FCC Adopts Net-Neutrality Rule Backed by Obama for InternetTodd Shields
U.S. regulators invoked broad powers to ensure that Web traffic for all users is treated equally, adopting net-neutrality rules that supporters say will preserve a wide-open Internet and that opponents vow to fight in court.
The measure approved Thursday by the Federal Communications Commission prohibits companies such as AT&T Inc. and Comcast Corp. from blocking or slowing online traffic, or offering faster service in return for payment. It also brings wireless Internet service under the rules.
The vote by three Democrats, with two Republicans opposing, enshrines a regulation backed by President Barack Obama. Cable and telephone companies opposed the rule, saying it risks stifling a fast-growing Internet and will lead to rate regulation.
“The landmark open-Internet protections that we adopted today should reassure consumers, innovators and financial markets about the broadband future of our nation,” FCC Chairman Tom Wheeler, a Democrat appointed by Obama, said after the commission voted to cheers from the crowd in its meeting room in Washington.
Obama said in a statement the decision “will protect innovation and create a level playing field for the next generation of entrepreneurs.”
With the vote, the FCC is seeking to settle more than a decade of debate about whether the Internet should be a highway offered to all users on equal terms, or whether broadband providers can levy fees and restrict access. A previous set of net-neutrality rules adopted by the FCC in 2010 was voided by a federal appeals court, sending Wheeler’s agency back to the drawing board.
The proposal approved Thursday drew comments to the agency from more than 4 million people. Republicans in Congress and at the commission opposed Wheeler’s plan, saying the chairman had improperly yielded to Obama’s call for strong rules. They didn’t let up with the vote.
House Speaker John Boehner said lawmakers would try to stop what he called the FCC’s “misguided scheme” that would “put the federal government in control of the Internet.”
“Overzealous government bureaucrats should keep their hands off the Internet,” the Ohio Republican said in a statement.
The agency debated the rules behind closed doors prior to the public meeting, and didn’t say when it would release the text that is more than 300 pages. The rules take effect 60 days after being published in the Federal Register.
The vote “imposes intrusive government regulations that won’t work to solve a problem that doesn’t exist using legal authority the FCC doesn’t have,” said Ajit Pai, a Republican commissioner who campaigned against the rules in TV and radio appearances and on social media.
The vote is a “radical” step that imposes “badly antiquated regulations,” Michael Glover, senior vice president at Verizon Communications Inc., said in an e-mailed statement. Verizon, the second-largest U.S. telephone company, brought the lawsuit that upended the FCC’s earlier net neutrality rules.
Among the spectators attending the FCC meeting for the vote was Apple Inc. co-founder Steve Wozniak, who said the action is “an indication that the people can sometimes win.”
“This is a victory for the people, the consumers, the average Joes against these suppliers who have all of the power and wealth and make the decisions for them,” Wozniak said in an interview with Bloomberg Television.
Internet companies such as Netflix Inc. and Twitter Inc. had sought the rules to keep access to Internet subscribers open.
Netflix shares rose 1 percent to $483.03 at 4:15 p.m. Netflix by some measures accounts for more than one-third of Web traffic in North America in peak evening hours.
“The net neutrality debate is about who picks winners and losers online: Internet service providers or consumers,” said Anne Marie Squeo, a Netflix spokeswoman. “Today, the FCC settled it: Consumers win.”
Comcast fell 0.8 percent to $59.15 and Time Warner Cable Inc. dropped 1.4 percent to $152.40. AT&T rose 0.9 percent to $34.50 and Verizon gained 0.4 percent to $49.37.
The agency’s action sets the stage for Internet-service providers to mount a legal challenge. Wheeler’s rules use extensive utility-style powers crafted to govern phone companies. That’s a change from a lighter approach adopted a decade ago when the agency had a Republican majority. Whether the FCC properly switched to the stronger basis for authority will be among issues in expected court challenges.
Internet traffic increasingly is running over mobile networks, so it makes sense to include those connections, Wheeler said before the vote. Wireless providers said Congress had exempted their service from strong rules.
The new rules let the FCC judge mobile deals that exempt services such as music streaming from counting against subscribers’ data caps. The agency can accept complaints and might ban an anti-competitive plan.
Venture capitalists had told the FCC the deals violate the concept that all Web traffic should receive equal treatment. T-Mobile US Inc. said its Music Freedom offering, which streams songs that don’t count against data caps, helps it stand out from competitors.
Companies and business lobby groups said the commission went too far.
AT&T wants a consensus solution and “hopefully bipartisan legislation,” Senior Executive Vice President-External and Legislative Affairs Jim Cicconi said. A future FCC, Congress, or courts could undo the FCC’s decision, Cicconi said in an e-mailed statement. He said there is “a very real potential of having to start over -- again -- in the future.”
The FCC has “pried open the door to heavy-handed government regulation in a space celebrated for its free enterprise,” Michael Powell, president of the National Cable & Telecommunications Association trade group that has Comcast among its members, said in an e-mailed statement. “The commission has breathed new life into the decayed telephone regulatory model and applied it to the most dynamic, free-wheeling and innovative platform in history.”
Wheeler disagreed with characterizations that government is imposing utility-style regulation.
“The action that we take today is an irrefutable reflection of the principle that no one, whether government or corporate, should control free and open access to the Internet,” Wheeler said.
In another expansion of its authority, the agency claimed power to judge whether Internet service providers offer fair terms for accepting Web traffic from the likes of video streamer Netflix and data shippers such as Cogent Communications Holdings Inc. and Level 3 Communications Inc.
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