FCC Under Scrutiny as GOP Senators Try to Head Off More Internet Regs

A Senate hearing last Wednesday took aim at a controversy that has vexed Congress, federal regulators and the telecommunications industry for the better part of a decade: How best to regulate the Internet — and how large a role the Federal Communications Commission should play.

The hearing of the Senate Commerce, Science and Transportation Committee focused on a Republican proposal to maintain so-called “net neutrality” — the idea that all Internet content should be open to the public and treated equally.

The GOP bill, crafted by the committee’s chairman, Sen. John Thune (R-S.D.), and his counterpart on the House panel, Rep. Fred Upton (R-Mich.), is an effort to head off the FCC’s own plan to preserve net neutrality. Most analysts expect the FCC to push for greater regulatory control over the web and the Internet service providers that deliver it to consumers. The FCC has sought greater control in the past, but the federal courts have struck down its efforts, saying the commission lacked congressional authority to take such action. The commission is set to announce its latest plan next month.

The Republican measure would allow the FCC to impose tough new limits on ISPs, especially with respect to how they manage their networks. But it also would limit the commission’s regulatory authority, and would fall well short of the solution touted by many Democrats and consumer groups: Turn the Internet into a veritable public utility like water and electricity, a move that would give the FCC broad powers to control service providers and, in effect, oversee their operation.

Such a scenario does not sit well with Thune.

“There is a well-founded fear that regulating the Internet like a public utility monopoly will harm its entrepreneurial nature [and] chill investment,” the senator said in his opening statement Wednesday.

Meredith Atwell Baker, president and CEO of industry trade group CTIA — The Wireless Association, agreed. She was one of five witnesses to testify at Wednesday’s hearing. Baker said the FCC’s expected plan, which would include a decades-old set of regulations known as Title II, would force “1930s-era wired rules” onto wireless broadband services. That, in turn, she said, would stunt growth and innovation, and in the end, lead to higher costs and diminished services for the public.

“It would harm consumers and our economy,” Baker said.

But Democrats fear that weakening the FCC’s bite would lead to a less-than-open Internet, a development that could also harm consumers, said Sen. Bill Nelson (D-Fla.), the committee’s ranking Democrat. Consumer groups fear that service providers would use “loopholes” in the GOP plan to set up a two-tiered Internet by charging companies a kind of information-superhighway toll to boost their websites’ visibility and access, an option known as paid prioritization. By necessity, that means companies who refuse to pay the toll have less visibility — a situation that goes against the principles of an open Internet.

“[The public] does not want their access to websites and services blocked,” Nelson said Wednesday. “They’re worried about their broadband provider picking winners and losers on the Internet by relegating those content companies who refuse to pay a toll to a slow lane of service.”

Nelson also echoed a concern shared by many consumer groups that an impotent FCC would make service providers less responsive to consumer concerns over cost and access.

“If we put a straightjacket on the commission, we may very well miss the future and leave the agency powerless — and American consumers defenseless — to deal with emerging problems,” the senator said.

Gene Kimmelman, president of nonprofit consumer interest group Public Knowledge, said the FCC and Title II, which dates back to 1932, has helped make the U.S. the most technologically advanced nation in the world.

“We are the nation that put a phone on every farm,” he said. “We are the nation that invented the modern wireless industry. We are the nation that invented the Internet.”

All of that was done, in part, through Title II and sound regulatory policy, he said.

“The focus on fundamental values such as service to all Americans and consumer protection — rather than focusing on ‘clarity’ and ‘certainty’ around the issues of the moment — made the United States the undisputed leader in telecommunications policy and technology,” he said. His comment was a none-too-subtle dig at one of the Republicans’ main arguments for legislation — namely that the party’s proposal would bring “clarity,” as Thune put it Wednesday, to an issue that has been in limbo for years.

But Thune said clarity is, in fact, a key concern to both the industry and consumers who want the Internet regulated — but not to the point that it stifles innovation and growth.

“Instead of using outdated regulations, I believe the most enduring way to protect both the Internet and individual Internet users is through legislation that establishes clear rules of the digital road,” he said. “As well as clear limits on the FCC’s regulatory authority.”

W. Tom Simmons, senior vice president of Midcontinent Communications, a telecommunications company based in Sioux Falls, S.D., said the FCC’s approach would place a “real burden” on small providers such as his company. Increased regulations, he said, would invariably lead to increased mandates and higher costs — not to mention upset customers.

“We have to explain to folks why their rates are going up with no increase in value,” Simmons said in response to a question from Sen. Roy Blunt (R-Mo.). “Well, you can get away with saying ‘it’s the government’ for a while, but that doesn’t work very long.”

Despite their differences on the issue, both Thune and Nelson struck a conciliatory tone during Wednesday’s hearing. The Republican chairman made clear he wanted to ensure the public’s “unfettered access” to an open Internet. Thune needs bipartisan support for the bill, given that President Barack Obama would likely veto it if it got to his desk. Bringing Democrats on board could help ensure a veto-proof vote, though that is anything but certain.

Nelson, meanwhile, said the FCC’s action — whatever it turns out to be — next month doesn’t mean some kind of congressional action isn’t warranted. He said he could see legislation working hand-in-hand with the FCC’s approach.

But whether the FCC or Congress — or a combination of the two — settle the issue of net neutrality and an open Internet, the courts are sure to have more to say on the issue.

Baker said her group’s members would be forced to take legal action if the FCC goes through with its proposal to regulate the Internet like a utility. On the other side of the issue, consumer advocacy and minority rights groups have said they too will go to the courts should the Republican bill become law.