FCC’s Broadband Regulation Push: Pros and Cons

Wounded from a court decision that stopped the government from regulating Internet service providers, the Federal Communications Commission has announced a new way to gain some control over the broadband industry. The proposal would let the FCC treat Internet transmissions like telephone communications, entailing more oversight, but would prevent government control over Web services, applications and e-commerce sites. Any move by the FCC is bound to draw cheers and jeers, but here are some of the pros and cons from both sides:

Pro: Web Services Love It

The Open Internet Coalition, which includes Web companies such as Google, Amazon and Netflix, applauded the FCC’s proposal. The approach of regulating just the transmission side of the Internet keeps the government out of Web companies’ hair, but also ensures that Internet service providers have to treat all their services equally.

Con: Cable Companies Hate It

FCC Chairman Julius Genachowski says that pursuing this middle ground of regulation won’t create a chilling effect on broadband investment. The cable industry may beg to differ. Stocks fell after the FCC announced its proposal, and Cablevision Chief Operating Officer Tom Rutledge said the company would be “disappointed” if the rules went into effect. Uncertainty over the outcome of regulation is enough to upset investors, which in turn could sour cable companies on sinking more money into infrastructure.

Pro: Green Light for National Broadband Plan

When a federal appeals court ruled last April that the FCC couldn’t prevent Comcast from throttling certain Internet services, Genachowski said the decision wouldn’t affect a plan to provide 100 Mbps broadband to 100 million homes, and to offer free wireless Internet through unused television spectrum. However, Genachowski must not have been entirely convinced, as he says the new rules put the National Broadband Plan on firmer legal footing than ever, clearly defining the government’s regulatory powers.

Pro: No Congress Required

The FCC may face a battle in court from cable companies, UBS analyst John Hodulik told the Wall Street Journal, but the commission’s proposal requires no changes to the law, which means Congress doesn’t need to get involved. Lawmakers have tried to introduce net neutrality laws before, but to no avail. The FCC’s proposal gets the ball rolling on net neutrality and a national broadband plan without waiting for Congress to do something.

Con: What Needs Fixing, Anyway?

About that last point: The FCC’s Republican commissioners aren’t thrilled with the idea of setting new rules without Congress. It hurts the credibility of the commission, and is doomed to fail anyway when courts ultimately strike down the proposal. Besides, they say, there’s no evidence of systemic problems in the broadband market, so new rules are unnecessary.