FCC Chairman Endorses Strong Net Neutrality Effort With Reclassification

UPDATED: The fight is on between the FCC and cable and telco broadband providers. Chairman Tom Wheeler confirmed in an op-ed piece in Wired that he will recommend this week that the agency “use its Title II authority to implement and enforce open internet protections.” The plan, expected to be presented to regulators on February 26, will also “modernize Title II” by guaranteeing that there’ll be “no rate regulation, no tariffs, no last-mile unbundling.”

The proposal would bar ISPs from blocking access to legal content, throttling transmissions or offering paid prioritization. That would mean, hypothetically, that Comcast couldn’t provide speedier transmissions for its streaming videos over, say, Netflix.

Wheeler’s plan also would enable the FCC to deal on a case-by-case basis with disputes involving connections between ISPs and companies that distribute content to them. It would apply to mobile broadband as well as wired. Although the Internet would be considered a telecom service, providers would not have to contribute to the Universal Service Fund or charge additional fees, according to a senior FCC official.

Wheeler has long supported net neutrality, but it was unclear how far he would go to promote it. A U.S. Appeals Court last year remanded the FCC’s net neutrality rules from 2010: The agency overstepped its authority, the court said, after having earlier deemed the Internet to be a lightly regulated information service. That would change if the FCC reclassified the web as a so-called Title II regulated telecommunications service.

In November, President Obama urged the independent regulatory agency to reclassify to promote unfettered competition. Wheeler strongly hinted last month that he would also support such a change. Those favoring reclassification flooded the FCC with emails, especially after comedian John Oliver called for a response on his HBO show.

Cable and telco companies, as well as many GOP lawmakers, have said that reclassification would chill investment. Sen. Ted Cruz (R-TX) called tough rules “Obamacare for the Internet.” Rep. Greg Walden (R-OR) referred to a redefinition of the Internet as the “nuclear option.”

Former FCC Chairman Michael Powell, now CEO of the National Cable & Telecommunications Association, says reclassification “will result in a backward-looking new regulatory regime, ill-suited for the dynamic Internet, with far-reaching and troubling consequences.” Despite Wheeler’s vow not to dictate prices, “we remain concerned that this proposal will confer sweeping discretion to regulate rates and set the economic terms and conditions of business relationships.” The lobby group will “look carefully at the final order to fully understand the impact on broadband networks and American consumers.”

Similarly, Verizon General Counsel Michael Glover called Wheeler’s plan “unnecessary and counterproductive.” The FCC “can address any harmful behavior without taking this radical step. Moreover, Congress is working on legislation that would codify open Internet rules once and for all. It is counterproductive because heavy regulation of the Internet will create uncertainty and chill investment among the many players — not just Internet service providers — that now will need to consider FCC rules before launching new services.”

Former Commissioner Meredith Attwell Baker, who now runs lobby group CTIA-The Wireless Association, said last month that if the FCC acts alone, then “the wireless industry will have no choice but to look to the courts.”

Despite the industry opposition, most of the large cable Internet providers’ stocks are up following Wheeler’s announcement with a pledge not to control rates. The chairman’s tone was “balanced, rational and generally positive for the cable sector,” Wells Fargo Securities’ Marci Ryvicker says. In midday trading, Comcast is up 3.1%, Time Warner Cable is +3.6%, and Charter is +4.7%.

Phone companies are faring less well, likely due to Wheeler’s call to extend net neutrality “bright-line rules to mobile broadband,” not just wired services. Verizon and AT&T shares are +0.3%.

Open Internet advocates are thrilled by Wheeler’s announcement. “This is a banner day as years of grassroots organizing is paying historic public interest dividends,” says former Commissioner Michael Copps, now an adviser to Common Cause. Public Knowledge VP Government Affairs Chris Lewis says that while he wants to see the details of the chairman’s proposal, the plan appears to promote net neutrality while it “uses a scalpel, not a cleaver, to avoid subjecting broadband providers to parts of Title II that may not be applicable to their services.”