As previously noted, the Federal Communications Commission's Chairman has announced that the agency intends to pursue a "Third Way" and attempt to create a narrowly-tailored framework that would apply portions of Title II to those portions of broadband Internet service that the agency "re-defines" as telecommunications service.

The impetus for this action is the D.C. Circuit's recent ruling in Comcast v. FCC, rejecting the FCC's implied or "ancillary jurisdiction" to regulate Internet service services based on the legal theories advanced in the appeal by the agency. The FCC's General Counsel has described the new course of action as "A Third-Way Legal Framework for Addressing the Comcast Dilemma."

This morning, I participated in a panel discussion hosted by The Progress & Freedom Foundation entitled, What Should the Next Communications Act Look Like? I was asked to address the Federal Communications Commission's recently announced, "Third Way" plan to regulate broadband Internet service and its relation to the "Next Communications Act" What follows are my remarks as prepared for presentation.

I was invited to participate in a May 4th panel discussion hosted by the New America Foundation entitled "Federal Communications Commission: Toothless Regulator or Cop on the Beat?" We were asked to address whether the FCC has the authority to enforce its Network Neutrality principles, redirect the Universal Service Fund to promote broadband, or promote competition, in the wake of the D.C. Circuit's ruling in Comcast v. FCC, without taking the controversial step of "reclassifying" broadband Internet as a Title II common carrier service. The underlying premise being that the Comcast decision "threw a huge legal roadblock in the path of the FCC's National Broadband Plan—and President Obama's promise to preserve a non-discriminatory, open Internet—with its ruling this month that the Commission lacks the authority to prevent cable giant Comcast from blocking certain peer-to-peer applications." What follows is my analysis, as prepared for presentation.

I was invited to participate in an April 13th conference call hosted by Kelly Cobb on behalf of the Internet Freedom Coalition to discuss the D.C. Circuit's recent decision in Comcast v. FCC and its impact on the FCC's Open Internet rulemaking proceeding. My task was to offer an explanation of the procedure by which the FCC might attempt to impose the Communications Act's "Title II" regulations on the Internet without congressional authority or approval, and what judicial challenges might emerge from such an action. What follows are my remarks, as prepared for presentation.

The D.C. Circuit ruled today in favor of Comcast in the company's challenge to an FCC enforcement action concerning its provision of Internet service. The court's ruling reaffirms the primacy of the rule of law and the legislative authority of Congress to determine whether and how our nation's communications networks are to be regulated. I have said from the outset in my "The Law is Whatever the Nobles Do" series that the FCC's action against Comcast's Internet network management practices was unlawful because Congress has not delegated to the FCC regulatory authority over the provision of Internet services, and the FCC may not self-generate such authority through creative use of the doctrine of implied or "ancillary jurisdiction." The court's decision rests on the foundational principles that the FCC's regulatory authority is not unbounded, the agency is not free to make it up as it goes along and the FCC possess no plenary authority to regulate an Internet service provider's network management practices. That is to say, the administrative nobles in our system must follow the laws as Congress writes them; they do not stand above the law and cannot self-generate their legal authority.

As the D.C. Circuit wrote, the FCC may properly exercise its ancillary jurisdiction over matters not expressly mentioned in the Communications Act, but only when that exercise is reasonably ancillary to—that is, in support of—an expressly-delegated regulatory responsibility. In its Comcast-BitTorrent Order, the FCC could not show, despite strenuous efforts, that regulating Internet network management practices was reasonably related to any of its express regulatory mandates in the Communications Act. This all-important limitation on the exercise of its implied powers, according to the court, is what keeps the agency from freeing itself "from its congressional tether." Paraphrasing an earlier Supreme Court decision, the court observed that the FCC's Comcast decision, not only "'strain[ed] the outer limits of even the open-ended and pervasive jurisdiction that has evolved by decisions of the Commission and the courts,'" it sought to "shatter them entirely."

As called for in last year's The American Recovery and Reinvestment Act of 2009 (ARRA), the FCC has reported its long-awaited National Broadband Plan to Congress. The 360 page Plan seeks to guide policymakers, the communications industry and the public in order to increase the availability of broadband capability across America.

The Plan includes some 200 recommendations for further action, over half of which are directed at the FCC itself. The agency plans to release an implementation schedule soon of over 40 rulemaking proceedings necessary to implement the Plan's recommendations.

What was released on March 16th is therefore nothing more than a plan for a plan — or, more to the point, a jigsaw of plans that will be implemented piecemeal by the FCC and other government offices. The danger is that the resultant pieces may not fit together, and no clear picture of gains in broadband availability or adoption will materialize.

They say April showers bring May flowers. What will the waters of March bring us? I refer not the immortal jazz standard, "The Waters of March" by Antonio Carlos Jobim, but to the increasingly torrential shower of droplets now leaking—or rather, gushing—from the Federal Communications Commission's National Broadband Plan team. Not a day goes by without serial announcements of what is, and is not, in THE PLAN (only full capitalization can do this plan justice, as Professor James Speta once remarked). Examples of this serial leakage, include the tribal radio preference plan, Universal Service Fund reform to support broadband, and the mobile futures auction idea. FCC "Kremlinologists," investment analysts, and the press are busy studying these droplets for clues, as Forbes.com put it, of "Broadband Plan Winners and Losers." Of course the people of the United States will be the ultimate winners if THE PLAN is done correctly, but at the same time, the decisions made by the government will create industry sector winners and losers, as the headline states. Setting aside whether it is a good use of government resources to pick industry winners and losers, development of a plan to spur broadband deployment and adoption is exactly what Congress directed the FCC to do in the American Recovery and Reinvestment Act.

