The next clash: Who gets to regulate net neutrality?

In yesterday's highly anticipated policy speech from newly appointed FCC Chairman Julius Genachowski, the FCC under the Obama Administration has officially appointed itself the federal regulatory body overseeing "net neutrality." Since the term was coined by Congress in 2006, the phrase has morphed radically to mean many things. Originally conceived as a principle preventing an ISP from offering certain content providers premium bandwidth unavailable to, or unaffordable by, others, it came to mean a principle preventing an ISP from limiting users' access to certain content or applications.

But the concept has morphed so many times now that even the reader discussion of yesterday's Genachowski speech centered around an argument over what it meant. Yesterday, local TV news reports about the speech defined the principle as preventing Apple from denying access or placement of applications on its mobile App Store.

As the Chairman took possession of the hot potato yesterday, he too began a now-familiar process of re-morphing and re-shaping the issue, though perhaps not as drastically as local TV news suggested. Still, his proposed introduction of two new principles for Internet regulation, in addition to the four originally proposed by former FCC Chairman Michael Powell, slipped in some new language that sounded the alert sirens of Republicans on Capitol Hill, who acted immediately.

Acting on a suggestion last April from FCC Commissioner Michael Copps (one which was based on a suggestion from a former Obama campaign official named Julius Genachowski), the Chairman proposed an "Internet non-discrimination principle," the ostensible purpose of which would be to prevent ISPs from using any means to block users' access to content. While ISPs would retain the right to monitor and regulate traffic, he contended, that right would not interfere with this new principle: "This principle will not prevent broadband providers from reasonably managing their networks. During periods of network congestion, for example, it may be appropriate for providers to ensure that very heavy users do not crowd out everyone else."

But the morphing began with a key paragraph which at first appeared innocuous enough, praising the evolution of the Internet as a technology: "In considering the openness of the Internet, it is also important to recognize that our choice of technologies and devices for accessing the Internet continues to expand at a dizzying pace. New mobile and satellite broadband networks are getting faster every day, and extraordinary devices like smartphones and wireless data cards are making it easier to stay connected while on the go. And I note the beginnings of a trend towards openness among several participants in the mobile marketplace.

"Even though each form of Internet access has unique technical characteristics, they are all are different roads to the same place," Genachowski continued. "It is essential that the Internet itself remain open, however users reach it. The principles I've been speaking about apply to the Internet however accessed, and I will ask my fellow Commissioners to join me in confirming this."

If you weren't looking for an offending passage, you might not see it. But Congressional Republicans were definitely looking for it, and they found it here, in the way Genachowski extends the breadth of his Fifth Principle to cover mobile and satellite. There is considerable legal debate over whether the FCC has the right to regulate transactions over carriers' private networks, which existing law such as the Telecommunications Act of 1996 would classify as telephone traffic -- outside the FCC's purview. The "foot in the door" for regulating telephone traffic is to create a trail of breadcrumbs that leads this way: "Telephone > Smartphone > Broadband > Internet."

Genachowski leads us to that point with this sentence: "The principles I've been speaking about apply to the Internet however accessed."
In an effort yesterday to immediately suspend the FCC's ability to draw that conclusion for itself without extensive debate, Sen. Kay Bailey Hutchison (R - Texas) and colleagues quickly drafted an amendment to an Interior Dept. appropriations bill -- something which has nothing to do with net neutrality -- that would, as an afterthought, cut off funding to the FCC for regulating in this manner. The entire amendment reads, "The Federal Communications Commission shall not expend any funds from any account in fiscal year 2010 -- (1) to implement any Internet neutrality or network management principles; or (2) to promulgate any rules relating to such principles."

Sen. Hutchison tried similar measures to prevent Genachowski's predecessor, former chairman Kevin Martin, from trying a different approach to achieve the same goal. Specifically, Martin had advocated opening cable TV systems to a la carte programming options, although doing so would, by default, declare the FCC the official regulator of content availability through CATV-owned pipelines. Genachowski's Fifth Principle takes another route, but would achieve the same goal. And while there are many in Congress who are fine with the FCC assuming that role -- including high-ranking Congressman Ed Markey (D - Mass.), who previously introduced legislation declaring the FCC the regulator in such affairs -- others in Congress are unwilling to cede what they see as their own authority over these matters.

Hutchison, among others, has been a supporter and author of legislation over the last several years (which, like net neutrality legislation, also went nowhere) that would open up broadband franchising beyond the local and municipal level -- in Hutchison's case, to the level of states. In such instances, state regulators and state courts would be the arbiters of fairness and neutrality; though as Hutchison sees it, loose regulations should enable ISPs to set service standards and requirements for their own networks. It was the political effort in 2006 by Senate and House Republicans to deregulate how private service providers manage their own networks, that led to the opposition creating "net neutrality" as a popular mantra for regulated fairness.

In a joint statement released yesterday afternoon, Republican FCC Commissioners Robert McDowell and Meredith Baker expressed skepticism over the implications of Genachowski's Fifth Principle, and acknowledged they saw his play to get a foot in the door for wireless regulation: "We hope that all of the stakeholders affected by the Chairman's proposed endeavor have sufficient time to investigate the facts thoroughly and deliberate openly before the Commission acts to codify more government involvement in the Internet space," Baker and McDowell said. "Although we have not been given any draft or summary of proposed net neutrality rules, it is clear from the Chairman's statements that they will be monumental in their scope. In the meantime, we are concerned that both factual and legal conclusions may have been drawn before the process has begun."