Telcos Get Brand X Status

The FCC has unanimously agreed to classify telco's Internet access service over digital subscriber lines (DSL) as an information service, granting them the same freedom from access regulations the cable industry got in June when the Supreme Court upheld the FCC in the Brand X decision.

In addition, the commission agreed to require telco and cable internet phone service to be subject to government access for homeland security purposes--wiretaps and other surveillance--per the Communications Assistance for Law Enforcement Act, and to adopt a policy statement of principles encouraging free and open access to the internet.

The commission also agreed to consider whether there is a need for an overarching public policy regime for broadband services, regardless of how they are deployed.

Those additions were central to getting the votes of Democrats Jonathan Adelstein and Michael Copps, as were portions addressing accessibility for the disabled, protections for rural carriers, and emergency communications.

Both Democrats said they wanted the FCC to revisit the decision in a year to see whether it had promoted broadband competition, investment and penetration. If not, they said, the FCC should takes steps to put teeth into its policy statement on consumer access and protection.

Copps said he still believed the FCC was overstepping its bounds by reclassifying cable and telco Internet services, which essentially frees them from obligations to carry unaffiliated Internet service providers, but said the Court had changed the landscape and that it was better to work toward the best proposal possible rather than "throw up his hands."

Independent ISP carriage will be grandfathered for a year to give time for the transition, with that clock likely to start in September, when the order is published in the Federal Register.

FCC Chairman Kevin Martin had been working hard to get a unanimous vote on the proposal to give telcos the same control over Internet access to its digital subscriber lines (DSL) that the FCC gave cable or modem service, and the Supreme Court subsequently upheld in the Brand X case.

After that decision, Martin and Abernathy had praised the move, and Adelstein had supported gaining some regulatory certainty. Copps had been less sanguine.

That less sanguine Copps, mixed with a large measure of resignation, was very much on display at the meeting, saying, "The handwriting is on the wall. DSL will be reclassified, either now or sometime soon, whether I agree or don't agree. It is not a situation of my preference, or making," he said, "nor does it benefit this institution or consumers."

The commission said the the telcos must continue to contribute the same portion of their DSL revenues into the Universal Service Fund as before for the next 270 days or until the FCC figures out how to maintain that fund--which helps extend broadband to unserved areas--since the decision would remove the DSL category from those obligated to pay into the fund.

The FCC reserved the right to extend that 270-day pay period, or to expand the base of those paying into the fund. One bill introduced in Congress last week would expand that base of payers by adding cable's VoIP service to that list.

The telephone industry was understandably pleased: 

“The Commission’s vote today is the right move to bring consumers more choice for high-speed Internet service, speed broadband deployment and spur investment," the U.S. Telecom Association said. "After waiting several years for the courts to act, we appreciate Chairman Martin’s efforts to bring the rules for DSL service in line quickly with the rules for cable modem service.

Media Access Project President Andrew Schwartzman was not happy with the decision, though he did give it a backhanded compliment: "This is bad news for the people who use the Internet," he said in a statement. "It means higher prices, less competition and disincentives for those entrepreneurs who have used the Internet as a platform for innovation and economic growth.

"Even so, it could have been worse. By asserting its authority to stop the most flagrant kinds of abuse, the FCC has made it somewhat harder to block or impede access to information."

The Natoinal Cable & Telecommuniations Association said it was glad the FCC was pushing broadband deployment and a level playing field, but used the opportunity to chide the telcos over efforts to avoid local franchise regs when rolling out video service.

"We applaud Chairman Martin for making broadband deployment a national priority, and support today's FCC decision to promote deregulatory policies that treat like services alike," said NCTA Presidnt Kyle McSlarrow. 
"We invite the telephone companies to take a similar approach to regulation of video services and drop their self-serving demands for special treatment by the government when entering the video marketplace.  A competitive marketplace with a level regulatory playing field for all services, regardless of technology, is one that all industries should be prepared to compete in.", which along with Google, Microsoft and others, had pushed the FCC to ensure unfettered Internet access even as it reclassified the service, applauded the sentiments of the policy statement but pushed Congress to put an exclamation point on it.

"We welcome the FCC’s finding that American consumers are entitled to broadband Internet access unimpaired by network operators," said Paul Misener, VP, Global Public Policy.  "We also appreciate that the FCC drew a line in the sand against interference by network operators. 

"In order to better protect this important consumer right of unfettered access to lawful Internet content, we believe Congress should take the next step and enact additional safeguards. 

"We commend the Commission and its staff for their determination to keep the Internet a unique place for consumer information and services, technical innovation, and economic growth, and look forward to working with Congress on the next step."

Independent ISP Earthlink was looking on the bright side. VP Dave Baker characterized the decision "effectively preserves DSL access for the next year.  Beyond that, we are confident that we will extend our existing commercial agreements with the Bells so that we can continue to deliver DSL services.

"EarthLink will continue to work with our cable partners and explore next generation broadband alternatives to give consumers competitive alternatives for their high-speed Internet service."

Martin got high marks from both Democratic commissioners for his collegial approach to the reclassification decision, which has been a priority of his.

In a speech to the National Association of Regulatory Utility Commissioners July 26, Martin had said the Supreme Court's decision that cable modem service is a "less regulated information service" gave the commission a "clear roadmap" to take telcos on that same path, and he wanted to get there as soon as possible.
That apparently required burning the midnight oil and delaying the meeting twice while commissioners and staffers hammered out a proposal both sides could live with.

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.