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The Federal Communications Commission has developed what it calls a "third way" approach to the issue of net neutrality which it says will protect consumers while at the same time giving network operators and content providers freedom to innovate.

This "compromise" comes about a month after a federal court ruled that the FCC (News - Alert) had overstepped its regulatory authority when it fined Comcast for throttling certain types of network traffic in late 2008, effectively bringing the agency "back to the drawing board" in terms of drafting net neutrality rules.

Under its proposed "third way," the FCC will "recognize the transmission component of broadband access service -- and only this component -- as a telecommunications service;" and will "apply only a handful of provisions of Title II (Sections 201, 202, 208, 222, 254, and 255)" to broadband. In addition it will "renounce" certain sections of the Communications Act "that are unnecessary and inappropriate for broadband access service;" and will "put in place up-front forbearance and meaningful boundaries to guard against regulatory overreach."

The FCC continues to mix apples and oranges by making funding for its National Broadband Plan part of the net neutrality issue. Last month the agency announced its plan to transition the Universal Service Fund, used to subsidize traditional landline phone service in rural areas, into a broadband deployment fund that will be used to subsidize the deployment of broadband networks.

As most people know, figuring out how to pay to build broadband networks and forming the policies that govern their operation are two distinctly separate issues - that is unless there are strings attached to the government funding used to build them (i.e network operators have to abide by the FCC's rules in order to receive funding for rural build-outs).

So far it seems the goal in reclassifying broadband isn't as much to protect consumers as it is to protect the FCC legally - i.e. to give it the regulatory authority to attach said strings to said funds. FCC Chairman Julius Genachowski (News - Alert) said in a statement that the number one purpose of reclassifying broadband is to put the FCC "on the soundest legal foundation, thereby eliminating as much of the current uncertainty as possible."

Could it be that the FCC has given up on the idea of eliminating all uncertainty surrounding the net neutrality debate? Is it willing to concede that this is an issue that simply will not go away, no matter how many regulatory policies are put in place? It is one thing to "clean the house" -- quite another to prevent it from getting messy again. When it comes to net neutrality and broadband regulation, it seems like the FCC is doing everything it can to do as little "cleaning" as possible. And innovation can be a very messy thing.

As mentioned, under its proposed reclassification of broadband, the FCC "will treat only the transmission component of broadband access service as a telecommunications service." But exactly what the FCC means by "transmission component" is not clear.

The FCC is careful to point out that its "third way" plan, should it be approved, "would not give the FCC greater authority than the commission was understood to have pre-Comcast (News - Alert). And it would not change established policy understandings at the FCC, such as the existing approach to unbundling or the practice of not regulating broadband prices or pricing structures. It would merely restore the longstanding deregulatory -- as opposed to 'no-regulatory' or 'over-regulatory' -- compact."

In addition, and perhaps most importantly, the "third way" plan will establish "meaningful boundaries and constraints to prevent regulatory overreach."

"The FCC would invoke only the few provisions necessary to achieve its limited but essential goals," Genachowski said in his statement. "Notably, these are the very same provisions (sections 201, 202, and 254, for example) that telephone and cable companies agree the FCC should invoke, albeit indirectly under an "ancillary authority" approach. The Commission would take steps to give providers and their investors confidence and certainty that this renunciation of regulatory overreach will not unravel while also giving consumers, small businesses, entrepreneurs and innovators the confidence and certainty they need and deserve. Since Congress gave the Commission forbearance authority 17 years ago, the Commission has never reversed or undone a forbearance decision."

Still lacking from this "narrow and tailored approach," however, is even a vague description of how the FCC will go about enforcing it.

The FCC, however, may have already come up with at least a "partial fix" on how to go about policing broadband networks: Last month the commission announced its plan to install special sensors on broadband lines in volunteers' homes across the US as part of a pilot project. The sensors will measure changes in broadband speed and capacity and report the data back to the FCC.

The FCC claims the program will arm consumers with a powerful tool for ensuring that they are getting the broadband speeds that their service providers have promised contractually.

This could be a first step in enforcing the FCC's "third way" net neutrality rules. The FCC suffered a major setback in the Comcast decision, when a federal court ruled that it did not have the power to set such rules because Congress never formally granted it the authority to do so.

The issue of enforcement is perhaps the biggest obstacle the FCC and net neutrality proponents face in crafting rules: In order for net neutrality to be enforced, the FCC or other appointed agency will, in essence, have to take on the role of "network traffic cop" to ensure that all ISPs and other service providers are delivering the speed and capacity that their broadband subscribers have been promised - and further that certain types of traffic aren't being blocked.

There is no way for the FCC to impose punitive measures on service providers that violate net neutrality rules without tangible evidence that they throttled or blocked certain types of traffic. Rather than taking the approach of monitoring network traffic in the core, the FCC could simply distribute edge devices that measure what customers are actually getting in terms of service, thereby protecting the rights of consumers and businesses while at the same time leaving service providers in charge of the intricacies of network "traffic shaping" to optimize the performance of their networks.

The sensors would not necessarily have to be deployed at every customer location in order to be effective as an overall means of policing provider activities: They could be strategically located along a provider's network in such a way that overall network performance can be accurately measured without having to monitor every endpoint.

Initially these sensors will only measure overall network speed - in other words, they will not be capable of separating and measuring different types of network traffic -- but that could be coming.

To carry out this pilot, the FFC has reportedly awarded $600,000 in stimulus funds to SamKnows Ltd, a London-based firm which has done similar network monitoring work for Ofcom, the U.K.'s equivalent of the FCC.

In addition to deploying "sensors," the FCC also recently released a broadband speed test on its Web site (and via an iPhone (News - Alert) app) to help consumers to get a general sense of what speed they're getting.