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FCC Strugles to Define Broadband as Technologies Converge

Federal Communications Commission Chairman Julius Genachowski will soon have to make a wonky but controversial decision that could have a profound impact on how much consumers pay for broadband, how fast their services will be - and possibly whether millions of people will be able to get it at all.

He can ensure that the FCC has the power to set rules for high-speed Internet service if he asks his fellow regulators to define it, in legal terms, as a highly regulated common carrier service like telephones. Or he can let cable and phone companies call the shots by allowing it to remain a lightly regulated information service.

There's no deadline for a decision. But if Genachowski waits too long, he may have to abandon dozens of policy changes that he has proposed to close the digital divide and protect broadband subscribers.

That would mean Genachowski "will have no legacy," says Josh Silver, executive director of Free Press, an activist group that favors more broadband oversight.

But if he does act, cable and phone companies likely would "launch an all-out attack" on the FCC leading into this year's congressional elections, "with charges of lost jobs, lost investment, lost (broadband) deployment and more Democratic meddling in industry," says analyst Rebecca Arbogast of Stifel Nicolaus, a financial services firm.

Genachowski ran into this dilemma last week when the U.S. Court of Appeals for the District of Columbia overturned a commission decision from 2008 that involved Comcast's management of Internet traffic. Justices said the FCC lacked an explicit mandate to regulate broadband. The agency tied its own hands in 2005 when it defined phone DSL broadband as an information service, similar to a decision it made in 2002 about cable modems.

The court tossed aside the FCC's view that it could infer some power over Internet services from its authority to set rules for cable TV and phone services. The ruling hit just weeks after the FCC unveiled a sweeping proposal, called the National Broadband Plan, designed to make high-speed Internet a staple of everyday life.

Separately, Genachowski and President Obama have said that they want to require Internet providers to treat all Web services equally, a policy known as net neutrality.

Without a change in the law that defines broadband, many of these proposals would have to be scuttled or might end up being "litigated before a skeptical court," Arbogast says.

The FCC won't say whether Genachowski is inclined to reassert regulatory power over broadband by reclassifying it as a common carrier service. But whatever decision he makes will create shock waves.

Rules are 'badly out of date'

If the FCC changes the way it treats high-speed Internet, then "everybody in the industry would sue," says Scott Cleland, chairman of NetCompetition.org, an Internet forum supported by cable and phone companies.

"It would be like an 8.0 earthquake under the sector," he adds. "Hundreds of billions of dollars have been invested (in broadband) in the belief that there'd be a market rate of return, not a regulated rate."

The FCC's two Republican commissioners have said they'd fight a move to reclassify broadband.

Verizon and AT&T have said that they'd prefer to see Congress clarify the FCC's role and what rules should apply to new players including Google. Laws are "badly out of date," Verizon Executive Vice President Tom Tauke said in a recent speech.

But consumer advocates and others say that Genachowski can't afford to wait. "It would surely take a year or two" to get a major law through Congress, says Andrew Schwartzman of the Media Access Project, a public interest law firm.

And if an FCC decision to reclassify broadband draws a lawsuit, it makes more sense to have "one big court case instead of a dozen small cases," Schwartzman says.

Genachowski's fellow Democrats on the commission also are eager to act. Michael Copps called reclassification the "only way the commission can make lemonade out of (the Appeals Court's) lemon of a decision."

If Genachowski wants to defuse the issue, he could try to engineer a compromise. For example, he could agree to take broadband reclassification off the table as long as providers make legally binding promises to offer consumer protections called for in the National Broadband Plan and to agree to treat all Web services equally. But it will be hard to please everybody as advocates gear up for a fight.

While reclassification isn't a sexy issue, as the Internet becomes the main pipeline for media and communications, the FCC's rules "will shape everything that people use to interact with the world," Silver says.

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