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FCC Chairman Defends Net Neutrality Proposals As Protecting Competition

tom wheeler FCC Chairman
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FCC chairman Tom Wheeler pushed back against reports that his proposals for net neutrality, introduced to fellow commissioners on Thursday, are watering down the agency’s efforts to preserve an open Internet and allowing for a landscape that will freeze out competition.

In a blog post, Wheeler said that his proposals “would establish that behavior harmful to consumers or competition by limiting the openness of the Internet will not be permitted.”

Reports on Wednesday of the new net neutrality proposals triggered an outcry from public interest groups, particularly over the notion that the new rules would allow for content companies to pay Internet providers for prioritization, like faster delivery to consumers of web video. That raised the prospect that burgeoning streaming companies like Netflix and Amazon would pay Internet providers for more favorable treatment, with the costs ultimately passed on to consumers.

Michael Copps, a former FCC commissioner who is now special adviser to Common Cause, said that “if true, this proposal is a big step backwards and must be stopped. If the Commission subverts the open Internet by creating a fast lane for 1 percent and slow lanes for the 99 percent, it would be an insult to both citizens and to the promise of the Net.”

But Wheeler, along with FCC officials who briefed reporters on Thursday in a conference call, said that the proposals had been misconstrued.

Key parts of the FCC’s net neutrality rules, passed in 2010, were struck down by the D.C. Circuit Court of Appeals in January, including a provision that prohibits ISPs from blocking content, and another that bar them from “unjust and unreasonable discrimination” in the delivery of traffic to consumers.

The new proposals would retain that no-blocking rule, but the anti-discrimination rule would be abandoned in favor of a new legal standard, one that would measure whether Internet providers were engaging in “commercially reasonable” conduct in the way they treat traffic. A content company could still enter into an agreement with an Internet provider for special access to consumers, but such deals could not be commercially unreasonable.

Exactly what is “commercially reasonable” and what is not remains to be defined — an example of a reasonable practice may be a company paying for prioritization of heart monitor data to patients, an FCC official said.

Wheeler said that his proposals will establish a “high bar” for what is commercially reasonable, and the FCC official said such factors as competition, consumer protection, free speech and good faith negotiations would be considered, along with other issues as the commission draws up the rules in the months ahead.

“The allegation that it will result in anti-competitive price increases for consumers is also unfounded,” Wheeler said in the blog post. “That is exactly what the ‘commercially unreasonable’ test will protect against: harm to competition and consumers stemming from abusive market activity.”

He added that under the  “commercially reasonable” standard, ISPs still would be barred from favoring the traffic from an affiliated entity. An FCC official said that under the proposal, the agency would review complaints as well monitor activity on their own.

Wheeler has set a goal of passing the new rules by the end of the year. The commission will vote on May 15 whether to move forward with the proposals and post it for public comment.

One of Wheeler’s challenges will be convincing consumer groups, public interest organizations and industry organizations like the Writers Guild of America that the proposals will be robust enough to prevent the Internet from devolving into something resembling cable TV, where subscribers pay for access to different tiers of content.

At the same time, Wheeler and other FCC officials have expressed a desire to get rules in place relatively quickly that can survive a legal challenge.

The FCC also is proposing that Internet providers disclose their traffic policies to their customers. The “commercially reasonable’ standard would apply to the wired Internet, but the proposal asks whether it should be applied to wireless services as well.

Some public interest groups have called on the FCC to take the step of classifying broadband like it does a public utility, which would put ISPs under a heavier level of regulatory scrutiny. The Writers Guild of America West, in a filing on Thursday, said that such a classification “remains the most effective way of ensuring the Internet remains a neutral platform for free speech and economic innovation.”

Wheeler’s proposal does not take that step but nevertheless leaves the option open.  The political turbulence from such a move, along with opposition from industry, could have the effect of delaying the implementation of new rules even further.

An FCC official also challenged the notion that the proposal represented a shift in policy. The old net neutrality rules did bar “unreasonable discrimination,” but did not ban discrimination altogether, the official noted. And there was an exception in those rules that allowed Internet providers to create so-called “specialized services.”

Update: While initial reaction to the net neutrality proposals focused on the outcry from public interest groups that they were not strong enough, on the other side of the argument are House Republicans, who have long argued that the FCC should just leave the issue alone.

Rep. Fred Upton (R-Mich.), chairman of the House Energy and Commerce Committee, and Rep. Greg Walden (R-Oregon), chairman of the Communications and Technology subcommittee, issued a joint statement that “Chairman Wheeler’s approach to regulation seeks to freeze current market practices, which will cast a chill on technological breakthroughs and cause American consumers to lose out.”

“Further underscoring the needlessness of the rules, Internet service providers have made clear they will continue to adhere to the spirit of the rules that were already struck down by the courts,” they said. “It is well past time for the commission to focus on areas where its work will foster new innovation, competition, and job creation.”