The feedback is in on the Federal Communications Commission's proposed "third way" net neutrality proposal, and few stakeholders are willing to give any ground in the matter. The cable companies, telcos, and their allies insist that the idea will kill investment. On the other side of the fence, online content providers say that without common carrier style protections, the ISPs will pick and choose winners and losers on the 'Net.

Reclassification of ISPs as common carriers would "cram today's broadband Internet access providers into an ill-fitting 20th century regulatory silo," warns AT&T, and would "present risks and harms that dwarf any putative benefits, and would all but scuttle the Administration's ambitious broadband agenda." The agency's National Broadband Plan calls for policies that encourage billions more in private sector investment in ISP networks.

The "wrong way," AT&T calls the plan

But Google suggests that the opposite is the case—investment will go south if the agency doesn't go ahead with its new regulatory scheme.

"In particular, the Third Way will promote legal certainty and regulatory predictability to spur investment, ensure that the Commission can fulfill the tremendous promise of the National Broadband Plan, and make it possible for the Commission to protect and serve all broadband users, including through meaningful enforcement," the search engine giant writes.

Looking for options

Here's a refresher on how we got to this latest impasse. Last October the FCC called for stronger net neutrality rules, including a pair of add-ons to its four part Internet policy statement, which says that consumers are entitled to run applications and use the services of their choice. The additions would require ISPs to obey these principles, and to practice transparency regarding their network management practices.

But looming over the proceeding was Comcast's lawsuit against the FCC for sanctioning the ISP for BitTorrent throttling. Earlier this year the DC Circuit Court of Appeals told the agency that Title I of the Communications Act, upon which the Commission had based its enforcement, gave it no authority to do so. For years the FCC has classified ISPs as "information services" under Title I's definitional toolkit, rather than as common carriers under Title II of the act. And the government based its regulatory powers on various policy statements found in Title I.

Sure, the court acknowledged, Congress declared that "[i]t is the policy of the United States... to promote the continued development of the Internet and other interactive computer services." But "statements of policy, by themselves, do not create 'statutorily mandated responsibilities'," the justices ruled.

In the wake of this decision, FCC Chair Julius Genachowski now had a narrow range of choices on how to move forward. He could continue to try to scratch out a regulatory framework from various other provisions in Title I, or he could apply whole hog Title II "telecommunications service" common carrier rules to the ISPs.

Or, Genachowski could propose what he now has on the table—apply those common carrier provisions to ISP "onramp" services, with "forbearance" attached. In other words, the agency would invoke Title II powers to stop ISPs from engaging in "unjust or unreasonable practices" towards services and applications, but forbear from regulating ISP subscription rates or using other less relevant Title II regulatory tools.

In mid-June the Commission launched a Notice of Inquiry asking for public feedback on this "Third Way" concept. The deadline for comments was Friday. Megabytes of them piled in, with very few neutral statements on the stack.

Radical change?

The "wrong way," AT&T calls the plan, with loud and lengthy dittos coming in from Comcast, Time Warner Cable, and Qwest. Cellular industry trade group CTIA - The Wireless Association, calls the proposal "radical change," and unnecessary. The proposal is "by any other name is still heavy regulation," CTIA warns, and the forbearance provisions could be reversed down the line.

The most flexible carrier response to the FCC's Notice comes from Sprint, which agrees that the Commission still has options under Title I. But, Sprint adds, if the agency decides to go with Title II, the new rules should "adopt a narrow definition for Internet connectivity service that includes only those minimum network elements and functions essential to establish a line of transmission between the user and the Internet."

Meanwhile, the other side is going full-court press on behalf of the agency's proposals. The Open Internet Coalition, which represents the perspective of eBay, PayPal, Facebook, Amazon, and other content services, concurs with the FCC that classifying ISPs as Title I "information services" doesn't make a whole lot of sense any more. Most consumers don't subscribe to Comcast or AT&T to get "information" from these companies—that is, to browse an ISP provided search engine or to get an e-mail account.

"What consumers want from their broadband Internet access providers—and what these providers market to consumers—has to do with the speed and price of their broadband Internet access connection," OIC notes. Thus Title II logically applies in this instance.

Agreed, says the American Civil Liberties Union.

"Individuals who use Facebook, Google, voice or text chat, e-mail, or online games expect, accurately, to be able to access those services regardless as to whether they might be connected to the Internet through their home DSL provider, their friend’s cable subscription, or a Wi-Fi hotspot at their local coffee shop," the ACLU warns.

"Since access to the Internet is provided by private corporations (enabled by government), free speech principles dictate that the government should create strong, clear policies that will prevent speech-restrictive abuses by companies that are fundamentally profit-seeking rather than civic-minded."

The American Library Association pretty much concurs with this, but thinks Title II classification should only apply to networks "available to the general public."

Higher education, libraries and K-12 schools often have their own closed or ―'private' networks that simply connect institutions to each other. These networks are not open to the general public and should not be subject to regulation. We believe that the FCC's Inquiry intends to exclude these private networks from regulation, but the FCC needs to be absolutely clear about this in its final order.

Tangents

Here and there one finds comments in this discussion that urge the FCC to look at other issues. The Motion Picture Association of America argues that whatever the Commission decides, its new rules must not undermine "the willingness of broadband providers to take the measures necessary to address the online theft of creative works." The Consumer Electronics Association agrees that the Title II question is important, but says the agency needs to focus its attention on getting more spectrum licenses to the wireless industry.

But as for voices of compromise on the Title II conundrum—they're hard to find in this debate. They may become even rarer if the FCC takes the next logical step, and proposes very specific "Third Way" net neutrality rules.