thursday, 20 february of 2014

U.S. - FCC plans to issue new ´Net Neutrality´ rules


FCC plans to issue new 'Net Neutrality' rules

The Federal Communications Commission said Wednesday it would again issue rules to prevent Internet service providers from blocking or slowing down access to content providers that don't pay a toll to reach consumers.

However, analysts said the rules could open the door for broadband providers to cut deals with content companies like Netflix Inc. NFLX -1.97% or Google Inc. GOOG -0.71% to give their products some kind of advantage, either though speed or prominent placement.

The FCC's announcement means it doesn't plan to reclassify broadband as a public utility at present, as Democrats and public-interest groups had urged. Doing so would give the FCC much greater authority to set rules for broadband providers.

Supporters say treating all Internet traffic equally, a concept known as net neutrality, is crucial to keeping the Internet open and allowing smaller companies to compete with the biggest content providers. But the courts have ruled against the FCC's previous attempts to enforce net neutrality on companies like Comcast Corp. CMCSA -3.66% and Verizon Communications Inc. VZ +1.20% that provide Internet connections to households and businesses.

Last month, the U.S. Court of Appeals for the District of Columbia Circuit threw out FCC rules barring providers from blocking or slowing down websites, but it acknowledged the FCC has some authority to regulate broadband-company practices under a section of the 1996 Telecommunications Act that gives it broad authority to encourage U.S. broadband service.

The FCC said Wednesday it won't appeal the D.C. Circuit's ruling. Instead, it plans to take advantage of Section 706, of the law to propose new rules in the late spring or early summer, after soliciting public comment.

"The FCC must stand strongly behind its responsibility to oversee the public interest standard and ensure that the Internet remains open and fair," FCC Chairman Tom Wheeler said in a statement. "The Internet is and must remain the greatest engine of free expression, innovation, economic growth and opportunity the world has ever known."

The court said in January that the FCC could impose a "no blocking" rule if it found a different legal justification. Mr. Wheeler's statement indicates the FCC will do just that, by establishing a minimum standard for how broadband companies treat content. The rules would likely outline expectations and unacceptable practices for broadband providers, and provide for case-by-case enforcement when websites complain of unfair discrimination.

Analysts said the new rules could pave the way for deals between Internet providers and content companies to carry their content to consumers at higher speeds. Paul Gallant, a telecom policy analyst at Guggenheim Securities, said his reading of the commission's principles is that the agency is more likely to focus on policing anti-competitive conduct than on discouraging the content deals.

"I think the FCC will be inclined to permit voluntary paid prioritization deals," he said.

Even with that caveat, Republicans are opposed to the new proposed rules. "I am deeply concerned by the announcement that the FCC will begin considering new ways to regulate the Internet," FCC Commissioner Michael O'Rielly said. "The Obama administration refuses to abandon its furious pursuit of these harmful policies to put government in charge of the Web," House Energy and Commerce Chairman Fred Upton (R., Mich.) and Rep. Greg Walden (R., Ore.) said in a statement.

Any rules would have to be approved by a vote of the five-member commission, which includes three Democrats and two Republicans.

Net neutrality supporters, however, were disappointed with the FCC's decision not to reclassify broadband Internet as a public utility, which they had argued was the only way to make the rules stand up in court.

Andy Schwartzman, a telecom lawyer and adviser to the anti-media consolidation group Free Press, said not reclassifying broadband "would be repeating the biggest mistake" made during prior efforts by former FCC Chairman Julius Genachowski.

Broadband providers have argued that reclassification would be disastrous for the industry because it would subject them to regulations designed for the landline phone system. "We think reclassification would probably be the ultimate death of the broadband market," Comcast Executive Vice President David Cohen said in an interview last week. "We think it would dry up private investment and destroy all the gains made in the broadband market in the U.S."

Cohen's comments were made in the context of his company's bid to acquire Time Warner Cable Inc. TWC -2.75% Comcast has already agreed to abide by the FCC's net neutrality rules, even though they were struck down in court, as part of its acquisition of NBC-Universal in 2011. Comcast has also agreed to extend the agreement to Time Warner Cable Inc. subscribers if that acquisition is approved.

Mr. Wheeler has left the reclassification option open for now, which could serve as a deterrent for broadband providers seeking to challenge the rules in court again.

A Verizon spokesman said the company said it wouldn't appeal last month's court ruling, and that it is too early to determine whether it would challenge the FCC's latest rules.

As part of the process, the FCC will also examine ways to encourage competition in the broadband market. That could include removing legal restrictions that prevent cities and towns from building their own broadband or Wi-Fi networks.

(Published by The Wall Street Journal – February 19, 2014)

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