FCC Commissioners Debate Effects of Net Neutrality Rules

CHICAGO — When FCC chairman Tom Wheeler addressed on Wednesday the very cable industry that is challenging the FCC’s net neutrality rules, he pointed to one of the flashpoints of disagreement.

The FCC’s rules prohibit blocking, throttling or paid prioritization of content, but they also include an “Internet conduct standard,” a requirement that Internet providers not “engage in conduct that impairs a free and open Internet.”

Wheeler gave a speech at the Internet and Television Expo, held by the National Cable and Telecommunications Assn., which is challenging in court the FCC’s net neutrality rules and reclassification of the Internet.

Critics have said that the “general conduct” standard is too undefined, raising questions about the extent to which ISPs could impose such things as sponsored data plans or usage-based pricing, even though FCC’s rules call for the agency to refrain from rate regulation.

Some Wall Street analysts see usage-based pricing models — in which consumers pay for broadband they use, not for an unlimited amount — as necessary to make up for a potential decline in future cable subscribers. Wireless carriers like T-Mobile have sponsored data plans that exempt certain streaming offerings from data caps.

The FCC’s net neutrality rules essentially say they would handle such industry practices on a case-by-case basis. When it comes to sponsored data plans, for instance, the order acknowledges that they have the potential to distort the market or be good for competition.

FCC commissioner Ajit Pai, who voted against the net neutrality order, said it was a “tremendous mistake for the agency to put that and other business models on the chopping block.”

“Essentially, anyone who wants to adopt an innovative business or innovative service plan will now have to funnel all of those innovative ideas through the FCC’s regulatory bottleneck,” Pai said in a panel with three other FCC commissioners on Wednesday afternoon at the Internet and Television Expo, held by the National Cable and Telecommunications Assn.

But FCC commissioner Mignon Clyburn said that she was a proponent of not imposing any “bright line” rules on such things as sponsored data plans and instead see how the marketplace develops, via such pricing models and other areas of innovation.

“I want to be part of an enabling ecosystem that will allow the market and individuals to pick winners and losers, to be able to offer different products and services,” she said.

In his speech, Wheeler said that the “general conduct” standard is to address “broad outcomes,” “not to create an obstacle course to test the ingenuity of ISPs in how they may structure certain activities.”

“The Internet Conduct standard is the ‘going forward’ rule,” he said. “Often people say to me, ‘I know you won’t do anything crazy, but what about those that follow you?’ My response is, ‘I take you at your word to protect an open Internet, but what about those that follow you?'”

Net neutrality also raised questions of whether there should be rules for other types of restrictions on Internet access.

At the panel session, Jerry Kent, the CEO of Suddenlink, noted that “today we have programmers who block access to a website when you have a dispute with an ISP.” Suddenlink has been in a program carriage dispute with Viacom over channel costs, in which the Viacom channels were not only pulled from the cable lineup, but Internet subscribers were blocked from streaming Viacom programming.

“Is that a violation of net neutrality?” Kent asked.

Commissioner Jessica Rosenworcel said that “it is flat-out a problem when any consumer can’t access the content they wish,” although she said that she didn’t think such a situation “falls squarely within the net neutrality rules.”

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