U.S. Regulator to Write Rules on Internet Service Next Month, Analyst Says

U.S. regulators next month may write rules governing how companies led by AT&T Inc. and Comcast Corp. provide Internet service, deciding on an issue that has divided the technology and telecommunications industries and provoked political debate.

The Federal Communications Commission may vote on the policy, known as net neutrality, at a Dec. 15 meeting, Paul Gallant, a Washington-based analyst with MF Global, said today in a note to clients.

Net-neutrality rules, which would bar telecommunications companies from interfering with subscribers’ Internet service, are backed by President Barack Obama and technology companies led by Google Inc., EBay Inc. and IAC/InterActiveCorp. Telephone providers have said rules aren’t needed and might damp investment.

FCC Chairman Julius Genachowski may not have reached a final decision to seek a commission vote, “but right now it appears to be the most likely scenario,” said Gallant, a former FCC staffer. He didn’t identify sources for his information.

Republicans who won a House majority in the Nov. 2 election have opposed the rules. Representative Cliff Stearns, a Florida Republican, today in an e-mailed statement reiterated warnings about a “job killing and investment freezing net neutrality proposal.”

Photographer: Andrew Harrer/Bloomberg

The FCC may vote on net neutrality at its meeting set for Dec. 15 according to Paul Gallant, an analyst with MF Global. Close

The FCC may vote on net neutrality at its meeting set for Dec. 15 according to Paul... Read More

Photographer: Andrew Harrer/Bloomberg

The FCC may vote on net neutrality at its meeting set for Dec. 15 according to Paul Gallant, an analyst with MF Global.

All Options Considered

Genachowski has been advocating for rules that would prevent Internet-service providers from selectively blocking or slowing content delivered to subscribers while favoring their own offerings and those of business partners.

The agency is considering “all the options” as it seeks “the right rules to write down to preserve Internet freedom and openness,” Genachowski said at a conference in San Francisco on Nov. 17.

The proposal being considered would be “positive” for AT&T, Comcast, Time Warner Cable Inc., Verizon Communications Inc. and Cablevision Systems Corp. because the possible rules don’t include a previous Genachowski plan to pull high speed- Internet service into the regulatory regime used for telephone service, Gallant wrote. Companies said telephone rules might lead to regulation of rates.

Jen Howard, an FCC spokeswoman, said in an e-mail the agency hasn’t circulated the agenda for its December meeting.

“These rumors from outside, uninformed sources are pure speculation at best,” Howard said.

‘Legal Anchor’

Genachowski in May proposed using the telephone rules as the “legal anchor” for reclaiming authority undermined by a U.S. court. Judges on a federal appeals court in April ruled the agency lacked authority to punish Comcast for interfering with subscribers’ Web traffic.

Now Genachowski “is leaning toward” relying on the same section of the law the court attacked, Gallant wrote.

The agency is trying to find authority for goals including subsidizing high-speed Internet service, or broadband, Gigi Sohn, president of the Washington-based advocacy group Public Knowledge, said in an interview.

“The Comcast decision left open a tiny little hole in the needle that the FCC can try to thread,” she said. “I believe they may try to do that.”

Stearns, the top Republican on the House subcommittee on communications, technology and the Internet, said Genachowski’s proposal would “further impede economic growth and job creation.”

“Ramming through Internet regulations would ignore the will of a bipartisan majority of Congress and the American public,” he said.

House members, including 171 Republicans and 74 Democrats, have written to Genachowski to express concern over his proposed Web policies.

To contact the reporter on this story: Todd Shields in Washington at tshields3@bloomberg.net

To contact the editor responsible for this story: Allan Holmes at aholmes25@bloomberg.net.

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