FCC Title II Push is "Reckless," "Risky" and Will Create a "Casino" Environment

Mincing no words, former FCC Commissioner Harold Furchgott-Roth says the Federal Communications Commission's drive to reclassify broadband access as a common carrier service is "reckless" and "risky," will lead to a dampening of investment in networks, years of legal challenge and replaces an investment climate with a "casino" environment.

Of course, the drive to regulate broadband access as a common carrier service, despite being described as a targeted "third way" between unregulated information services and regulated common carrier services can be no such thing. The service either is an unregulated data service or it is a common carrier service under Title II. There is no permanent middle ground, as the FCC can later apply virtually any Title II common carrier obligations if it so desires, once the change is made.

In fact, the FCC's latest effort is the fourth time the FCC has launched inquiries into the status of information services, concluding three times before (Computer Inquiry I, II and III) that information or enhanced services are in fact to remain unregulated.

In light of those decisions, one has to ask: is broadband Internet access a separable telecommunications service plus a separate information service including processing, storage, retrieval, or a single integrated information service that uses telecommunications? If broadband access is deemed to be the former, the FCC might try to regulate some parts of the "access" service under Title II. If broadband access is seen to be the latter, then the current information services classification logically remains in place.

That's the chief problem with the Federal Communications Commission's effort to find some "third way" as it seeks

to impose Title II regulation for the first time, on broadband access services, says Russell Hanser, an attorney at

Wilkinson, Barker & Knauer.

"The uncertainty the proposal creates will create a dampening effect on investment in the broadband business,"

says Harold Furchgott-Roth, former FCC commissioner. Companies aren't sure what will happen and will delay

investment until there is certainty, he says.

The FCC's proposal simply is not conducive to investment, he says. "This is risky," he adds. It "puts businesses at

risk of making decisions they can't be certain about."

Years of litigation are certain to follow if the rules are put into place, Furchgott-Roth says. "The problem is that the proposal is not clear or narrow," and that is the sort of FCC decision that tends to clearly withstand legal challenge," he adds. "Anybody who talks to investors knows how much investors got burned 10 years ago based on faulty interpretations of rules," he says. "This is a casino environment."

If the FCC proceeds, and succeeds, "things will be tied up in courts for years an investors will gravitate to areas with greater certainty and opportunity for profit."

One might argue that means overseas investments will make more sense, or that investments in wireless will make more sense. But the FCC also seems to leaning towards regulating mobile providers more intensely than it already does, arguing that industry concentration is growing.

"There is a very clear correlation between certainty and investment," says Furchgott-Roth. "Unfortunately, both regulation and uncertainty is where we appear to be headed."