Our Industry Insight series brings insight and analysis from industry thought leaders on important issues facing the telecom industry. This latest insight comes from industry veteran L. Marie Guillory, who provides analysis on the implications of the current open Internet debate.

The Google-Verizon legislative framework proposal for an open Internet  addresses the limits of the FCC’s regulatory authority  to regulate  the network management practices of  Internet access service providers.

There has been extensive coverage and debate over what is contained in the accord and what is missing but not much about the two giants’ failure to address the FCC’s regulatory authority to assess broadband access service providers to support universal service in the same way that telecommunications carriers are assessed.

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FCC Ancillary Authority
Before the DC Circuit’s decision in Comcast v. FCC, the FCC relied on its ancillary powers to regulate some of the  network management practices of  Internet access services providers. Apparently, the  FCC  also believed that these  ancillary powers would allow  it to implement other important changes related to broadband access services and  proposed in the National Broadband Plan.

One of these NBP proposed changes is a  plan  to expand the universal service contribution base to include broadband related revenues. Today, only telecommunications services are assessed and revenues to support universal service have remained flat as a result.  Now left without authority under its ancillary jurisdiction, the FCC must rely on the 1996 Act to expand the universal service funding base if it wants to add services like broadband or extend service to additional unserved areas.  However, the 1996 law limits the field of contributors to “telecommunications carriers” that provide “telecommunications services.”
The Comcast decision held that the FCC could not rely on its ancillary powers in the absence of a clear mandate to regulate broadband services that it had itself classified as “information services.” After Comcast, the FCC proposed its own third way of regulating broadband Internet access services and went looking for solutions on how to address network neutrality.

Comcast goes beyond questioning the FCC’s authority to regulate broadband services. It also casts doubts on the FCC’s authority to use its ancillary authority to assess the broadband services it has classified as “information services” to support the various services included in universal service now or at some future date.   Of course, expansion of the universal service contribution base to include broadband service providers is exactly what the FCC proposed in Recommendation 8.10 of the NBP.

The Agency has not  held all day Sunday meetings  looking  for a solution to address  the  impact of Comcast on its authority  on  some of the recommendations  for  universal  service funding  coming out of  the National Broadband Plan.  It has expressed some concerns about its authority to move forward, however.

Reliance on ancillary jurisdiction to assess broadband access service providers  is now more than ever likely to invite litigation and delay fixing of the contribution problem.  At this stage, Comcast does not allow the FCC to move with the swiftness called for in the NBP and there appears to be no Google-Verizon type accord in the works to address this issue.

Legislative Approach
There is a legislative vehicle in place already that can move this process along, however.   In  July,  Reps. Rick Boucher (D-Va.), chairman of the Energy and Commerce Subcommittee on Communications, Technology and the Internet, and Lee Terry (R-Neb.) introduced the Universal Service Reform Act of 2010. The Bill  begins to address what is missing in the Google-Verizon accord by providing the FCC specific regulatory authority to assess the broadband related revenues of Internet access service providers to support universal service.

With Congress returning to work on September 13, now may be the time for interested parties with equal clout on universal service issues to come up with an accord to address the need for expanding the universal service contribution base.

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