FCC role in flux amid broadband explosion

Federal regulators find themselves pummeled on both sides as they contemplate broadband regulation that Capitol Hill has declined to address.

5 min read
WASHINGTON--The Federal Communications Commission is taking baby steps toward regulating high-speed Internet services, even as a bevy of broadband-related bills have failed to pass this year's Congress.

Gartner analyst Ron Cowles says the free market will prevail and regulators, despite good intentions, should avoid creating bumps along the way.

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The FCC's role signals a shift in strategy at the agency. Though it has historically regulated broadcasting and phone services, under the leadership of Chairman William Kennard the agency has been reluctant to take on the myriad issues facing the Internet. With these potential new regulations, the FCC is asserting itself as the central federal source for Internet policy and regulation.

The FCC's review of the colossal merger of America Online and Time Warner could lead to high-speed, or "broadband," requirements for the merger's approval, including open-access regulations on Time Warner's cable network. But the FCC has several other initiatives getting less publicity that also could lead to broadband regulation.

A growing bipartisan chorus on Capitol Hill has faulted the commission for acting too slowly on implementing the deregulatory laws Congress passed and for its lengthy merger reviews. Some reforms assigned by Congress to the FCC, such as addressing the charge Bell companies pay for sending calls to Internet service providers, have dragged on for years, leading some politicians to seek to solve the problems with new laws. Others want to severely curtail the commission's authority.

Kennard, in turn, has vowed to close the so-called digital divide that has rural and inner-city areas receiving less broadband choice. Among items being considered at the commission are the idea of forcing Bell companies to provide access to competitors' newly installed, advanced Internet equipment, as well as an open-access inquiry that eventually could place mandates on a variety of industries, from satellite providers to wireless.

"Clearly the FCC has been loafing on the broadband issues," said James Love, director of the Washington, D.C.-based Consumer Project on Technology. Love, a crusader who has organized rallies to protest the commission's inaction on open access, is one of many urging the commission to be more proactive.

The FCC has been "hoping the marketplace will be so competitive they won't have to do anything," Love said. "The big issues are the new technologies for discrimination in content delivery and whether or not there need to be rules to promote a level playing field.

"We say yes," Love said. "But then of course you need to design the rules--a tough but necessary job."

The first such regulation could come in the AOL-Time Warner merger review, which Kennard has vowed will be voted on by the end of the month. Disney and others have expressed concerns that a vertically integrated company such as AOL Time Warner will be able to block both Internet and cable content.

Content is also expected to be an issue in the open-access inquiry the commission recently launched. Content providers have the same bottleneck concerns with other cable operators that they do with Time Warner.

Some view the commission's recent inaction not as loafing, but as something to celebrate.

"There has been no more eloquent advocate of keeping government regulations out of Internet access than Chairman Kennard," said Peter Arnold, executive director of the northern Virginia-based coalition Hands Off the Internet. Arnold and his coalition partners have fought the last two years to keep the government from forcing cable companies to open their plants to competing Internet service providers.

Changing tacks
Kennard "has been a very clever skipper of a sailboat, tacking one way and then the other" on broadband issues, Arnold said. When "the clouds looked pretty dark" for cable companies he "was vociferous in support of a hands-off (regulatory) policy," Arnold said. But after the AOL-Time Warner merger was announced, "Kennard tacked the other way" and pushed harder for voluntary industry agreements on open access.

Arnold would expect See related newsmaker: William Kennardmore of the same if the FCC has some new leadership following the presidential election. Change is more likely to occur if Texas Gov. George W. Bush is elected president, with the latest speculation having Commissioner Michael Powell, son of retired Joint Chiefs of Staff Chairman Colin Powell, replacing Kennard as chairman.

Powell has been a moderate voice on the commission compared with his fellow Republican Commissioner Harold Furchtgott-Roth. Powell has voted with Kennard more often than not on broadband issues, so it's unclear how much of a change his tenure would bring.

Congress had a full plate of broadband issues this term, but few if any appear likely to become law. Thus, for the next few months at least, the focus of advocates like Love and Arnold will be on the FCC.

The Bell equipment item could be voted on in the next couple of months, said Dorothy Attwood, the FCC's Common Carrier Bureau chief. The open-access inquiry won't be wrapped up until next year, and there's no guarantee that could lead to any new regulation.

The FCC also is looking to streamline its approval process for broadband equipment, including wireless devices, another action that could come in the next few months if not sooner. That is welcome news to the Telecommunications Industry Association, which notes that the FCC's approval time can sometimes last almost as long as the time it takes for the next generation of a product to clear development.

The commission also is required by law every year to monitor whether broadband "is being deployed to all Americans on a reasonable and timely basis" and to "take immediate action to accelerate deployment" through regulation.

In its August broadband review, the FCC warned the broadband industry that some populations, including rural and inner-city areas and tribal reservations, were underserved. If that continues, there are several ways the commission could act, from simple steps such as boosting the telephone subsidy that funds the e-rate program for school computer equipment to more drastic measures such as corporate mandates. Kennard and others have indicated they don't have to wait until the next annual survey to act.

Arnold, for one, would not like to see that happen. "Regulating Internet access is nonsensical," he said, noting that broadband is nascent but growing. "It's a solution in search of a problem."