FCC Stirs Old Debate on 'Net Neutrality'

To Julius Genachowski, the Internet is one of humanity's great inventions. "I can't imagine what life would be like without the Internet," the chairman of the Federal Communications Commission said in a Sept. 21 speech at the Brookings Institution. "It has unleashed the creative genius of countless entrepreneurs." And, Genachowski is convinced, it can help solve problems in areas ranging from health care and education to energy.

One of the keys to the Internet's success, Genachowski argues, is that it is an open system, allowing anyone to use it and develop new applications. Now, he says, "few goals are more essential than preserving a robust and open Internet." That's why Genachowski proposed new net neutrality rules for the Internet in his Brookings speech.

The central idea, as Genachowski explains, is that network carriers such as AT&T (T), Verizon (VZ), and Comcast (CMCSA) would be prohibited from discriminating against users or applications. The providers could not favor, say, the transmission of their own videos over those of others. They wouldn't be able to punish competitors by transmitting their content at slower speeds. And they wouldn't be able to limit access to lawful content or new applications. "The fewer the obstacles, the greater the opportunity," Genachowski said. The proposed new rules, he argued, will make sure that "in the 21st century, the garage, the basement, and the dorm room will be places where people can innovate and bring dreams to life."

Long-Running Battle That, of course, is the argument that's been pushed by Web companies. And make no mistake, this is a battle that has been raging for years in techdom. On one side are telecom and cable companies, who say that as broadband providers they should be able to charge the heaviest users for the costs of capital upgrades. On the other side are Google (GOOG) and others, which contend that such pricing allows broadband providers to discriminate against services that compete with their own.

So it is hardly surprising that Genachowski's proposed new rules were immediately attacked. "Net neutrality is an anticompetitive, pro-bureaucratic construction," fumed the Competitive Enterprise Institute in a statement. There's no need to force AT&T to allow a Google application on the iPhone, for instance, the CEI said in a prepared statement: "Sparring behemoths like Google, Apple (AAPL), and AT&T can take care of themselves."

Republicans on Capitol Hill are already lining up to try to block the proposal, which is expected to be approved by the FCC along a party-line 3-2 vote.

Flood of Comments Expected Elsewhere, the idea is receiving strong support. "What we heard today is a commonsense approach—although in this town, things that are common sense are considered bold," says Ben Scott, policy director at Free Press, a nonprofit organization that advocates for universal access to media. "Net neutrality is a pro-investment policy."

Skype CEO Josh Silverman is also a big fan. That makes sense, since such a policy would make it harder to block applications such as his Internet calling technology from using the telecoms' networks and competing with their own service. "It's an extremely welcome development," says Silverman. "What we are seeing is communications policy being recognized as innovation policy."

What about the big telecom carriers, who clearly would face more competitive threats under the policy? Verizon Vice-President David E. Young is careful not to be too critical—yet. "We share the chairman's goal of preserving an open and robust Internet," Young says. But he cautions the FCC not to move without a thorough examination of all the facts, and the potential consequences of such a policy. "Our concern is will it stifle innovation and growth," he says.

As the FCC issues the proposed rules, then reviews the expected flood of comments, there will be plenty of time to argue over who's right before any actual rules can be issued.

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