John Windhausen, Telepoly ConsultingCathy Sloan, Computer and Communications Industry Association

May 19, 2010

FCC Chairman Genachowski announces that the FCC will recognize the

“transmission component of broadband access service—and only this

component—as a telecommunications service.”

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What does this mean for Net Neutrality?

What are the implications for higher education?

What are the implications for the Computer and Broadband Industries?

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1980’s: The FCC decides that computerized services (data processing, dial-a-horoscope) should be classified as unregulated “information services.”

However, when the Bell Operating Companies provide information services bundled with telecommunications services, they must separate out the “telecommunications services” and offer them as stand-alone (regulated) services.

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Retained the separation between “telecommunications services”

(regulated) and “information services” (unregulated) Also included Section 706 – intended to

promote the deployment of “Advanced Services” (broadband).

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Found that “Internet Access Services” are “information services.” (e-mail,

web hosting, usenet, etc.)

Initially did not directly address the classification of “broadband services”

because they were not available to the general public.

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FCC found that cable modem access to the Internet should be classified as an “information service”.

FCC did NOT require cable companies to separate out the transmission function from the Internet function.

On appeal, the Supreme Court upheld the FCC’s Order in 2005 (Brand X case), finding that the FCC’s Order was reasonable.

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After the Supreme Court decision, the FCC found that all broadband Internet access (including by telephone companies) should also be classified as “information services.”

It reversed its Computer II/III rulings and said Bell Companies do NOT have to separate out their telecommunications services.

It said this was necessary to promote broadband investment and Section 706.

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“Not to worry” (said the FCC), we will protect the consumer by exercising our authority under the vague provisions of Title I.

The FCC issued 4 principles to ensure that consumers have a right to access any content, use any service or equipment.

But Chairman Martin said at the time that these principles were “unenforceable.”

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In 2008, the FCC found that Comcast violated net neutrality principles and ordered Comcast to change its network management practices.

Comcast appealed. The Court of Appeals overturned the

FCC and said Congress had not given FCC authority to regulate broadband under Title I.

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FCC releases National Broadband Plan in March 2010.

Many of these NBP proposals are put in jeopardy by Comcast Decision. Universal Service Reform Disabilities Access Promote broadband deployment and

adoption

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Option 1: Classify all broadband Internet access as “telecommunications services.”

Option 2: Continue to try to use Title I, despite the court opinion.

The Third Way: regulate only the “transmission component” of broadband services.

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The FCC is not proposing to regulate the Internet – it says only the “on-ramps” to the Internet will be regulated.

Only six provisions of Title II will be applied to the “transmission component.” Section 201 requires just and reasonable

rates. Section 202 requires nondiscrimination. Section 208 allows filing of complaints.

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Will the Third Way require all Internet Service Providers (ISPs) to offer stand-alone broadband transmission service? (as in Computer II/III?)

Will the Third Way consider rate regulation of broadband services?

Will the Third Way apply to Google, Skype, E-bay and other application providers that also own their own transmission facilities?

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FCC will consider two separate proceedings. To define the telecommunications

component that will be regulated. To determine which regulations will apply.

Both proceedings will be launched this summer, with decisions expected later this year/early next year.

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Will resolve many uncertainties about access to the network;

Will constrain market power of broadband companies to manipulate the market;

Will encourage more innovation and investment at the edge of the network.

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The Third Way may promote freedom of speech, promote marketplace of ideas.

The Third Way may reduce prices that smaller colleges and community colleges must pay for broadband services;

Risk that the Third Way could affect non-profit research networks or private networks.

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Many Democrats (i.e. Rockefeller, Waxman) will encourage the FCC to move forward.

Many Republicans will attack the FCC (and Obama Administration) for regulating the Internet (encouraged by the Tea Party)

Moderates of both parties will seek/support pragmatic solutions while avoiding both inflammatory rhetoric and heavy-handed regulation.

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Not concerned about Net Neutrality Cable is expected to “win” the

broadband war with telcos, now that Verizon and AT&T have put any future fiber investment on hold.

Cable downgraded because the Third Way may prevent cable from “reaping the spoils of victory.” (i.e. monopoly prices)

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