Why legacy incumbent telephone and cable companies want FCC re-reclassification as information service providers. Hint: It’s not “net neutrality.”

If the U.S. Federal Communications Commission revokes its 2015 Open Internet rulemaking classifying Internet as a telecommunications common carrier utility under Title II of the Communications Act and restores the previous rule classifying it as information service under Title I of the law as expected before year end, it will set the stage for another round of litigation just as that which followed after the 2015 rule was adopted. This time however it will be public and consumer interests that will be challenging the FCC rather than legacy incumbent telephone and cable companies. And the governing statute, the Communications Act, might well be on their side. Section 3(a)(1)(41) of the Act as amended in 1996 defines an information service as follows:

INFORMATION SERVICE- The term `information service' means the offering of a capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information via telecommunications, and includes electronic publishing, but does not include any use of any such capability for the management, control, or operation of a telecommunications system or the management of a telecommunications service.

The legacy incumbent telephone and cable companies want the FCC to define their Internet protocol delivered services using that definition, essentially equating them with services like LexisNexis or Intelius. Their problem however is these companies market Internet protocol-based telecommunications services such as data, voice and video delivered over their connections to customer premises. If they were merely information services like LexisNexis or Intelius, they wouldn’t market physical premise connections sold in throughput speed tiers for a monthly recurring fee. In so doing, they are arguably offering telecommunications service, which the statute defines as “the offering of telecommunications for a fee directly to the public, or to such classes of users as to be effectively available directly to the public, regardless of the facilities used.”

So what is the incumbents’ main motive in not wanting to be classified as telecommunications providers under Title II of the Act? Hint: It’s not “net neutrality” – the requirement they treat the bits and bytes of Internet protocol moving over their networks equally regardless of origin. The primary reason to avoid being classified as telecommunications providers is to escape the requirement in the Communications Act as amended in 1996 that they provide advanced telecommunications capability to all areas of the nation consistent with the public interest, convenience and necessity. It must enable users to originate and receive high-quality voice, data, graphics, and video telecommunications using any technology per Section 706(c)(1) of the statute. Elected policymakers at all levels of government generally agree advanced telecommunications capability is even more in the public interest and vital to the constituents they represent than it was when the 1996 Act was enacted two decades ago.

Incumbents also chafe at the prospect of price regulation as advanced telecommunications providers as authorized at Section 706(a) of the Act. Bottom line, if they are regulated solely as providing an information service and not as telecommunications common carriers, then they would be able to continue to redline neighborhoods they don’t wish to serve and charge customers in those they do whatever they wish – just as they have since the statute was enacted without meaningful regulatory enforcement. That might serve the interests of their shareholders, but clearly doesn’t comport with the public interest specified in the statute.