The FCC began in earnest Thursday to assert its primacy on how the internet will be governed, crafting rules that will have a long-term impact on the devices, services and apps well be able to use on broadband.

The agency, which regulates the nations communications services, is scrambling to find solid legal ground to keep an eye on broadband providers, after a federal court ruled it lacked the authority to force ISPs to adhere to its so-called Internet Freedoms. Under the proposed rules, ISPs would be required to let customers use the software, services and hardware of their choice so long as they didnt harm the network the same principles that have been in place during the explosion of innovation on the internet over the last 14 years.

But when FCC tried to use these rules to stop Comcast from blocking peer-to-peer file sharing, the cable and internet giant challenged them in court, and won.

The FCC is now asking the public and industry to comment on three possible ways forward: Leave things as the are, reclassify broadband using all of the complicated rules that apply to the phone system, or reclassify broadband applying only a few of those rules.

FCC head Julius Genachowski prefers the last of the three options, which he dubs the Third Way. He is finding support from supporters of net neutrality, including public interest groups and industry giants like Google, but is facing opposition from free-market groups and the nations ISPs and wireless carriers.

The Third Way approach was developed out of a desire to restore the status quo light-touch framework that existed prior to the court case, Genachowski said, sounding like a moderate Democrat, not a rousing trust-buster.

Its not hard to understand why companies subject to an agencys oversight would prefer no oversight at all if they had the chance. But a system of checks and balances in the communications sector has served our country well for many decades, fostering trillions of dollars of investment in wired and wireless communications networks, and in content, applications and services and creating countless jobs and consumer benefits.

Thursdays move, approved on 3-2 party lines by the commission, is simply a Notice of Inquiry, which informs the public what the FCC is interested in doing and gives interested parties a way to file comments, which are due by Aug. 12.

The interested are already making public statements.

The Center for Democracy and Technology applauded the move as the right middle ground.

The Internet is rapidly becoming the core communications network for the 21st century, and it is simply untenable for the FCC to lack a clear understanding of its oversight of the internet, said CDT President Leslie Harris. The FCCs decision to roll up its sleeves and address this critical issue in a straightforward, thorough, and timely fashion is a better alternative to a series of drawn-out legal battles the commission would otherwise face.

Gigi Sohn, the president of pro-net neutrality group Public Knowledge, came firmly down on the side of the FCC.

The commissions simple, uncomplicated action today of makes certain that the expert agency in telecommunications has the authority to carry out its mission, Sohn said. The commission has been attacked unmercifully by multibillion dollar companies using threats, intimidation and fabrications, among other distasteful tactics.

But the telecom-supported Progress and Freedom Foundation slammed the proposal.

The FCC stands on the cusp of killing one of the great deregulatory success stories of modern economic history by reviving the discredited regulatory industrial practice of the 19th century, said the groups president, Adam Thierer.

ISPs oppose the new rules, partly just because no industry likes regulation, and partly because ISPs dont want rules that turn them into a series of dumb pipes. ISPs are eyeing new ways of making money, including charging online services extra to get into the fast lane and offering video services that compete with sites like Hulu and YouTube. Net neutrality advocates want rules that keep ISPs from using the network to favor their own services.

The FCCs move is an attempt to solidify its power over broadband, undoing a change made in the Bush FCC which reclassified DSL and cable-internet services as information services rather than telecommunications services. The former generally applies to things like Gmail or Google, while the latter refers to services like the public telephone network. When broadband was classified as a telecommunications service, broadband providers had to allow outside companies to rent their lines at a fair price, in order to offer a competing service but information services face no such obligations.

That reclassification created a court battle that ended up in the Supreme Court, which in 2005 ruled that the FCC could reclassify services as it likes, even if the classification wasnt the best choice.

In a scathing dissent, conservative justice Antonio Scalia blasted the agency and his fellow judges saying the reclassification made no sense and presciently predicted that the FCC, now empowered to make decisions essentially at whim, would rereclassify broadband again if it suited its purposes. Moreover, he said, broadband services were clearly telecommunications services and that the FCC had the power to solely apply only the relevant anti-monopoly rules that apply to the phone service.

Common-carrier regulation of all ISPs is not a worry, Scalia wrote.

In order to mollify concerns that ISPs would make business decisions that would harm consumer rights, then-FCC-head Michael Powell issued a policy statement, which promised that Americans would have a choice of broadband providers and could use the software, services and hardware of their choice.

But a federal court ruled that because the FCC had reclassified broadband, it had no power to actually regulate it.

So now the FCC is attempting to reclassify broadband back as a telecommunications service, while promising to apply fewer rules than applied when broadband was originally in that classification.

That move is leading free-market advocates to proclaim that the government would soon be regulating content, when in fact, nothing in anyones proposals would come close to giving the FCC the right to police content as it does on the public airwaves.

The FCC faces a difficult fight trying to re-establish the authority it gave away, with many in Congress finding sympathy for cable and DSL companies. Meanwhile, it remains very unclear which, if any, net neutrality rules will be applied to wireless companies, who protest that their networks are very different from wire-line broadband and that they shouldnt be forced to obey basic openness rules.

Those interested in commenting may due so at the FCC public-comment page online, searching for the docket number: 10-127.

Photo: FCC Chairman Julius Genachowski is interviewed at his office in Washington on March 12, 2010.

Jacquelyn Martin/AP