FCC votes to draft net neutrality rules

By Cecilia Kang
Washington Post Staff Writer
Friday, October 23, 2009

The Federal Communications Commission voted unanimously Thursday to begin crafting rules to prevent Internet providers from acting as gatekeepers over which services and content are delivered to their customers, the agency's surest step yet toward regulating the rules of the road online.

The federal government previously had taken a largely hands-off approach to Web regulation but decided to act as concerns grew that telecommunications giants such as Comcast, AT&T and Verizon could begin to favor their products and services over others.

"It's hard to imagine anything more important to the future of the success of our economy than a healthy and vibrant Internet, and there is no question that the openness of the Internet is the secret sauce to its success," FCC Chairman Julius Genachowski said in an interview after the agency meeting.

The vote kicks off a months-long process to draft the new rules in a effort that promises to be contentious. Heavyweights such as Google have already weighed in supporting new rules, while wireless carriers and others have argued for the need to manage their scarce bandwidth. The Internet providers worry they may be forced to carry services that might hog bandwidth at the expense of other priorities.

Theirs is an uphill battle. The FCC's three Democratic commissioners have voiced strong support of "net neutrality" rules. The two Republican commissioners said Thursday that they agreed that exploring such rules was a good idea but that they didn't think regulations would ultimately be needed.

Specifically, the FCC proposal would codify what are currently just guidelines and broaden them to prevent the discrimination of Web content by carriers. Further, the carriers would have to disclose how they manage traffic on their networks to ensure no wrongdoing.

In an interview with reporters and the editorial board of The Washington Post, Google chief executive Eric Schmidt acknowledged that new rules would benefit the search giant, which is rolling out a number of new services, including voice and video applications that compete with those offered by the telecom titans. But he said new rules would benefit smaller companies more.

"Google is strong enough and with enough revenue to deal with enough of these outcomes," Schmidt said. "What I'm worried about is the next start-up."

The move, the first by Genachowski as President Obama's pick to run the FCC, underscores the agency's drive to have a heavier hand in the Web economy.

"There's no question that promoting investment, innovation and opportunity around 21st century communications is a core mission for us," Genachowski said.

Critics of the proposal, including a bipartisan group of lawmakers, have argued that new rules could hamper investment in broadband technology.

"The Internet ecosystem is serving consumers very well, and there is no problem that requires new government regulation," Tom Tauke, Verizon's executive vice president for public affairs, said in a statement. "As we engage in this process, we remain concerned that the unintended consequences of regulation could bring substantial harm to consumers and the ability of the Internet sector to innovate, contribute to economic growth and productivity, create new jobs, and deliver social benefits to our nation."

The proposed rules would clearly constrain telecommunications, cable and wireless companies, said Rebecca Arbogast, head of technology policy research at Stifel Nicolaus.

She said in a research note that as a concession to large telecommunications companies, it appeared as though some commissioners had opened the question of whether Internet content companies such as Google, Amazon, eBay and Skype should also fall under the rules.

For instance, in his statement, Commissioner Michael J. Copps noted that the "gatekeepers of today" may not be the "gatekeepers of tomorrow." Copps, a Democrat, has long been a supporter of open-Internet access rules.

In a news conference, Genachowski said he viewed the rules as only applying to Internet providers. The FCC has regulatory jurisdiction over communications services, so it could only apply its policies to companies that act as the on-ramps to the Web.

He disagreed with arguments that such rules would hamper investment in broadband networks. He said that since 2005, when the FCC issued its first Internet access guidelines, broadband networks have exploded.

"I reject the notion that we must choose between open Internet rules and investment by service providers in their networks," Genachowski said during the meeting.

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