The chairman of the Federal Communications Commission, Julius Genachowski, said the government body is leaning toward keeping the current regulatory structure of broadband Internet service providers such as Comcast, as opposed to extending the FCC's legal authority, which has been recently challenged.
The Washington Post reported unnamed sources said the chairman thinks "reclassifying" would serve as an investment deterrent for broadband providers and wants to keep broadband services deregulated. The news suggests the FCC will be unable to enforce a "net neutrality" rule, which forces broadband providers to treat all Websites and applications as equals.
However, an October 2009 report from media watchdog Free Press found in general, firms' investment decisions are driven primarily by six factors: expectations about demand, supply costs, competition, interest rates, corporate taxes and general economic confidence, making the overall decision to invest a complex process that is dependent on the specific facts of a given market. "It is simply wrong to suggest that network neutrality, or any other regulation, will automatically deter investment," wrote Free Press research director S. Derek Turner.
"In capital-intensive industries like the ISP sector, firms must make massive investments just to maintain the status quo, as old equipment depreciates and outlives its productive lifecycle," he wrote. "But when we look at the ISP sector through this lens of "net investment," we see that for the most part, U.S. ISPs are depleting more in asset value than they spend on new capital equipment -- thus they are actually disinvesting in their networks."
Free Press executive director Josh Silver lambasted the FCC in a statement, calling Genachowski's comments unbelievable and predicting such comments would lead to the destruction of net neutrality. "If Chairman Genachowski fails to re-establish the FCC authority to protect Internet users, he will be allowing companies like Comcast, AT&T and Verizon to slow down, block or censor content at will," he said. "They can block any website, any blog post, any tweet, any outreach by a political campaign - and the FCC would be powerless to stop them. Without reclassification, nearly every broadband-related decision the agency makes from here forward will be aggressively challenged in court, and the FCC will likely lose."
The comments come after an April 6 ruling by the U.S. Court of Appeals for the District of Columbia Circuit, which threw out the FCC's decision to regulate Comcast's online management. The court ruled the FCC "has failed to tie its assertion" of regulatory authority to any actual law enacted by Congress, the agency does not have the authority to regulate an Internet provider's network management practices. Congress had repeatedly declined to give the FCC the authority to enforce its network neutrality principles.
In addition to implications for net neutrality, the court ruling also put in doubt the FCC's ability to carry out its National Broadband Plan, which aims to improve efforts to connect all individuals and the economy to the benefits of broadband's Internet service. The plan's call for action over the next decade includes connecting 100 million households to affordable 100M bps service. Key elements of the Broadband Plan require the FCC's use of network neutrality rules to keep the nation's broadband pipes open, including the ability to dictate that broadband providers not favor their own content over legal content.