The Federal Communications Commission's plan to craft a new, The Federal Communications Commission's plan to craft a new, "third way" approach to regulating broadband service has reignited the battle over "network neutrality," the idea that Internet service providers should treat content equally. Net neutrality advocates generally cheered the new initiative, while opponents expressed disappointment.

But in an indication of the middle-ground path the agency is pursuing, neither side appears to be able to claim a resounding victory.

The new FCC initiative, which was formally announced Thursday, is designed to overcome a recent legal setback the agency suffered when a federal appeals court ruled that the agency lacked the authority to enforce its net neutrality principles.

After that ruling, net neutrality advocates urged the agency to reclassify broadband as a "communications service" under Title II of the Telecommunications Act -- a move vigorously opposed by the broadband providers.

Addressing Legal Uncertainty

In 2002, the Bush-era FCC had classified broadband Internet service -- which was still in relative infancy -- as a Title I "information service," which severely limited the agency's ability to regulate broadband providers. In 2005, then-FCC Chairman Michael Powell enumerated four rules designed to ensure network neutrality.

In 2008, the FCC sanctioned broadband giant Comcast (CMCSA) for violating those principles, but last month a federal appeals court said the agency lacked the power to enforce those principles, throwing the FCC's ambitious broadband plan into chaos.

The plan announced Thursday seeks to address the legal uncertainty caused by that decision. The FCC aims to apply limited sections of Title II that deal with access to broadband service -- a solution referred to by some observers as "Title II lite." In essence, FCC Chairman Julius Genachowski is aiming to thread the needle by asserting limited regulatory authority while avoiding overly burdensome regulation.

Aiming for a "Light Touch"

In a statement initiating a public comment period, Genachowski argued that "the extreme alternatives to this light-touch approach are unacceptable. Heavy-handed prescriptive regulation can chill investment and innovation, and a do-nothing approach can leave consumers unprotected and competition unpromoted, which itself would ultimately lead to reduced investment and innovation."

Interestingly, in his legal basis for the new policy, FCC General Counsel Austin Schlick relied heavily on a opinion by Supreme Court Justice Antonin Scalia in the 2005 "Brand X" case, in which he wrote that "the 'computing functionality' and broadband transmission component of retail Internet access service must be acknowledged as 'two separate things.'"

"The provisions of Title II would apply solely to the transmission component of broadband access service, while the information component would be subject to, at most, whatever ancillary jurisdiction may exist under Title I," Schlick wrote.

Comcast Disappointed

Comcast, the company at the heart of the FCC's net neutrality struggle, issued a muted statement expressing disappointment with the FCC's new path but pledging to work with the agency.

"While we are disappointed with the inclination not to lean in favor of Title I regulation, we are prepared to work constructively with the Commission to determine whether there is a 'third way' approach that allows the Commission to take limited but effective measures to preserve an open Internet and implement critical features of the National Broadband Plan, but does not cast the kind of regulatory cloud that would chill investment and innovation by ISPs," Comcast spokesperson Sena Fitzmaurice said in a statement.

Now begins the public comment period. Expect a vigorous debate in coming weeks.

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