Title II Debate May Reignite as USF Evolves

FCC Chairman Julius Genachowski abandoned trying to use Title II authority in the net neutrality order, but his proposed overhaul of the Universal Service Fund may revive the reclassification debate, an industry official and a former Obama administration adviser each told us. Genachowski wants to refocus the fund to support high-speed broadband, and his staff has drafted a notice of proposed rulemaking that the commission is expected to vote on next week. Congress is poised to jump into the universal service deliberations (CD Jan 28 p4).

Legislation would resolve any doubts about whether the FCC has authority to undertake a thorough remake of universal service, said former Rep. Rick Boucher. He and Rep. Lee Terry, R-Neb., last year introduced a comprehensive bill that won wide industry endorsement. The FCC probably won’t reignite the Title II fight just for USF, because the commission feels it resolved that debate in its December net neutrality order, Boucher said. He said congressional action is required to deal at least with USF contributions. But the FCC can take other action on its own, and the commission and Congress should move on parallel tracks, he said.

USF “legislation would be useful to the Commission,” Terry said by e-mail. He has said he plans to reintroduce his own USF overhaul bill shortly. “Current and past Commissioners as well as most Members of Congress believe that we need to modernize the fund by transitioning it to broadband,” Terry said. “The Congress has and will again look at legislation to do just that."

The commission “has ample authority to target universal support for broadband, including under Sections 254 and 706,” without resorting to Title II regulation, a commission spokesman said. “USF currently supports broadband, and the proposed reforms will enable the FCC to provide that support much more effectively and efficiently without increasing growth in the fund.” As to whether the commission is still interested in reclassification, “the FCC accomplished its goal” in the net neutrality order, the spokesman said. “We're now focused on moving forward to implement the order and pursue other goals."

Yet the “danger … exists” that the FCC’s direct support for broadband will give reclassification advocates an opening, AT&T Senior Vice President Bob Quinn told reporters Thursday. AT&T opposes reclassification of broadband, and the company last year filed a white paper arguing that the FCC could use the USF to support broadband under Title I. “I don’t personally see how that’s sustainable,” said Susan Crawford, a visiting telecom law professor at Yale who used to be broadband adviser to President Barack Obama. “It’s so clear under Title II that the services that can be supported by USF are telecommunications services,” said Crawford, a longtime advocate of reclassification. “Absent rifle-shot legislation from Congress that deals with USF and nothing else, it’s difficult to see how you get from point A to point B without opening up the Title II question."

AT&T is “very, very supportive” of Genachowski’s proposed USF revamp (CD Jan 28 p4), Quinn said, but “there’s always that possibility” that reclassification will be re-injected into public debate as an unintended consequence. As Quinn sees it, state regulators are slowly fading from the universal service system, and eventually there will be direct negotiations between carriers and the federal government. “You're going to see the carrier say, ‘I'll provide broadband for X amount of subsidy over the next five years and here’s going to be my rate structure,'” Quinn said. That will inevitably attract “people who are more interested in the religion than they are in the practicality,” he said.

Whether Congress intervenes or not, the FCC “doesn’t seem to be pursuing Title II or the ‘Third Way,’ which was focused on after the Comcast” court decision, Hogan Lovells telecom lawyer Dan Brenner said. “What was interesting is the commission in the net neutrality order didn’t spend a lot of time explaining why Title II doesn’t apply,” he said. “But they spent a lot of time explaining why Title I does apply.”