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Backdraft: FCC Preps Network Neutrality

The FCC’s proposed network neutrality order is being circulated among the commissioners for a vote. The question is: What if any modifications will be made to the draft? The answer will likely determine the ultimate fate of the order.

According to FCC officials familiar with the draft— who asked not to be identified—the order tracks closely with early reports on items by outlets including B&C. The draft rules apply transparency caveats to wired and wireless broadband; unreasonable discrimination rules that are meant only for wired; and blocking rules that all apply to wired, with a subset of those applying to wireless transmissions focused on Websites and applications with voice and video.

The definition of “reasonable network management” will be a case-by-case evaluation, said one FCC source. That leaves for another day the debate over whether said definition will be too broad, and thus favor ISPs, as some public interest groups argue.

The item allows for usage-based pricing, which means charging users for exceeding bandwidth limits. That practice is currently in play, but ISPs were concerned it could be circumscribed or foreclosed by the new rules.

Bernstein Research analyst Craig Moffett said last week that the importance of that support for the cable business cannot be overstated. “Usagebased pricing will preserve, and even enhance, the economics of cable’s infrastructure…even if consumers eventually get some, or even all, of their video content over the Web,” Moffett said.

FCC Chairman Julius Genachowski no longer plans to declare broadband transmissions a Title II common-carrier service subject to some of the rules that are stricter than its current Title I information service classification; that could, however, mean having to adjust the item to secure the votes of both of his Democratic colleagues, Mignon Clyburn and Michael Copps. Republicans are strongly opposed to the new approach, as they were to Title II.

While the one-page rules codify the FCC’s current Internet openness guidelines, and add ones on transparency and nondiscrimination, they do not ban paid prioritization and so-called “specialized services.” Those would allow cable and phone networks to insure the speed and quality of video distribution, for a price. This flexibility is one of the main reasons industry players including Comcast, AT&T and Time Warner Cable are, if slightly grudgingly, on board with network neutrality regulations.

According to the proposed order, the FCC has “significant concern with such practices” and will keep an eye on them. The FCC did not foreclose those services, which are broadband but not delivered over the public Internet, in part because the commission’s broadband plan envisions online applications, like remote health monitoring, that will be bandwidth-hungry and could require priority over less crucial apps.

Complaints Remain
Public interest groups complain this will also allow video distributors to bypass the Internet and pay for favored status. They have vowed to continue to push for changes to that language before a commission vote.

The FCC will enforce the new rules via a case-bycase complaint process. As senior staffers have said, the FCC will attempt to defend the rules using general delegated authority to promote telecommunications competition, rather than reclassify broadband service under parts of Title II common-carrier laws that give it power over things like rates and access.

A federal court said the FCC had not sufficiently defended its decision in the BitTorrent case under that delegated authority, but did not say it could not justify it. The court said that promoting telecommunications was a policy statement, and some previous decisions suggested it was a policy statement, said an FCC source who asked not to be identified, so they are going back to make it clear this is a delegated power by Congress.

While Genachowski has scheduled a vote on the new rules Dec. 21, the item could still be pulled from the agenda if he can’t get the three votes he needs. The two other Democrats on the commission were on board with reclassification of broadband under some common-carrier regs as a way to support net neutrality rules, but neither endorsed this latest approach.

Commissioner Copps has been talking up Title II as the better approach, and his support could depend on toughening language on managed services, or applying more of the regs to wireless broadband.

“The key is, whenever we see a red line [correction to the draft], what has happened,” said an FCC source. “The Democratic horse-trading is the sport for the month.”

Last week, Sen. John Kerry (D-Mass.), chairman of the powerful Senate Communications Subcommittee, asked both Copps and Clyburn to bite the bullet and support the chairman’s compromise that, while not perfect, Kerry sees as good enough. Clyburn signaled she was on the same page, but still has some issues with how the regs apply to wireless.

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