How Obama’s net neutrality comments undid weeks of FCC work

FCC Chairman Tom Wheeler is in the hot seat over "net neutrality" (AP Photo/Susan Walsh)

When President Obama told his top telecom regulator Monday to apply "the strongest possible rules" on Internet service providers so that they couldn't speed up or slow down certain Web sites over others, he galvanized Democrats around a populist technology issue and set up a showdown with congressional Republicans.

But the White House's move also undermined weeks of work by the chairman of the Federal Communications Commission to develop an alternative policy, which he has said in private meetings could preserve a free and open Web while also addressing concerns by the Internet providers. Because of the unprecedented nature of the FCC's compromise proposal and its controversial nature -- critics fear it would not prevent Internet providers from slowing down content they don't like -- the agency held a flurry of meetings with a wide range of groups, including major tech companies, lobbyists, consumer advocates and the telecom industry to see if it could bring a broad coalition together around its plan, according to a half-dozen people familiar with the discussions.

In the days before the president's statement, the agency's efforts appeared to be working. Some tech companies, including at least one major firm, and several tech interest groups showed signs of warming to the outreach by FCC Chairman Tom Wheeler. They and Wheeler scheduled a series of critical meetings on Monday at the FCC to discuss their differences. Talk emerged of working out language in a letter that would clarify the sentiments of all involved and help build consensus for Wheeler's plan.

But all of that was thrown off-track as soon as Obama called for "bright-line rules" backed up by the FCC's most aggressive powers. Now a number of companies who were close to signing onto the "hybrid" plan proposed by Wheeler are in a holding pattern. Demand for a less-compromising stance has increased. And pressure is building on Wheeler and the FCC to decide what it should do.

"If the week had started not with the president's announcement, but with the tech community and lots of big names lining up in favor of the hybrid, we'd be having a very different conversation right now," said one tech industry official, who spoke on condition of anonymity because the meetings were private.

Before Obama spoke out, some groups who had agreed to talks at the FCC were intercepted by the White House. One major tech industry executive said a White House official told him, days ahead of the president's statement, to "keep your powder dry" — a phrase that the executive interpreted as a signal that he shouldn't yet commit to the FCC's plan.

Wheeler now finds himself facing a movement that is quickly gaining steam around the President's position. Three people who met with Wheeler in the days after the president's statement say he was "adamant" that all options remain on the table -- but they also walked away with the impression that the chairman is still not ready to give up on the agency's hybrid proposal.

"He certainly referred to the hybrid glowingly," said one official, who met with Wheeler late this week and spoke on condition of anonymity to speak freely about the gathering. "If we had to bet where he's heading, it's still the hybrid."

After this story was described to her, an FCC spokeswoman declined to comment.

The debate centers around a crucial question that could shape the future of the Web: Should Internet providers have the power to auction off the highest speeds to Web companies, a scenario that some fear will favor rich and powerful firms such as Google or Netflix over start-ups?

Obama has made it clear that he wants Internet providers, such as Time Warner Cable or Verizon's broadband division, to be regulated by the FCC by putting them under Title II of the Telecommunications Act. That way, they would have to answer to the agency similar to the way phone companies do. With that authority, the agency could ban Internet providers from speeding up Web content that they like and slowing down what they don't, proponents of this approach have argued.

Wheeler, while publicly saying he has been open to all options including the full use of Title II, still appears to favor the hybrid plan that uses some of the FCC's Title II authority only in some circumstances, according to the people who have met with him over the past few weeks.

But the complexity of the hybrid -- and its potential to create legal pitfalls -- have made the plan difficult for even industry officials to digest. Many of the FCC meetings leading up to Obama's statement Monday were spent simply trying to understand what the agency meant by its proposal and how it would work.

"The proposal had been described to me in so many different ways," said one telecom industry official. "At one point I was really going, 'Wow, I really need to have a much clearer picture as to what we're talking about.'"

The FCC initially anticipated voting on rules for broadband providers in its December monthly meeting. That vote will now be pushed back to next year, the agency said this week. The FCC has been developing new rules for Internet providers ever since a federal court threw out the bulk of the agency's old net neutrality regulations in January.

There have been few issues more controversial for the FCC than net neutrality. On Monday, before Obama's statement, Wheeler tried to pull out of his garage to get to work, only to find his driveway blocked by protesters who wanted the full Title II approach instead of the hybrid.

The three people who met with Wheeler this week added that the pressure on the chairman is clearly having an impact. In at least one meeting this week, the chairman was "openly hostile to just about every other idea that was mentioned -- to the point where he would bite people's heads off after they opened their mouths." He also complained how the process has become "politicized."

Another person who had met with Wheeler simply put it this way: "The dude needs a vacation."