FCC Plan To Regulate Broadband Is -- *Gasp* -- Good For Internet Business

The prospects for net neutrality -- the principle that Internet traffic carriers shouldn't be able to treat some types of traffic more favorably than others -- looked dim in April, after a court ruled that the FCC had no power over broadband providers. Now the FCC is back with an end-run around that ruling in which it plans to treat carriers as a special variation of telephone provider. This will mean a degree of regulatory oversight and pain that carriers have never known -- but it will also protect many emerging Internet market niches.

Broadband carriers have long wanted the freedom to discriminate among different types of traffic, charging rates that would vary by the nature of the data or use. So, for example, carriers could throttle back bandwidth for consumers who used "too much," or demand additional payment from high bandwidth services like video on demand. Carriers generally disapproved of the support the FCC has shown for net neutrality.

Now they're back under the gun. According to a statement from FCC Chairman Julius Genachowski:

The recent court opinion in Comcast v. FCC does not challenge the longstanding consensus about the FCC's important but restrained role in protecting consumers, promoting competition, and ensuring that all Americans can benefit from broadband communications. Nor does it challenge the commonsense policies we have been pursuing.But the opinion does cast serious doubt on the particular legal theory the Commission used for the past few years to justify its backstop role with respect to broadband Internet communications. The opinion therefore creates a serious problem that must be solved so that the Commission can implement important, commonsense broadband policies...

Instead, it plans a hybrid approach that recognizes only the transmission portion of broadband as a telecommunications service and apply only some of the applicable regulatory provisions to the industry. You can expect howls as the carriers see how much control they might lose and as executives view -- and rightfully so, I think -- the promise of "forbearance and meaningful boundaries to guard against regulatory overreach" to be one that future commissioners might not take so seriously.

But ranting and raving won't server carriers in the long run. These are companies, after all, that have claimed to be victims of "abuse" by customers even as they pulled down billions in profits. The industry has managed to double-dip quite effectively for some time, with both senders and receivers of traffic paying access charges that more than covered the carriers' true infrastructure costs. This is an industry that has overreached in its greed and unwillingness to invest sufficient revenue as its cost of doing business. Now it will likely have to settle for the consequences, one of which will be the necessary freedom for Internet-related businesses to innovate and develop new products.

Related Coverage:

• FCC Loses Broadband Authority, But May Get the Last Laugh
• Verizon, AT&T To Limit Bandwidth; They Don't Understand Customers
• Telecoms Toss the Gauntlet Over Broadband