomlaw.com.