FCC Plan to Subject Internet to Old Phone Regulations Could Harm Consumers and the Economy

The Federal Communications Commission's so-called "third-way" proposal to subject broadband Internet access services to old, monopoly-era telecommunications regulations is unnecessary, unworkable and could harm consumers, the economy and the future of the Internet ecosystem, Verizon told the FCC on Thursday (July 15).

In comments filed with the commission, Verizon said the FCC's proposal is "based on an incorrect reading of the Comcast decision," faces "insurmountable legal and factual obstacles," and "is in reality a return to the old way."

The company proposed a better way:  "The commission should pursue a genuine 'third way' built on the Internet's successful model of self-governance based on technical standards and best practices, with the government serving as a backstop on a case-by-case basis in the event industry mechanisms prove unable to resolve the issue."

If the old regulations are applied to the dynamic and highly competitive wireless sector, Verizon warned, significant harm could result.  "While the commission's proposal would be harmful and unlawful with respect to broadband Internet services generally, it would be particularly irrational and damaging in the wireless context," the company said in its filing.

Verizon's comments are in response to a notice of inquiry approved last month by a divided FCC.  Members of Congress from both political parties (including a bipartisan majority of the House of Representatives) and an array of groups, experts and companies have urged the FCC not to take its proposed approach.

"This approach would see the commission abandon a regime that has led to the rapid growth of the Internet as an economic engine for our nation in favor of one in which pervasive regulation would become the inevitable norm and regulatory uncertainty would be an unavoidable outcome," Verizon told the FCC.  "As numerous independent financial analysts have observed, the result would be a profoundly negative effect on investment and innovation, jobs and the broader economy."  

The company said the proposed "reclassification" of broadband Internet access is an effort to expand FCC authority and would be unlawful. 

"The commission has no legal or factual basis to reverse course and find that broadband Internet access service is (or contains) a Title II telecommunications service subject to common carrier regulation," Verizon stated.  "Reclassification would be contrary to the Communications Act and repeated commission precedents as affirmed by the Supreme Court."

The FCC has acknowledged that, even if it reclassifies broadband, it still will exercise Title I ancillary authority over information service aspects of Internet access services to accomplish its regulatory agenda.  Thus, "the additional step of subjecting some aspects of broadband Internet access to archaic common carrier regulation is gratuitous (and costly) regulation for regulation's sake," the company stated. 

The company also said that the FCC's legal theory necessarily would "allow it to sweep under Title II a whole range of other Internet-based offerings," including Amazon's Kindle, voice-over-IP services such as Vonage and Skype, network providers like Akamai, and applications like Google and Netflix.

Verizon Communications Inc. (NYSE, NASDAQ:VZ), headquartered in New York, is a global leader in delivering broadband and other wireless and wireline communications services to mass market, business, government and wholesale customers.  Verizon Wireless operates America's most reliable wireless network, serving nearly 93 million customers nationwide.  Verizon also provides converged communications, information and entertainment services over America's most advanced fiber-optic network, and delivers innovative, seamless business solutions to customers around the world.  A Dow 30 company, Verizon last year generated consolidated revenues of more than $107 billion.  For more information, visit www.verizon.com.

####