John Windhausen, Telepoly Consulting Cathy Sloan, Computer and Communications Industry Association May 19, 2010

 FCC Chairman Genachowski announces that the FCC will recognize the “transmission component of broadband access service—and only this component—as a telecommunications service.” 2

 What does this mean for Net Neutrality?  What are the implications for higher education?  What are the implications for the Computer and Broadband Industries? 3

 1980’s: The FCC decides that computerized services (data processing, dial-a-horoscope) should be classified as unregulated “information services.”  However, when the Bell Operating Companies provide information services bundled with telecommunications services, they must separate out the “telecommunications services” and offer them as stand-alone (regulated) services. 4

 Retained the separation between “telecommunications services” (regulated) and “information services” (unregulated)  Also included Section 706 – intended to promote the deployment of “Advanced Services” (broadband). 5

 Found that “Internet Access Services” are “information services.” ( , web hosting, usenet, etc.)  Initially did not directly address the classification of “broadband services” because they were not available to the general public. 6

 FCC found that cable modem access to the Internet should be classified as an “information service”.  FCC did NOT require cable companies to separate out the transmission function from the Internet function.  On appeal, the Supreme Court upheld the FCC’s Order in 2005 (Brand X case), finding that the FCC’s Order was reasonable. 7

 After the Supreme Court decision, the FCC found that all broadband Internet access (including by telephone companies) should also be classified as “information services.”  It reversed its Computer II/III rulings and said Bell Companies do NOT have to separate out their telecommunications services.  It said this was necessary to promote broadband investment and Section

 “Not to worry” (said the FCC), we will protect the consumer by exercising our authority under the vague provisions of Title I.  The FCC issued 4 principles to ensure that consumers have a right to access any content, use any service or equipment.  But Chairman Martin said at the time that these principles were “unenforceable.” 9

 In 2008, the FCC found that Comcast violated net neutrality principles and ordered Comcast to change its network management practices.  Comcast appealed.  The Court of Appeals overturned the FCC and said Congress had not given FCC authority to regulate broadband under Title I. 10

 FCC releases National Broadband Plan in March  Many of these NBP proposals are put in jeopardy by Comcast Decision.  Universal Service Reform  Disabilities Access  Promote broadband deployment and adoption 11

 Option 1: Classify all broadband Internet access as “telecommunications services.”  Option 2: Continue to try to use Title I, despite the court opinion.  The Third Way: regulate only the “transmission component” of broadband services. 12

 The FCC is not proposing to regulate the Internet – it says only the “on-ramps” to the Internet will be regulated.  Only six provisions of Title II will be applied to the “transmission component.”  Section 201 requires just and reasonable rates.  Section 202 requires nondiscrimination.  Section 208 allows filing of complaints. 13

 Will the Third Way require all Internet Service Providers (ISPs) to offer stand-alone broadband transmission service? (as in Computer II/III?)  Will the Third Way consider rate regulation of broadband services?  Will the Third Way apply to Google, Skype, E-bay and other application providers that also own their own transmission facilities? 14

 FCC will consider two separate proceedings.  To define the telecommunications component that will be regulated.  To determine which regulations will apply.  Both proceedings will be launched this summer, with decisions expected later this year/early next year. 15

 Will resolve many uncertainties about access to the network;  Will constrain market power of broadband companies to manipulate the market;  Will encourage more innovation and investment at the edge of the network. 16

 The Third Way may promote freedom of speech, promote marketplace of ideas.  The Third Way may reduce prices that smaller colleges and community colleges must pay for broadband services;  Risk that the Third Way could affect non-profit research networks or private networks. 17

 Many Democrats (i.e. Rockefeller, Waxman) will encourage the FCC to move forward.  Many Republicans will attack the FCC (and Obama Administration) for regulating the Internet (encouraged by the Tea Party)  Moderates of both parties will seek/support pragmatic solutions while avoiding both inflammatory rhetoric and heavy-handed regulation. 18

 Not concerned about Net Neutrality  Cable is expected to “win” the broadband war with telcos, now that Verizon and AT&T have put any future fiber investment on hold.  Cable downgraded because the Third Way may prevent cable from “reaping the spoils of victory.” (i.e. monopoly prices) 19