FCC Chair Changes Tune on Net Neutrality

The chairman of the Federal Communications Commission reportedly is changing a proposal for regulating Internet traffic in response to a wave of dissension against the idea.

Chairman Tom Wheeler had proposed a new “Net neutrality” plan that would allow Internet service providers to negotiate with companies that use the Internet to provide services to end customers — such as those who deliver streaming video, cloud services, social networking, or any Web service — in order to grant preferential treatment of their data in exchange for fees.

For example, Netflix recently agreed to pay Comcast extra fees to deliver streaming video at a better performance rate to customers.Netflix has publicly protested the arrangement but said essentially that it had no alternative in the absence of Net neutrality rules.

The concept of an open Internet, or “Net neutrality,” requires that Internet service providers treat all Internet data and traffic equally and refrain from offering preferential treatment to technology and Internet companies that are prepared to pay extra for improved delivery of their information to consumers.

Rule Rewrite

The D.C. Circuit Court of Appeals in January threw out the FCC’s order prohibiting ISPs from discriminating against technology and Internet companies, and asked the commission to rewrite the rules.

Wheeler’s proposal reportedly would have allowed ISPs to strike deals with content providers and other Internet companies for faster delivery of their services — such as the Comcast-Netflix deal — while banning the ISPs from blocking or slowing down data delivery.

The advantage for Net neutrality would be in establishing a prohibition against blocking or slowing down websites and other services, Wheeler argued. The FCC had been set to vote on the proposal this week.

“Wheeler’s original proposal was clearly in the comfort zone of telcos to the point that many thought he was acting as little more than their shill,” Charles King, principal at Pund-IT, told the E-Commerce Times.

“Wheeler may be setting his eye on life after the FCC, but acting like what amounts to a professional lapdog is generally a poor career strategy,” he continued. “If his proposal includes the features being reported and the new ombudsman’s office is properly funded and staffed, Wheeler will be able to position himself as someone willing to compromise his principles for the greater good.”

Strong Resistance

Wheeler’s plan met with stern resistance from the technology industry, the public and even an FCC commissioner. More than 100 technology companies — including Google, Facebook, Twitter, Microsoft and Yahoo — signed a letter calling for the FCC to ensure the Internet remains an open platform, noting that the commission’s support of the open Internet has allowed such companies to thrive and boost U.S. economic growth.

FCC Commissioner Jessica Rosenworcel has decried Wheeler’s demand for a vote this week on the issue, instead calling for a delay of at least a month to give his proposal due consideration. The existing time line neglects to “respect the public response” to the proposal, she argued. Another commissioner, Ajit Pai, also called for a delay on the vote.

“We are encouraged by reports that suggest that the FCC is beginning to hear the public outcry that followed the leaking of its original proposal three weeks ago,” said Michael Weinberg, vice president at Public Knowledge.

“The FCC must take public concerns about a fast lane and slow lane online seriously, and the first step to doing so is asking real questions that explore all of its options for implementing strong Net neutrality rules,” he told the E-Commerce Times.

“Going forward, we will continue to push to make sure that the FCC understands that Internet fast lanes go against the core values of Net neutrality, and that the public demands protection for a truly free and open Internet,” Weinberg added.

Exceptions Included

“It’s not a full pullback in that it reportedly includes exceptions for special cases — such as healthcare organizations streaming rich data to patients,” Pund-IT’s King noted, “but while purists are likely to bluster a bit, the new approach is far more balanced and consumer-friendly than Wheeler’s proposal.”

The updated proposal would seek to address the opposition to his plan, ensuring that the FCC would closely examine deals between ISPs and Internet companies to make sure ISPs don’t hamper companies who decline to pay for faster data delivery, according to The Wall Street Journal.

The new proposal also will seek comment on whether such deals should be banned completely, and it will prohibit major ISPs from seeking deals with some companies that they neglect to offer to others.

Public Utility Suggestion

Wheeler’s proposal also would seek comment on whether the provision of broadband Internet service should be designated as a public utility, which would allow stricter regulation. While ISPs are fighting against such a move, which they say would hamper investment and innovation, companies such as Mozilla have publicly called for ISPs to be classified as “common carriers.”

As such, they would not be allowed to enter deals to provide paid preferential treatment. The FCC also plans to seek comment on Mozilla’s proposal.

“Since Net neutrality rules were thrown out by a Federal court in January, carriers have had free rein to devise various toll road scenarios for customers — like Comcast’s imposition of surcharges on Netflix,” King pointed out. “Common carrier rules would allow the FCC far greater oversight of those strategies and deals without having to ask Congress to pass Net neutrality legislation, which would be essentially impossible in the current session.”

Wheeler additionally hopes to establish an ombudsman who would advocate on behalf of Internet companies and would have “significant enforcement authority,” enabling all those concerned in ISP-Internet company deals to have access to the FCC’s dispute resolution process.

The updated proposal attempts to address the opposition to the plan while remaining on what Wheeler believes would be the fastest course of action on the issue, agency officials told the WSJ. Yet his belief that the proposal would retain an open Internet, without previously revealing much information on exactly how that would occur, reportedly has caused dissension in the FCC.

“It definitely seems to be tipping toward a more consumer-friendly outcome, which hasn’t always been the case during the past two-plus decades,” King suggested. “As a class, the vast majority of modern politicians, bureaucrats and regulators are extremely friendly toward business interests. That Wheeler decided to tone down his recommendations is testimony to the volume and quality of dissenting opinions, along with the fact that we’re in the run-up to hotly contested elections.”