The proposal is the latest in a year-long struggle by Wheeler, a former lobbyist for the cable and wireless industry, to create so-called net neutrality rules, amid great public interest in the creation of strong rules and fierce opposition by deep-pocketed telecom and cable companies.
In a Wired op-ed, Wheeler said Wednesday that he wants to regulate Internet providers with the most aggressive tool at his disposal: Title II of the Communications Act. In addition to covering fixed broadband providers such as Comcast and Time Warner Cable, the draft rules would cover wireless providers such as T-Mobile and Sprint. The rules would also make speeding up or slowing down Web traffic — a tactic known as prioritization — illegal. And it would ban the blocking of Web traffic outright.
The proposed rules are much more aggressive than many had initially predicted. Just a few months ago, Wheeler appeared ready to side with cable providers. But after much prodding, including protests in his driveway and a public plea from President Obama, Wheeler said Wednesday that the industry needs strong oversight.
It all adds up to the most significant intervention ever undertaken by federal regulators to make sure the Web remains a level playing field.
"My proposal assures the rights of Internet users to go where they want, when they want," Wheeler wrote, "and the rights of innovators to introduce new products without asking anyone’s permission."
The FCC is expected to vote on Wheeler's proposed rules on Feb. 26.
The draft rules seek to impose a modified version of Title II, which was originally written to regulate telephone companies. It will waive a number of provisions, including parts of the law that empower the FCC to set retail prices — something Internet providers fear above all.
However, contrary to many people's expectations, the draft rules will also keep other parts of Title II that allow the FCC to: enforce consumer privacy rules; extract funds from Internet providers to help subsidize services for rural Americans, educators and the poor; and make sure services such as Google Fiber can build new broadband pipes more easily, according to people familiar with the plan.
Internet providers won't be asked to contribute to the subsidy fund, known as Universal Service, right away. The draft rules merely open the door to that obligation down the road should the FCC determine that step is necessary. (The Universal Service Fund helps schools and libraries buy Internet service and reduces the cost of telephone service for low-income Americans. It also subsidizes connectivity for rural areas. If the FCC later decides to ask Internet providers to pay into the fund, the money would go toward these programs.)
In addition, senior FCC officials confirmed, Wheeler's draft proposal applies strong rules to the Internet backbone — the part of the Web responsible for carrying Internet traffic to the doorstep of Comcast, Verizon and others before those companies ferry that content to you. The proposal stops short of laying down specific regulations there; it merely says companies should not favor some Web traffic over others in that part of the network. But under the draft rules, the FCC could investigate deals similar to the one Netflix signed with Comcast, Verizon and others to ensure its content is delivered quickly to customers. That's a huge deal for Netflix.
"This is a historic moment for applying the Communications Act to preserve freedom of expression," said Gene Kimmelman, president of the consumer group Public Knowledge. "By using targeted non-discrimination policing powers, I think the FCC chairman is doing more today to protect and promote freedom of expression than we've seen in decades of debate about how broadband services should be treated."
The announcement reflects a major turning point for Internet regulation, and a huge moment in the history of the Web. Wheeler's proposed rules stand to determine who — and how — Internet providers are allowed charge for services.
Wheeler's proposal has Republican critics and Internet providers seething.
"It is a power grab for the federal government by the chairman of a supposedly independent agency who finally succumbed to the bully tactics of political activists and the president himself," said Sen. John Thune (R-S.D.), the chair of the Senate Commerce Committee, in a statement.
The proposed rules “will result in a backward-looking new regulatory regime, ill-suited for the dynamic Internet, with far reaching and troubling consequences,” Michael Powell, president of the National Cable & Telecommunications Association.
“We believe that such a significant expansion of the FCC’s authority is unnecessary and will only deliver further uncertainty instead of legally enforceable rules that everyone supports.”
To understand the magnitude of what's happening, consider this: Since Columbia Law scholar Tim Wu coined the term "net neutrality" in 2003, the FCC has tried to implement net neutrality rules twice — and failed. Both times, the rules were struck down after a court challenge. Now, the FCC is trying a third time. And its leader — a former lobbyist for the cable and wireless industries, no less — appears to be swinging for the fences.
For consumer groups that have been pressing for aggressive rules all along, this is a major victory. It's a significant setback for Internet providers that wanted the flexibility to try new business models. And importantly, it's the culmination of a year's worth of reflection by Wheeler himself, who months ago was in a very different place on the issue.
Wheeler wasn't always sold on what President Obama said should be the "strongest possible rules" for net neutrality. Let's rewind to last January, when a federal court tossed out the FCC's existing rules on the grounds that the agency had exceeded its congressionally granted authority. In the wake of that ruling, Wheeler said he'd follow the court's "roadmap" to a solution that would stay on the right side of the law.
In the spring, he rolled out a proposed rule that many ISPs liked but consumer groups hated. The problem? It tacitly allowed for Internet providers to speed up some forms of Web traffic in exchange for payment — a tactic known as paid prioritization. This is the one thing net neutrality rules were supposed to prevent.
