Does the FCC Plan to Give Up on Broadband Regulation?

The Federal Communications Commission may soon abandon its plan to reclassify high-speed Internet access as a transport service subject to its regulation, according to sources in Washington. Which means everything from the agency’s ability to regulate network neutrality to its planned reform of the universal service fund could end up mired in legal challenges, and may never be completed.

The reclassification debate became an issue in April after an appeals court overturned a 2008 ruling against Comcast (s cmcsa) for blocking P2P files . I wrote then that most people believed the FCC would have no choice but to classify broadband as a transport service (GigaOM Pro, sub req’d) subject to its authority rather than as an information service that requires more legal justification in order for the agency to get involved.

But I recently heard from two sources that the FCC was considering allowing its recent court defeat over its ability to regulate broadband stand without attempting to reclassify broadband, and today Cecilia Kang of The Washington Post writes that she’s heard — from sources inside the Commission — the same thing being attributed to Chairman Julius Genachowski. However, Jen Howard, the spokeswoman for Chairman Genachowski’s office, said that “no decision has been made.”

That may be true, but the issue here is so large and politically charged that it’s possible we’re seeing multiple sides fight this issue out in the press. The pendulum has perhaps swung the other way, either because of a concerted lobbying effort by the large communications companies that don’t want the FCC to get any more power over their broadband business, or possibly because the legal arguments the FCC needs to make in order to change the way it ruled on cable, DSL and wireless broadband back in 2002, 2005 and 2007 are too complex or politically unfeasible.

The FCC took a beating over its authority to implement net neutrality in the most recent round of comments related to its proposed net neutrality rules. In general, large ISPs attacked the FCC’s authority to implement net neutrality, while promising to self-regulate on the issue (and simultaneously arguing that it’s not even a problem in the first place). Organizations representing the wireless industry did the same.

Reclassification is important to any business that plans to offer services via the web, as it would essentially give the FCC clear regulatory powers over high-speed Internet access and the transfer of bits over the ISP’s pipes. Right now, that authority has been questioned, which means businesses offering services over the web have to rely on the ISPs to act as an impartial delivery service, something they’ve been reluctant to do in the past.