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FCC Comments regarding the Framework for Broadband Internet Service

Submission Date: 
07/15/2010


Executive Summary

     ACA members bring to this proceeding more than a decade of providing broadband Internet service under a consistent federal policy - a light regulatory touch. This policy has contributed significantly to the success of small and medium-size cable companies in delivering broadband to smaller markets and rural areas, particularly in markets where the cost of infrastructure and delivering service is often substantially higher than in urban markets. Against this background, ACA is concerned about the practical implications for smaller providers of subjecting these services to a regulatory framework developed a century ago for analog voice telephone service. In developing its regulatory framework for broadband service, the Commission appears poised to depart from its highly successful "light touch" regulatory environment for broadband Internet services and impose, for the first time, economic regulation on broadband Internet service providers.

     The Commission's "Third Way" proposal - reclassification of broadband Internet service as a telecommunications service and forbearance from two-thirds or more of Title II common carrier obligations -- risks foisting on smaller providers increased regulatory burdens and costs. Before making such a major shift in the governing regulatory framework, as a matter of law and sound policy, the Commission must fully assess and weigh the costs and benefits of its "third way" proposal, particularly with respect to the burdens of significantly increased regulation for small entities.

     In ACA's view, the Title II burdens associated with the Third Way proposal will have a significant economic impact on small broadband Internet service providers. These 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 the Commission's rules. The cumulative impact of the new regulatory burdens associated with common carrier status counsels restraint. If the Commission moves forward with its "Third Way" proposal, it should forbear to the greatest extent possible to minimize the burdens on small providers.

     Regardless of whether the Commission reclassifies the transmission component of the integrated broadband Internet service on the basis that it is today being offered as a stand-alone telecommunications service or that it must be so provided, the action will change the legal status of the service and simultaneously impose new legal obligations with significant economic impacts on small providers where today there are none. This is true notwithstanding the ultimate level of forbearance exercised by the Commission with respect to this service. For this reason, the act of reclassifying the service as a common carrier offering is in the nature of a legislative ruling, requiring both a formal notice-and-comment rulemaking under the Administrative Procedure Act and a regulatory flexibility act analysis under the Regulatory Flexibility Act.

     ACA is particularly concerned that the Commission has indicated its intent to move directly from the NOI while skipping both of these important procedural requirements mandated by law. Only after conducting initial and final Regulatory Flexibility Act analyses can the Commission properly quantify the extent of the impact of reclassification on small entities, and articulate its efforts to minimize the significant economic impact of regulatory burdens on smaller entities. As it is, the Commission 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.

     To ease the immediate impact on small operators, should the Commission decide to reclassify broadband Internet service as a stand-alone telecommunications service offering, the Commission must delay implementation of its classification (or classification and forbearance) decision until it can conduct and complete the rulemaking proceedings necessary to implement the "unforborn" provisions of Title II to the newly declared common carrier service.

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2010 07 15 ACA Third Way Comments FINAL.pdf131.07 KB

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