By Maggie Shiels
Technology reporter, BBC News, Silicon Valley
The US ranks 15th in the world for providing access to high-speed internet
US regulators have announced plans to salvage efforts to give every citizen access to high speed internet with the aim of heading off legal problems.
The Federal Communications Commission unveiled a "third way" after a court found against it in a case against Comcast for slowing some net traffic.
Advocacy groups said the ruling put the FCC's broadband plans in "legal limbo".
The FCC says it will adopt a "narrow approach" in treating broadband as a utility.
Under present rules the FCC has what is known as "ancillary" authority over broadband providers like Comcast, AT&T and Verizon where they are lightly regulated.
Plans to redefine broadband as a telecommunications service as opposed to an information service would generally give the Commission authority over rates, practices, regulations, facilities and so on.
But under new proposals, the FCC has taken a more softly-softly approach. It says that it will not regulate rates charged by telephone and cable companies for internet services, regulate internet content, services, applications or electronic commerce sites.
FCC chairman Julius Genachowski said the new regulatory framework is aimed at giving the Commission the "modest authority it needs to foster a world-leading broadband infrastructure for all Americans".
The FCC is clearly hoping its new approach will satisfy the cable operators and critics as well as assuage the concerns of advocacy groups and supporters of net neutrality who argue that all web traffic should be treated equally.
"The important thing was to find a path forward and give the FCC some appropriate but limited authority," David Sohn of the Centre for Democracy and Technology told the BBC.
"They are clear this should be limited to broadband access and not extend to content regulation or them regulating the internet broadly."
Broadband is increasingly essential to the daily life of every American
Public Knowledge, a digital rights advocacy group, said the way forward will not be trouble-free.
"We expect a pitched battle on this approach," spokesman Art Brodsky told the BBC.
"We knew from the beginning that anything the Commission does would be taken to court and we bet the telephone and cable operators have their Supreme Court lawyers already lined up. But at the end of the day we will win and get back in place a solid regulatory structure that ensures a cop is back on the beat looking out for consumers."
Businessweek reported that, shortly after the FCC announcement, shares of major cable-television carriers took a tumble. Comcast, Time Warner Cable and Cablevisions Systems, the three largest publicly traded cable operators in the US, all lost around 5%.
The FCC has said broadband was "the greatest infrastructure challenge"
Cable and phone companies said the new regulations will make it harder for them to justify network investments to shareholders because the FCC might require them to share their pipes with rivals in the future, putting a limit on returns.
Cablevision said using rules drawn up in the early 20th Century to regulate network providers is a bad move.
"We operate in a highly competitive environment," said Tom Rutledge, Cablevision's chief operating officer in a conference call.
"We've built fantastic products as a result of the competitive situation that has existed under existing law. We don't think there's a real problem."
The FCC will soon seek public comment on Mr Genachowski's proposal. It will have to be approved by three of the five commissioners to get the go ahead. Mr Genachowski is expected to have the support of his two fellow Democracts at the agency.
The two Republicans, Robert McDowell and Meredith Baker, said they were disappointed with the plan.
In a joint statement they said "this dramatic step to regulate the internet is unnecessary".