I was invited to participate on a March 2 panel discussion on the release of Richard Bennett's new paper, "Going Mobile: Technology and Policy Issues in the Mobile Internet," along with Harold Feld from Public Knowledge and Noah Clements, outside counsel to Association for Competitive Technology. A video of the paper presentation event is available on the ITIF website. What follows are my remarks, as prepared for presentation.

At a recent policy discussion luncheon in Washington, Craig Moffett, Senior Analyst, Bernstein Research, was asked how Wall Street would view a movement by the Federal Communications Commission to "re-classify" broadband Internet access services as "telecommunications services" subject to the full panoply of Title II common carrier regulation. His response: "investors would run for the hills." Such an action, Moffett explained, would be very destabilizing for the industry. Yet, that is exactly what several groups have asked the FCC to do in the context of developing its National Broadband Plan. The stated reason for this action is that reclassification from the lightly regulated "information service" category to the heavily regulated "telecommunications service" category "would expand the range of opportunities for more aggressive regulatory steps geared to promote widespread deployment and adoption of advanced telecommunications services." In other words, we can aggressively regulate our way to network investment and deployment.

I have previously written on this topic and noted that the purpose of regulation is to curtail companies from taking actions that they might otherwise take to gain some benefit, such as increase the return on the capital they have invested in their networks. Aggressive regulation will necessarily adversely impact network operator's future desire to continue to invest in their networks, just as it will adversely affect the desire of their investors to continue to invest in the communications infrastructure sector. As Dr. Larry Darby has observed, the concern is not that heavy handed regulation will completely stop network investment, but rather that "such rules will suppress investment that otherwise would be made, and that the differences might be substantial." In contrast, regulatory stability combined with actions based on empirical evidence and sound legal analysis that do not blow with the winds of the day is what is required to support the substantial long-term investments necessary to fund network industries like communications.

Whatever the merits or short-comings of the FCC's four separate decisions to classify all broadband Internet access services (cable modem, wireline Internet, broadband over powerline, and wireless Internet services) as information services, subject only to its limited Title I "ancillary jurisdiction," it may be too late in the day to go back, like SNL's Emily Latella, and say to the courts: "Never mind!" These decisions were made upon adequate factual records, consistent with the manner in which the services are provided, the wording of the statutory definitions, and the de-regulatory thrust of the provisions added to the Communications Act by the Telecommunications Act of 1996. The cable modem classification was upheld by the U.S. Supreme Court in the Brand X decision as a reasonable interpretation of the statute. There is no evidence that the manner of provisioning these services to the public is different today and the statutory definitions and policies under-girding these decisions are unchanged as well. A sector subject to a regulator using the logic of Humpty Dumpty would hardly be attractive to investors.

The FCC's National Broadband Plan team has previously placed a price tag for providing universal broadband service to all residents of the country at anywhere from $20 to $350 billion for a single network, depending on the speed of the connection delivered and other variables; double that--$700 billion--to support two networks if the competitive provision is deemed necessary. The American Recovery and Reinvestment Act budgeted $7.2 billion to support broadband deployment and adoption efforts. Private companies have invested hundreds of billions of dollars in the past decade to upgrade and expand their distribution networks and for the provision of Internet services and applications, and will need to continue to invest on a massive scale to meet the growing bandwidth demands of the future. The Government Accountability Office has recognized that we must continue to rely largely on private investment to fund network expansion and upgrades to achieve our broadband goals.

It is axiomatic, therefore, that a proposal that would send investors "running for the hills" should be categorically excluded from consideration as part of both the NBP and from the execution of the FCC's general statutory responsibilities, which include encouraging the deployment of advanced telecommunications capabilities such as high speed Internet service. A destabilized communications network sector will simply be unable to deliver the "100 Squared" vision recently articulated by the FCC's Chairman. The FCC would violate, not further, its statutory duties if its actions cause private capital to flee the communications infrastructure sector. At a time of record federal deficits, the chance that the federal government will cover a $350 billion shortfall, let alone the $700 billion shortfall, or that the universal service fund can do so, is somewhere between "Slim" and "None," and Slim just walked out of the building.

Google has announced that it will construct an ultra-high speed "experimental fiber network" to provide wholesale connectivity services on an "open access" basis to Internet content, applications, and services providers. Google states:

We're planning to build and test ultra high-speed broadband networks in a small number of trial locations across the United States. We'll deliver Internet speeds more than 100 times faster than what most Americans have access to today with 1 gigabit per second, fiber-to-the-home connections. We plan to offer service at a competitive price to at least 50,000 and potentially up to 500,000 people...

We'll operate an "open access" network, giving users the choice of multiple service providers. And consistent with our past advocacy, we'll manage our network in an open, non-discriminatory and transparent way.