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NCTA: Net Neutrality Order Is Imperfect But Fair Resolution

Industry player reaction was
guardedly supportive Wednesday of the FCC's proposed network neutrality
order vote, scheduled for Dec. 21.

That is not a surprise since they were in on
discussions and had been looking to head off Title II reclassification of
broadband access--the proposed order is based on Title I (information
services), not Title II (common carrier), authority.

The National Cable & Telecommunications
Association, which was at the table when the FCC was hammering out the Title I-based
compromise proposal, called it an imperfect but acceptable route to the shared
goal of network openness, though it continued to maintain that no FCC action
was needed.

"While not perfect from our point of view and
in the absence of further action by Congress, we believe that it is a fair
resolution of this set of issues and that it is proposed in a way that achieves
our essential and shared objectives: preserving the openness of the
Internet and the incentives to invest and innovate for the benefit of
consumers," said NCTA President Kyle McSlarrow.

McSlarrow pointed to NCTA's
understanding of some key points in the order. They included the recognition of
usage-based pricing and no ban on specialized services. McSlarrow said the
order essentially codifies the industry's existing code of conduct. But he
also reserved the right to "vigorously challenge" new rules
"should the order change in any material way from our understanding."

AT&T reiterated that it thought Congress
should be the one clarifying the FCC's broadband authority, and the FCC
didn't need to step in. But it did say that if the FCC was stepping in, it
was generally pleased with the direction of the order, though it would reserve
final comment for the final order--commissioners still have three weeks to
weigh in and propose changes. "Obviously, AT&T's strong preference
would be for the FCC to refrain from any regulation in the Internet
space," said AT&T senior EVP Jim Cicconi, who has been one
of the stakeholder representatives at FCC discussions about the compromise

"We feel the industry's track record, the
utter absence of any specific ongoing problem, and the state of the economy all
argue for regulatory restraint," he said. "We also believe, based on
jurisdictional concerns, that the issue should rightly be deferred to the
Congress, a view also expressed by a bipartisan majority of that body."

But given that the FCC has decided to proceed,
"we are pleased that the FCC appears to be embracing a compromise solution
that is sensitive to the dynamics of investment in a difficult economy and
appears to avoid over-regulation."

What AT&T likes about the proposal, he said,
was that it appeared to "avoid onerous Title II regulation; would be
narrowly drawn along the lines of a compromise we have endorsed previously;
would reject limits on our ability to properly manage our network and
efficiently utilize our wireless spectrum; would recognize the capabilities and
limitations of different broadband technologies; would ensure specialized
services are protected against intrusive regulation; and would provide for a
case-by-case resolution of complaints that also encourages non-governmental
dispute settlement."

The compromise was one hammered out by House
Energy & Commerce Committee Chairman Henry Waxman (D-Calif.), on which the
chairman's network neutrality proposal is based.

Verizon was somewhat less sanguine. Unlike the
Waxman proposal, which had a two-year sunset, there is no sunset of the FCC
network neutrality regs in the chairman's proposal, senior FCC officials
confirm. Verizon had wanted the sunset to remain. Saying "if' the FCC
decides to act on network neutrality, Verizon EVP Tom Tauke, himself a
former congressman, said it should "consider the framework of the Waxman
proposal, including its sunset provision. The FCC's
authority to act in this area is uncertain, and Congress has indicated a strong
interest in addressing this issue; interim rules would encourage congressional
action, while showing appropriate deference to Congress."

Like Cicconi, Tauke said he would reserve
judgment until the draft order is made public, but he did say, "In this
fast-moving marketplace, inappropriate regulation can be very harmful to
consumers, companies, and the ability of this industry to create jobs, provide
new services, and be an engine for economic growth. That is why it is so
important that policymakers get this right."

While the wireless industry would have preferred
not to have any net neutrality conditions applied, it suggested it could live
with the FCC's proposal only to apply non-blocking and transparency regs, while
monitoring the industry's progress and reserving the right to revisit that

"Although we have not seen the specific language of the Chairman's
proposal, in his remarks, Chairman Genachowski emphasized the appropriateness
of recognizing differences between fixed and mobile broadband," said CTIA
President Steve Largent. "While we maintain our belief that any action in
this area is unnecessary in the dynamic and rapidly evolving wireless
environment, we understand and are pleased that the proposed rules have moved
away from broad Title II regulation and toward a more tailored approach that
recognizes the unique nature of wireless services. The wireless ecosystem moves
at a startling pace, and if new rules are adopted, they should be reviewed in
two years."