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ACA Tells FCC “Third Way” Reclassification Prohibited Without First Accounting For The Burdens On Smaller Broadband Providers

Agency Must Conduct Rulemaking, Regulatory Flexibility Analysis Prior To Reclassification

PITTSBURGH, July 16, 2010 - The American Cable Association told the Federal Communications Commission that the agency is required by law to delay implementation of any broadband reclassification (or reclassification and forbearance) decisions until completion of rulemakings needed to identify those specific legacy provisions of Title II that the agency intends to apply to the newly declared common carrier service. 

In order to proceed with the agency's self-styled "Third Way" approach to broadband regulation, the FCC must comply with the Administrative Procedure Act (APA), which compels the agency to conduct a formal rulemaking, and the Regulatory Flexibility Act, (RFA) which requires the FCC to quantify the burdens on small operators of reclassification and steps it could take to ameliorate them.

"ACA submits that delayed implementation of any reclassification decision is not merely a matter of FCC discretion, but a necessity," ACA President and CEO Matthew M. Polka said.

The FCC has alerted stakeholders that as a procedural matter, it likely intends to move from a Notice of Inquiry (NOI) to the issuance of a ruling declaring that broadband Internet access is a telecommunications service rather than a lightly regulated information service within the meaning of the Communications Act.

With the policy machinery set up in this manner, ACA urged the FCC to delay the effective date of the reclassification ruling until the agency has established the substance of  the Title II regulations that it will require carriers to follow. In July 15 comments, ACA noted that it is unable to assess and comment upon the full scope and impact of new common carrier regulations on ACA members until such time as the FCC has finished the Title II work now unfortunately slated for completion after reclassification.

The FCC proposes new duties and obligations under six to 12 or more provisions of Title II of the Communications Act that the agency fully intends to exempt from any forbearance action it may take.

"As it is, the FCC has left ACA and its members in the dark about the precise extent of the new regulatory burdens associated with common carrier status for broadband Internet services, and this uncertainty affects both operations and investment incentives," Polka added.

Reclassifying wireline broadband access as a common carrier service runs the risk of imposing costly and disproportionate compliance burdens on independent broadband providers, according to ACA. These burdens include both direct economic regulation of the rates, terms, conditions and practices associated with the provision of Internet service and the administrative recordkeeping, reporting and filing obligations of common carriers under existing FCC rules.

"The FCC's proposed Third Way approach to broadband regulation - i.e., imposing common carrier obligations on ACA members for the first time - will significantly increase administrative recordkeeping, reporting and filing burdens and will potentially result in direct economic regulation of high-speed Internet access as offered to residential and commercial end-users.  If the FCC moves forward, it should forbear to the greatest extent possible to minimize the burdens on small providers," Polka said.

In its comments, ACA said that it is troubling that the FCC is contemplating such a significant policy shift in the procedural manner it has chosen, because it would permit the FCC to avoid conducting a formal rulemaking. It would also absolve the FCC from conducting a full regulatory flexibility analysis, a procedure which would give ACA members the opportunity to catalog the heavy burdens reclassification would impose and to forward specific recommendations to alleviate those harms.

About the American Cable Association

Based in Pittsburgh, the American Cable Association is a trade organization representing nearly 900 smaller and medium-sized, independent cable companies who provide broadband services for more than 7.6 million cable subscribers primarily located in rural and smaller suburban markets across America.  Through active participation in the regulatory and legislative process in Washington, D.C., ACA's members work together to advance the interests of their customers and ensure the future competitiveness and viability of their business.  For more information, visit http://www.americancable.org/

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