UPDATES: This is a surprise that will thrill net neutrality supporters — but is contributing to a sharp drop this morning in the stock prices for cable broadband providers including Comcast, Time Warner Cable, and Charter. President Obama said, in a statement, that the FCC should “reclassify consumer broadband service under Title II of the Telecommunications Act” — giving the agency broad authority to regulate the Internet as a phone-like communications service and a clear path to establish strong net neutrality rules. But he also asked regulators to promise not to dictate rates or rule on “other provisions less relevant to broadband services.”
“This is a basic acknowledgment of the services ISPs provide to American homes and businesses, and the straightforward obligations necessary to ensure the network works for everyone — not just one or two companies,” the President says.
The statement takes the president into a highly charged debate as the FCC tries to decide how to establish net neutrality rules after a DC court remanded previous regulations. Justices said that the FCC lacked the authority to impose tough requirements because years ago it had classified the Web as a lightly regulated information service. In May the agency launched a rule-making procedure based on a proposal from Chairman Tom Wheeler that would not reclassify broadband, thereby leaving at least a theoretical possibility that ISPs could favor some content providers by transmitting their material faster than their rivals’. The White House statement acknowledges that the FCC “is an independent agency, and ultimately this decision is theirs alone.”
Wheeler says that the FCC “will incorporate the President’s submission into the record of the Open Internet proceeding. We welcome comment on it and how it proposes to use Title II of the Communications Act.”
National Cable & Telecommunications Association President and CEO Michael Powell issued a statement, criticizing Obama’s policy stance, saying if adopted, “would create devastating results”.
“Heavily regulating the Internet will lead to slower Internet growth, higher prices for consumers, and the threat of excessive intervention by the government in the working of the Internet. This will also have severe and profound implications internationally, as the United States loses the high ground in arguing against greater control of the Internet by foreign governments,” said Powell in the statement. “There is no substantive justification for this overreach, and no acknowledgment that it is unlawful to prohibit paid prioritization under Title II. We will fight vigorously against efforts to impose this backwards policy”.
Congress would have to approve reclassification “which is highly unlikely in this political environment given Republicans have historically opposed any such move,” says Janney Capital Markets’ Tony Wible. Still, the President’s position “is surprising as we generally considered most of the politicians were in favor of the cable lobby. We question if the power of online publishers and voters is finally building enough momentum to shift policy as we have long stated it could.” Obama’s support also could make it politically easier for regulators to reclassify over cable and telco vigorous objections that it might blunt investment in the Internet.
Net neutrality supporters are applauding today’s announcement. “The president who promised to take a back seat to no one on Net Neutrality has finally gotten in the driver’s seat,” Free Press CEO Craig Aaron says. “And he may have saved the Internet at the moment it was in the greatest jeopardy.”
But Verizon, which challenged the FCC’s earlier rules in court, says that reclassification “would apply 1930s-era utility regulation to the Internet, would be a radical reversal of course that would in and of itself threaten great harm to an open Internet, competition and innovation. That course will likely also face strong legal challenges and would likely not stand up in court. Moreover, this approach would be gratuitous. As all major broadband providers and their trade groups have conceded, the FCC already has sufficient authority under Section 706 to adopt rules that address any practices that threaten harm to consumers or competition, including authority to prohibit ‘paid prioritization.’”
Here’s the White House statement:
An open Internet is essential to the American economy, and increasingly to our very way of life. By lowering the cost of launching a new idea, igniting new political movements, and bringing communities closer together, it has been one of the most significant democratizing influences the world has ever known.
“Net neutrality” has been built into the fabric of the Internet since its creation — but it is also a principle that we cannot take for granted. We cannot allow Internet service providers (ISPs) to restrict the best access or to pick winners and losers in the online marketplace for services and ideas. That is why today, I am asking the Federal Communications Commission (FCC) to answer the call of almost 4 million public comments, and implement the strongest possible rules to protect net neutrality.
