[1st-mile-nm] FCC Moves Closer to Regulating the Internet

[Richard Lowenberg]

FCC Moves Closer to Regulating the Internet

www.techlawjournal.com/internet/80908.htm

(September 8, 1998)  The Federal Communications Commission released a lengthy
report on Thursday, September 4, which suggests that the FCC ought to regulate
Internet access provided by cable operators such as @Home, Road Runner,
Cablevision, and MediaOne.  This is the second major policy statement by the
FCC this year that seeks to expand its regulatory reach from telecommunications
services into computer and Internet services.

The Congress, courts, and until recently, the FCC, have held to a distinction
between "telecommunication services" and "information services" (also referred
to as "basic" and "enhanced," respectively).  The former are subject to FCC
regulation -- the latter are not.  The FCC maintains in this Report that it
still adheres to this dichotomy.  However, it seeks to redefine certain
information services as telecommunications services.

The Report argues too that with technological convergence "it will become
increasingly difficult to maintain that particular facilities are 'cable' as
opposed to 'telecommunications'."  And because of this, existing "regulatory
categories," claims the Report, "must necessarily collapse of their own weight
in the digital communications world of tomorrow."

The paper released last week is entitled "Internet Over Cable: Defining the
Future in Terms of the Past: FCC Staff Working Paper on Regulatory Categories
and the Internet."  It was written by Barbara Esbin, Associate Bureau Chief of
the Cable Services Bureau, in conjunction with FCC's Office of Plans and Policy
(OPP).

The Report asserts that its purpose is to start a debate: "This working paper is
intended to stimulate discussion and critical comment on these significant
issues and their consequences."

"The issue of the regulatory status of Internet-based services provided by cable
operators over their cable systems arises as a result of revisions to the
definition of 'cable services' contained in the 1996 Act," states the Report.

The argument that the FCC has authority to regulate Internet access provided by
cable operators rests largely on a very minor two word amendment to the
definition of "cable service" contained in the 1996 Telecommunications Act.

1984 Cable Act defined cable service as "the one-way transmission to subscribers
of video programming or other programming service, and subscriber interaction,
if any, which is required for the selection of such video programming or other
programming service."

The words "one-way transmission" have long been understood to mean that Internet
access, which involves interactive two-way communication, is not covered by the
1984 Cable Act.

Moreover, the definition of "video programming" as "programming provided by, or
generally considered comparable to programming provided by, a television
station" would seemingly exclude Internet content from the 1984 Cable Act.

However, the 1996 Telecom Act modified the definition of "cable service" by
inserting the words "or use," so that the definition now reads, "the one-way
transmission to subscribers of video programming or other programming service,
and subscriber interaction, if any, which is required for the selection or use
of such video programming or other programming service."

The Report also contends that the changing nature of the Internet, particularly
its assertion that it is becoming increasingly like TV, warrants regulating
cable based Internet access like old fashioned cable TV monopolies.


Politics of FCC Regulation

The FCC is a Byzantine bureaucracy which was created to oversee certain
monopolies, including what was once "the phone company," and limited access
industries, such as analog broadcast TV and radio, for which there is very
limited spectrum.  The 1984 Cable Act extended FCC authority to one-way cable
transmission of TV programming.

While the Congress has recently been intent upon deregulating many of the
industries regulated by the FCC, as evidenced by passage of the 1996
Telecommunications Act, the FCC has been delaying or evading implementation of
many elements 1996 Act.  In contrast, the FCC, as evidenced by the April 10
Report to Congress, and this Report on cable based Internet access, is
attempting to extend its regulatory reach into competitive industries.

While FCC many personnel would like to preserve and extent their power, the FCC
is not acting in isolation.  Many telecommunications monopolies which have long
been regulated are quite comfortable with the old arrangements.  One of their
responses to new and unregulated technologies which threaten their position is
to prod and lobby the FCC to extend its regulatory reach over these new
competitors.  The purpose is to restrain or burden them, to make them less
competitive.

The National Cable Television Association, which represents old media one-way
cable monopolies, urged the FCC to regulate cable based Internet services
provided over cable systems by cable operators.

Similarly, old line analog telephone companies, which rely heavily on public
switched telephone networks, have long urged the FCC to regulate the packet
switched Internet Protocol telephony service providers.

Also, those who benefit from FCC regulation have generally lobbied the FCC to
expand its authority.  For example, recipients of universal service subsidies
want to see the pool of contributors to the universal service fund grow.


-- 
Richard Lowenberg
1st-Mile Institute
P.O. Box 8001, Santa Fe, NM 87504
505-989-9110;   505-603-5200 cell
rl at 1st-mile.com  www.1st-mile.com


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