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CONTACT: Mike Wendy
May 6, 2010
(202) 969-2957
Statement of Barbara Esbin Concerning the FCC's "Third Way" Internet Regulation Proposal

WASHINGTON D.C. — The following statement may be attributed to Barbara Esbin, Senior Fellow at The Progress & Freedom Foundation and Director of PFF's Center for Communications and Competition Policy:

The FCC has released a legal blueprint—a "Third Way"—to proceed with its plans to regulate the provision of Internet services without additional Congressional action following the Comcast decision. There is much to commend in the proposal, particularly its decision to avoid the most extreme options being foisted upon it by advocates at both ends of the spectrum. The new proposals are far less intrusive, for example, than the FCC's previously proposed "Open Internet" rules, which would have prohibited even "just and reasonable discrimination" in the handling of Internet traffic. Another encouraging detail is the FCC's indication that restrictive regulation of Internet service providers' network management practices is to be avoided.
Whether the FCC's third-way proposal will indeed provide the Commission with a sound foundation for future actions remains to be seen. It is by no means certain that the FCC can compel common carrier status in today's competitive broadband Internet marketplace; past attempts have succeeded only in the presence of significant market power. Relatedly, the rationale used for "treating" the telecommunications component of the functionally integrated Internet service offerings in today's market—market failure or a lack of adequate competition—will also doom the agency's chances of successfully forbearing from over 40 provisions in Title II of the Act, which by definition will automatically attach by virtue of the FCC's reclassification exercise. Finally, this action is by no means a simple return to the status quo ante the Comcast decision for all segments of the broadband Internet access industry—it is a radical departure for the cable industry, the largest providers of residential broadband Internet access.
A fundamental flaw with the third-way proposal remains: will the courts view this as reasoned decision-making, taken within the FCC's Congressionally-delegated powers, or a transparent end-run around the effects of an unfavorable judicial ruling? The devil, as always, lay in the details. In the final analysis, I fear this well-intentioned but nonetheless problematic third-way forward will engender increased regulatory uncertainty, decreased investment and adverse effects for consumers.

The Progress & Freedom Foundation is a market-oriented think tank that studies the digital revolution and its implications for public policy. It is a 501(c)(3) research & educational organization.



The Progress & Freedom Foundation