In 3-2 vote, commission frames path for Internet

If there is one common thread in Hollywood’s mixed reaction to the FCC’s new rules of the road for the Internet, approved Tuesday, it’s that at least there’s a path forward.

Throughout the long, contentious and often arcane debate, the industry has been split on Net neutrality, with some studios wary that too-stringent rules would limit growth and creative types worried that regulations that were too lax would eventually lead to consolidation of the Web.

The Net neutrality rules that passed in a 3-2 vote on Tuesday would prohibit Internet service providers from blocking access to lawful content, apps and services. They also prohibit providers from “unreasonable discrimination,” in which one site receives speedier delivery to consumers than others.

But the rules carve out an exception for wireless providers, with the rationale that the technology is still in its initial stages and needs “special considerations” to develop.

The rules prohibit a wireless provider from blocking access to competing voice or video services but leave flexibility in the way that other types of apps and services get to customers. And it makes clear that wireless Internet providers will be free to charge customers based on their usage of bandwidth.

The rules also allow for the development of “specialized services,” or new functions like the offering of HD movies outside the regular delivery infrastructure. In addition, ISPs will have leeway in managing their traffic, or “reasonable network management,” while requiring that such practices be disclosed to the consumer.

Central to the studios’ concerns has been that the open Internet rules apply only to legal content.

Bob Pisano, acting CEO of the Motion Picture Assn. of America, praised the FCC for offering leeway for ISPs to take “reasonable measures to address copyright infringement without running afoul of open Internet rules.”

Lobbyists in the cable industry, resistant to previous Net neutrality efforts, issued words of cautious support, arguing that the compromise plan offered by chairman Julius Genachowski at least provides some regulatory certainty.

Kyle McSlarrow, CEO of the National Cable & Telecommunications Assn., said that the rules appear to offer “compromise consensus,” but he reserved final judgment until details are released later this week.

Similarly, some advocates of robust Net neutrality rules also offered lukewarm reaction. The Writers Guild of America West said that the rules were “not all we had hoped for, but it does provide a regulatory platform that keeps alive the fight to preserve a free and open Internet.”

In contrast sister guild the Writers Guild of America East called the rules “tepid” and, reflecting the opinion of some consumer groups, said that they leave too many loopholes through which big media can gain a foothold over smaller players.

“These tepid rules will be challenged in court and in Congress, and they fail in the most fundamental ways, permitting paid prioritization and all manner of discrimination in wireless,” the WGA East said in a statement.

At the FCC’s hearing on Tuesday, Genachowski called the plan a “strong and balanced order,” adding that it “protects Internet freedom and openness and promotes robust innovation and investment.” He said that the plan “fulfills (the FCC’s) historic role of cop on the beat” but will not stifle growth.

He also tried to make clear that the rules would prevent the Internet from evolving into a system of paid prioritization, in which some content providers can pay for better service and delivery.

Yet critics say that wireless firms would still be allowed to do just that, leaving a glaring exception in what is expected to be the way that most users access the Internet in the future.

On the other end of the political spectrum, Republicans on Capitol Hill were quick to cite the FCC’s action as an example of government overreach.

Fred Upton (R-Mich.), incoming chairman of the House Energy & Commerce Committee, said, “We will explore every option to reverse this order, with no stone unturned.”

Rep. Lee Terry (R-Neb.) called Genachowski a “Lone Ranger” who was trying to gain power in “one fell swoop.”

Verizon’s Tom Tauke questioned whether the FCC even had the authority to issue such regulation; rumors swirled that the wireless provider would challenge the rules in court.

Genachowski and FCC staffers have insisted that they are on sound legal footing under several provisions of the Telecommunications Act of 1996.

Their previous effort to impose Net neutrality rules were sidelined by a federal appellate court ruling in April in favor of Comcast, which had challenged the FCC’s legal standing to impose sanctions for the way it slowed a Bit Torrent service.

Somewhat ironically, Comcast had some praise for the Net neutrality order. It is currently awaiting an FCC decision in its proposed combination with NBC Universal.

Comcast exec VP David L. Cohen wrote in a blog post that “while we acknowledge the concerns expressed with respect to the advisability of this rule, as adopted, the rule reflects months of work and support from a broad array of stakeholders, and in the end is intended to provide a balanced approach to a very difficult policy question.”

And one other media executive applauded the policy. “Good hard work from the chairman resulted in a decent first step in making certain the Internet won’t become the concentrated toll bridge for creators that is true for every other form of communications,” said Barry Diller, chairman of IAC and a former boss of Genchachowski’s. The FCC chairman once served as the COO of IAC.

Tom Lowry contributed to this report.

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