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FCC set to enact new net neutrality rules

Dec. 21 (Bloomberg) -- Tim Horan, an analyst at Oppenheimer & Co., talks about rules for Internet-service providers being considered by the Federal Communications Commission. The net-neutrality rules proposed by FCC Chairman Julius Genachowski, a Democrat, would forbid Internet service providers from interfering with subscribers' Web traffic. Horan, speaking with Betty Liu on Bloomberg Television's "In the Loop," also discusses AT&T Inc.'s $1.93 billion purchase of wireless spectrum from Qualcomm Inc. (Source: Bloomberg)

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Washington Post Staff Writer
Tuesday, December 21, 2010; 2:03 AM

Federal regulators are poised to enact controversial new rules affecting Internet access, marking the government's strongest move yet to ensure that Facebook updates, Google searches and Skype calls reach consumers' homes unimpeded.

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Under the regulations, companies that carry the Internet into American homes would not be allowed to block Web sites that offer rival services, nor would they be permitted to play favorites by dividing delivery of Internet content into fast and slow lanes.

The rules are set to win passage in a vote Tuesday by the Federal Communications Commission, after a majority of the panel's five members said they planned to vote in favor of the measure.

The proposal, pushed by FCC Chairman Julius Genachowski, seeks to add teeth to a principle known as net neutrality, which calls for all legal Internet traffic to be treated equally. It means that a cable company such as Comcast could not slow traffic of Netflix video, while a wireless carrier such as Verizon Wireless could not block competing Web voice services, such as Vonage.

The FCC's move comes amid a broad shift in consumer habits, as people gradually replace traditional phone and cable television services with comparable services offered via the Internet. Public interest groups have urged regulators to stay abreast of this change, arguing that major phone and cable companies could use their control of broadband networks to stifle those upstart rivals and limit consumers' options.

"While not as strong as they could be, [the rules] will nonetheless protect consumers as they explore, learn and innovate online," Commissioner Mignon Clyburn, a Democrat, said in a statement announcing that she will vote in favor of the regulations.

However, the FCC's authority over broadband networks remains uncertain. A federal court ruling in May cast doubt on whether Internet access fell within the agency's jurisdiction. The net-neutrality rules subject to Tuesday's vote are widely expected to face a court test, and they could be challenged on Capitol Hill by the Republicans who will assume control of the House in January.

The proposal falls short of what some consumer advocates had sought. Although it would prevent wireless carriers from blocking competing voice services on smartphones, it would allow them to charge more for other types of Internet applications, such as video or social networking services.

The rules would prohibit Internet providers from arbitrarily blocking or slowing delivery of online services, but they could strike business deals in which a company might pay extra for faster access to consumers.

The proposal marks a compromise after more than a year of wrangling by the FCC, phone and cable giants, and brand-name Internet firms such as Google and Facebook. Some carriers and high-tech firms say the proposal strikes a good balance between protecting consumers and preserving the ability to compete.

"These rules will increase certainty in the marketplace; spur investment both at the edge and in the core of our broadband networks, and contribute to a 21st century job-creation engine in the United States," Genachowski said in an excerpt of prepared remarks released Monday night.

But some Internet companies and Republican lawmakers say the FCC's new regulations will restrict network operators, making it harder for Internet service providers to invest in faster networks that reach more homes.

Rebecca Arbogast, an investment analyst for Stifel Nicolaus, said that the rules are written so they can be broadly interpreted and that questions remain about the real impact on Internet video. It's unclear whether a company such as Comcast could in effect give its video-on-demand service priority over competitors such as Netflix, YouTube and Amazon by charging them more to transmit high volumes of data, she said.

"I think there is a lot of hard work ahead that will be over these kinds of issues," she said. The FCC is deliberating a proposed merger of Comcast and NBC Universal that will deal with some of the same matters.

Wireless networks aren't covered as broadly by the rules, and that worries public interest groups as more people turn to smartphones and tablets to watch TV shows, do research for homework and find news.

"The inadequate protections for wireless technologies are especially troublesome, as wireless services provide an onramp to the Internet for many of the nation's poor and minority citizens," said Andrew Jay Schwartzman, policy director for the Media Access Project.

But some FCC members said the regulations, which won't be fully public for at least a few days after the vote, are an important first step for the government.

"If vigilantly and vigorously implemented by the Commission - and if upheld by the courts - it could represent an important milestone in the ongoing struggle to safeguard the awesome opportunity-creating power of the open Internet," Democratic Commissioner Michael J. Copps said in a statement.

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