The mere possibility of paid prioritization slipping through touched a nerve with grassroots activists, who argued that only Title II of the Communications Act would be enough to keep the broadband industry from setting up a tiered Internet favoring wealthy, established businesses. In a world with paid prioritization, they said, start-ups and small businesses would be shut out of the market because they couldn't afford to pay ISPs for priority access to customers. They also wouldn't be able to afford the legal fees associated with filing complaints to the FCC when abuses occurred.
Then came a late-night comedian named John Oliver. Oliver, who'd made a name for himself on "The Daily Show" with Jon Stewart, took on the FCC's initial proposal with a blistering, 14-minute rant that accused the agency of undermining net neutrality and even lobbed a few bombs at Wheeler himself.
Oliver's net neutrality segment kicked the grassroots organizing machine into overdrive. Proponents of stronger rules flooded the FCC with millions of comments calling for the use of Title II. By the end of the process, it had become clear that the public had spoken, despite a significant counter-effort by those backing the industry position. In all, Americans filed roughly four million comments to the FCC — smashing through the previous record, which belonged to Janet Jackson's infamous Super Bowl nipple-slip.
Industry officials admit that they were outmaneuvered by the Internet activists, who kept the pressure on with protests outside the FCC and even a sit-in outside Wheeler's house that prevented the 6-foot-4 chairman from driving to work in his Mini Cooper.
Meanwhile, other advocates of strong net neutrality were coming forward with alternative proposals that began gaining traction at the FCC in August and September. Mozilla, the maker of the popular Firefox browser, suggested that the FCC split the Internet in two. Apply Title II to the Internet backbone, it said, while leaving the part of the Internet between consumers and their Internet providers untouched under Title I. Tim Wu, the Columbia Law scholar, also put forward a proposal of his own.
The alternatives were intended to break the binary logjam that placed industry and consumer groups on opposing sides, said Chris Riley, head of public policy at Mozilla. Asked whether Mozilla believed its middle-ground proposal would cause Wheeler to move to stronger regulations, Riley said they always knew it was a possibility.
"What we wanted was to create options for getting to Title II," Riley said. "We definitely thought it could be something that demystifies Title II and gets people to think about it. And that was always part of our intention."
Momentum began building for a "hybrid" approach that leaned substantially on these proposals. Quietly, the FCC began talking to Internet providers, consumer groups and Web content companies about a compromise plan. The Wall Street Journal reported in October that a hybrid plan was in the works. It's still unclear just how close the parties were to an agreement, but people close to the negotiations say the news alarmed the White House, which sought to intervene before the hybrid proposal could really get off the ground.
On Nov. 10, President Obama dropped a major statement on net neutrality — an unusual attempt by a president to influence a legally independent agency. The move set up a partisan confrontation with Republicans in Congress. Many believe that's what prompted Obama to weigh in in the first place: His party had just lost a midterm election and net neutrality was a strong populist issue Democrats could lead on.
Regardless of Obama's motivations, his statement had the effect of pushing Wheeler to abandon the hybrid plan and adopt Title II, numerous officials inside and outside the agency said. Many suggested that Wheeler was now "boxed in," despite the fact that the chairman had always publicly kept Title II on the table as an option.
"Oliver and the president were probably the two most prominent [turning points]," said an industry official, "and then a series of ongoing drip, drip, drip every day for several months" by grassroots protesters.
The more Wheeler came around on the full use of Title II, the more that Internet providers came to resent Verizon for having challenged the FCC's old net neutrality rules at all. Now the agency was on the verge of replacing those regulations with something much stronger, turning Verizon's January court win into a Pyrrhic victory. An industry official told National Journal that Verizon was like the dog that caught the bus — it wasn't prepared for what came after.
"Definitely there was a disagreement about the tactic to appeal," the industry official recalled.
As the seeming inevitability of Title II grew, Internet providers turned to Congress. In a last-ditch effort at preempting action by the FCC, industry officials lobbied congressional Republicans on a bill that would establish a new rule under the Communications Act. This part of the law, known informally as "Title X," would have given the FCC the explicit authority to regulate net neutrality. In exchange, the FCC would not attempt to use Title II to regulate Internet providers.
The draft text of a bill, with some modifications, was released last month. But with Wheeler about to unveil his new proposal, which was widely expected to lean on Title II, Democrats saw little incentive to play ball.
Now that details of Wheeler's proposal have begun to slip out, the political calculus may shift again. Republicans at the FCC will almost certainly vote to block the rules from becoming law, meaning Wheeler must get the two other Democrats on the commission, Mignon Clyburn and Jessica Rosenworcel, to vote with him. It's unlikely they'll buck the party — or the president.
Even if the regulations pass, however, Internet providers are sure to take the rules to court.
"Title II is going to answer a couple of questions, but it's going to spawn scores more questions that are going to be debated and litigated for years to come," predicted Robert McDowell, a former Republican FCC commissioner.
It took nine months, but Wheeler now evidently believes that adopting Title II gives him the strongest legal argument for regulating Internet providers.
Correction: A previous version of this story said Republicans had formally introduced a net neutrality bill last month. Republicans had in fact released a draft text of the bill.