The FCC and Broadband Regulation: Third Way or Third Rail?

I really like what Federal communication Commission Chairman Julius Genachowski is trying to do with broadband regulation: Regulate it lightly, just enough to protect consumers without stifling innovation. It’s hard to argue with the intention. I just wish I could believe that it is going to work.

I don’t really share the fears of conservatives or libertarian’s like the Progress & Freedom Foundation’s Adam Thierer, who doesn’t believe there can be such a thing as a little regulation. The risks they cite are real, but I think we saw in the Clinton Administration and, so far, under Obama, that it is possible to have judicious regulation. It tends to be too much regulation to make business happy and too little to please self-appointed “consumer advocates,” but that’s where the sweet spot is.

My problem is that I fear that Genachowski is never going to get his chance to apply the eminently reasonable approach he lays out in a statement on his plans. In trying to set up a regulatory regime that reclassifies broadband services as telecommunications services, rather than information services, but at the same time to exempt them from the more onerous requirements of common-carrier reglation under title II of the Telecommunication Act, Genachowski is creating a third option that wasn’t envisioned by Congress.

I am not a lawyer and I don’t presume to know more about the legal details than the FCC’s general counsel, who has signed off on the plan. But I will note that in the 14 years since the passage of the 1996 act, the courts have not smiled upon efforts by the FCC to expand or otherwise redefine its powers beyond the strict letter of the law. It was former Chairman Kevin Martin’s effort to create network neutrality principles without explicit sanction that landed the FCC in its current pickle. When the FCC, still under Martin, tried to enforce the rules against Comcast, the cable operator sued and won a unanimous D.C. Circuit Court of Appeals ruling that the FCC had no such power. The rebuke was so thorough that the commission barely even considered appealing it. Genachowski is a lot more thoughtful and less impetuous than Martin, but I fear his effort to create a “third way” will come to the same unhappy end.

The problem for Genachowski is that the alternatives are grim. The fundamental issue is that the U.S. telecommunication policy framework was a mess when it was written in ’96, and it has since been swept over by several waves of technology that have rendered it increasingly irrelevant (Does anyone remember what a local access and transport area or an incumbent local exchange carrier is? Does anyone care?) But given the legislative backlog, the general paralysis of Congress, and the lack of a champion for telecom reform in the House, Senate, or the White House, the prospects for fixing the law anytime soon are close to hopeless.

In light of that, it’s hard to blame Genachowski for trying and I can only wish him well. But I’m not going to bet on a happy outcome.

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