Regulators, whose authority over broadband was put in doubt by a recent court ruling, will announce on Thursday that it will reassert its powers but will refrain from imposing strict burdens on broadband providers like Verizon, AT&T and Comcast.
The chairman of the Federal Communications Commission, Julius Genachowski, is seeking to walk a line between moving forward with a bold broadband policy and averting a heavy regulatory hand that could spark legal action by companies like Verizon and AT&T.
A senior FCC official said on Wednesday that Genachowski has decided to stick with preserving a free and open Internet policy under a middle-of-the-road approach.
The FCC's announcement is expected to focus on maintaining the status quo for the lightly regulated broadband business that existed prior to a court ruling in April, the FCC official said. The ruling threw into doubt the government's ability to move forward with an ambitious broadband plan.
Jeffrey Silva, an analyst with Medley Advisors, said the FCC move will result in bitter fight between broadband providers and Internet companies and create a period of uncertainty for the industry.
We believe the FCC's attempt to reclassify broadband will create a prolonged period of regulatory uncertainty and invite protracted litigation in a way that could complicate various high-priority policy initiatives, Silva said.
The FCC's decision would reclassify the regulatory framework for broadband services under an existing set of rules governing telephone services. However, the FCC will not impose the strict regulatory regime associated with telephone services, the official said.
That means the FCC is not likely to impose rate regulation and requirements to share lines with competing Internet service providers.
The FCC decision was applauded by consumer and public interest groups and online companies. This is extremely welcome news, said Josh Silver, president of Free Press, a public interest group.
It is a middle path that ensures that broadband access providers are not subject to an overly regulatory structure, while still ensuring that some basic rules of the road apply, said Markham Erickson, Executive Director of the Open Internet Coalition, which represents online companies such as Google Inc and Amazon.com Inc.
Telephone and cable companies are opposed to such a move to reclassify broadband to telephone rules even with assurances from the FCC that many of the heavy regulatory provisions will not be applied.
They feel that those reassurances could be pulled out from under them in a new administration or under new FCC leadership.
The announcement by the FCC comes as two leading Democratic lawmakers on Wednesday urged the FCC to consider short-term options to reassert its authority, including reclassifying broadband under the telephone rules regime but at the same time apply a light regulatory touch.
Representative Henry Waxman and Senator John Rockefeller also said the U.S. Congress stands ready to write new telecommunications policy, if needed.
In a letter to the FCC, they said that it is vitally important that the agency be empowered to move forward with its National Broadband Plan, unveiled earlier this year.
Spokespeople for Comcast and AT&T declined to comment. A spokesman for Verizon could not immediately be reached for comment.
The FCC's broadband plan would upgrade Internet access for all Americans and shift spectrum from television broadcasters to wireless carriers with burgeoning smart phone products.
It also would try to safeguard consumer privacy, provide consumers with complete and accurate information about broadband services and protect an open Internet.
It would also shift the focus on the universal service fund, a U.S. telephone subsidy for low-income and rural families, to broadband access.
(Reporting by John Poirier; editing by Carol Bishopric and Marguerita Choy)