After midterms, net neutrality could take a hit

The Federal Communications Commission is a key regulator of the telecommunications industry and plays an important role in shaping US. technology policy.
By Cecilia Kang
Washington Post Staff Writer
Thursday, October 28, 2010; 5:31 PM

If the forecast of strong Republican gains in Congress holds true Nov. 2, the battle over net neutrality - the most contentious tech policy issue - isn't likely to be resolved anytime soon.

Net neutrality - the idea that all traffic on the Internet should travel at the same speed - has been a point of contention for the Federal Communications Commission, which is proposing regulations that would ensure that broadband service providers treat all Web traffic equally. But analysts say the FCC could also find itself in a more hostile political environment as its embattled chairman pushes for rules that Republicans are expected to argue would hurt the telecom and cable companies responsible for a large chunk of American jobs.

Aside from net neutrality, federal regulators and lawmakers are also expected to focus on Internet privacy rules, tax reform and reviews of Comcast's proposed mega-merger with NBC Universal after the midterm elections.

But the move to regulate the broadband industry is what has businesses and public interest groups on the watch. The public interest groups fear that a Republican-dominated Congress could stall or weaken any new rules on net neutrality. FCC Chairman Julius Genachowski, they said, could buckle under pressure from lawmakers who would deem the measures anti-business.

"First and foremost, the new Congress has to sort out what to do about net neutrality because it's left too much uncertainty in the market," said Jeffrey Silva, an analyst at Medley Global Advisors.

The FCC wants to prevent Internet service providers from blocking Web applications or slowing the transmission of Web sites. It is unclear if those rules would apply to wireless networks and companies such as Verizon and Google, which want network carriers to be able to charge companies willing to pay for faster channels on their networks.

Congress could take up the issue, and Rep. Henry Waxman (D-Calif.) made an attempt last month when he gathered support from key businesses and public interest groups for a final draft of a net neutrality bill. But the bill has not been introduced in Congress, and in a lame-duck session, securing legislation could be more difficult.

Genachowski hasn't indicated a timeline for his policy proposal. At the start of his tenure more than a year ago, he said he would apply new rules to all platforms, including wireless networks. Critics say he has had ample time to push his proposal through the FCC, as three out of five commissioners favor the rules.

But a federal appeals court decision last spring on a sanction against broadband provider Comcast put Genachowski's power to regulate broadband services in doubt. The court ruled that the agency cannot force Internet service providers to keep networks open to all forms of content. Analysts say Genachowski may still put the proposal to an agency vote Nov. 30. The chairman is also trying another tactic to assert FCC oversight of broadband -- reclassifying it as a telecom service, thereby making it subject to some of the stricter regulations applied to telephone companies. That plan has drawn fierce criticism from some of the nation's largest broadband providers

"The final outcome may depend on the ultimate White House strategy" on net neutrality, wrote Rebecca Arbogast, an analyst at Stifel Nicolaus, in a research note.

The FCC is an independent agency, but President Obama promised a push for net neutrality rules during his campaign. Analysts say the issue isn't at the top of the administration's economic agenda, however, and that the FCC chairman's prolonged wrangling over details - by including big telecom companies and search engine Google in negotiations - has created more tumult over the issue.

"If there are severe losses in the midterms, the issue will be whether the Democrats become more conciliatory or decide to push through whatever part of their agenda they can," Arbogast wrote.

Internet businesses, meanwhile, are expecting lawmakers to show more interest in privacy legislation since the recent revelations of data breaches by companies such as Google and Facebook.

Two House bills are circulating on Internet privacy, and analysts say Republicans are open to some measures in Rep. Rick Boucher's (D-Va.) bill that appear favorable toward businesses. Boucher's bill and one introduced by Rep. Bobby Rush (D-Ill.) allow for Web firms and advertisers to collect basic information about Internet users unless people actively remove themselves from data collection. But the bills also require that firms not gather sensitive information such as financial and medical data and user locations for global-positioning services unless users voluntarily agree.

The Federal Trade Commission is expected to release recommendations for businesses and lawmakers on Internet privacy within weeks. The agency, which has limited rulemaking power on the issue, is focusing on investigating privacy breaches, such as an inquiry into how a malicious attack on Twitter exposed user data. The FCC announced Wednesday that it has closed its probe of Google's data collection from residential WiFi networks.

Also on the FCC agenda is Comcast's merger with NBC Universal, which is being closely followed by businesses and media interest groups. The merger is under review at the FCC and the Justice Department. Approval is expected, but conditions attached to the merger could significantly affect the communications and media markets, analysts say. Some lawmakers have urged the FCC to put net neutrality conditions on the merger. Comcast disagrees, saying any rules should be industry-wide.

Public interest groups are also pushing for rules that force the company to give access to its programs to online video providers and allow fair retransmission fee negotiations.

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