When I was a candidate for this office, I made clear my commitment to a free and open Internet, and my commitment remains as strong as ever. Four years ago, the FCC tried to implement rules that would protect net neutrality with little to no impact on the telecommunications companies that make important investments in our economy. After the rules were challenged, the court reviewing the rules agreed with the FCC that net neutrality was essential for preserving an environment that encourages new investment in the network, new online services and content, and everything else that makes up the Internet as we now know it. Unfortunately, the court ultimately struck down the rules — not because it disagreed with the need to protect net neutrality, but because it believed the FCC had taken the wrong legal approach.
The FCC is an independent agency, and ultimately this decision is theirs alone. I believe the FCC should create a new set of rules protecting net neutrality and ensuring that neither the cable company nor the phone company will be able to act as a gatekeeper, restricting what you can do or see online. The rules I am asking for are simple, common-sense steps that reflect the Internet you and I use every day, and that some ISPs already observe. These bright-line rules include:
- No blocking. If a consumer requests access to a website or service, and the content is legal, your ISP should not be permitted to block it. That way, every player — not just those commercially affiliated with an ISP — gets a fair shot at your business.
- No throttling. Nor should ISPs be able to intentionally slow down some content or speed up others — through a process often called “throttling” — based on the type of service or your ISP’s preferences.
- Increased transparency. The connection between consumers and ISPs — the so-called “last mile” — is not the only place some sites might get special treatment. So, I am also asking the FCC to make full use of the transparency authorities the court recently upheld, and if necessary to apply net neutrality rules to points of interconnection between the ISP and the rest of the Internet.
- No paid prioritization. Simply put: No service should be stuck in a “slow lane” because it does not pay a fee. That kind of gatekeeping would undermine the level playing field essential to the Internet’s growth. So, as I have before, I am asking for an explicit ban on paid prioritization and any other restriction that has a similar effect.
If carefully designed, these rules should not create any undue burden for ISPs, and can have clear, monitored exceptions for reasonable network management and for specialized services such as dedicated, mission-critical networks serving a hospital. But combined, these rules mean everything for preserving the Internet’s openness.
The rules also have to reflect the way people use the Internet today, which increasingly means on a mobile device. I believe the FCC should make these rules fully applicable to mobile broadband as well, while recognizing the special challenges that come with managing wireless networks.
To be current, these rules must also build on the lessons of the past. For almost a century, our law has recognized that companies who connect you to the world have special obligations not to exploit the monopoly they enjoy over access in and out of your home or business. That is why a phone call from a customer of one phone company can reliably reach a customer of a different one, and why you will not be penalized solely for calling someone who is using another provider. It is common sense that the same philosophy should guide any service that is based on the transmission of information — whether a phone call, or a packet of data.
So the time has come for the FCC to recognize that broadband service is of the same importance and must carry the same obligations as so many of the other vital services do. To do that, I believe the FCC should reclassify consumer broadband service under Title II of the Telecommunications Act — while at the same time forbearing from rate regulation and other provisions less relevant to broadband services. This is a basic acknowledgment of the services ISPs provide to American homes and businesses, and the straightforward obligations necessary to ensure the network works for everyone — not just one or two companies.
Investment in wired and wireless networks has supported jobs and made America the center of a vibrant ecosystem of digital devices, apps, and platforms that fuel growth and expand opportunity. Importantly, network investment remained strong under the previous net neutrality regime, before it was struck down by the court; in fact, the court agreed that protecting net neutrality helps foster more investment and innovation. If the FCC appropriately forbears from the Title II regulations that are not needed to implement the principles above — principles that most ISPs have followed for years — it will help ensure new rules are consistent with incentives for further investment in the infrastructure of the Internet.
The Internet has been one of the greatest gifts our economy — and our society — has ever known. The FCC was chartered to promote competition, innovation, and investment in our networks. In service of that mission, there is no higher calling than protecting an open, accessible, and free Internet. I thank the Commissioners for having served this cause with distinction and integrity, and I respectfully ask them to adopt the policies I have outlined here, to preserve this technology’s promise for today, and future generations to come.
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