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Business Costs & Regulation

FCC Likely to Get Back
Control of the Internet

Verizon, Google and others are lining up on both sides of a fight in Congress.

Stung by a court ruling earlier this month that it lacks authority to regulate the Internet, the Federal Communications Commission will seek and likely get such power from Congress. However, it may be next year before lawmakers pass a bill granting the FCC’s wish.

The agency’s push for legislation is sure to spark a major clash between Internet service providers (ISPs), such as Comcast, Verizon, AT&T and AOL, and leading providers of content over the Web, including Google, Facebook, Yahoo and Amazon.

Specifically, the FCC will ask Rep. Edward Markey (D-MA) and other allies on Capitol Hill for regulatory powers that would allow the agency to issue rules pertaining to “net neutrality” -- a provision that seeks to guard against government or ISP restrictions on Web sites and platforms. Markey is a strong proponent of an open and unencumbered Web.

The FCC also wants the legislation to allow it to require ISPs to be more transparent in letting customers know what actual broadband speeds they’re working with at any given time.

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Moreover, the agency is asking lawmakers to allow it to redirect money from the Universal Service Fund -- an FCC-created kitty for the advancement of universal service -- to the deployment of broadband service.

The court’s ruling that the FCC lacks authority to regulate the Web may slow the Obama administration’s ambitious national broadband plan, which seeks to connect 100 million households with broadband capability of at least 100 megabits over the next decade, as well as its moves to require truth-in-advertising rules for ISPs.

The controversial court case dates to 2005, when the FCC set up a number of net neutrality rules, requiring ISPs to treat all Internet traffic equally, no matter the source. In 2008, the agency found that Comcast, an ISP, was violating those regulations because it was slowing the speed of BitTorrent’s peer-to-peer file sharing program, which allowed users to share very large files, such as movies and television shows.

Though it denied the charge at first, Comcast later admitted that it was slowing that program, but only to protect customers from network congestion caused by the volume of BitTorrent traffic.

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But the U.S. Court of Appeals for the District of Columbia Circuit held that the FCC “lacked any statutorily mandated responsibility” to impose its net neutrality rules on the Internet.

The decision “means there are no protections in the law for consumers’ broadband services,” says Gigi Sohn, president of Public Knowledge, a digital rights group that brought Comcast’s slowing of BitTorrent traffic to the attention of the FCC. “Companies selling Internet access are free to play favorites with content on their networks, to throttle certain applications or simply block others,” she adds.

The FCC could appeal the ruling to the Supreme Court, but that’s unlikely because the appeals court relied heavily on Supreme Court precedents in its decision.

It could also move to declare the Internet “a communications service” and therefore subject to its legal authority. In 2002, the Internet was declared an information service rather than a communications service and therefore subject to light regulation.

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But reclassifying it as a communications service would subject it to the same rules designed for the then-monopolistic landline telephone systems, which are onerous and could stifle Internet innovation.

“We hope the issue would be referred to the U.S. Congress, which alone confers the Commission’s legal authority,” says Jim Cicconi, AT&T executive vice president.

For its part, Comcast -- which has stopped the practice of slowing peer-to-peer traffic -- says it “remains committed to the FCC’s existing broadband principles, and we will continue to work constructively with the FCC as it determines how best to increase broadband adoption and preserve an open and vibrant Internet.”