Net Neutrality: FCC May Regulate Internet Like Phones

The debate on net neutrality is about to get even more controversial at the Federal Communications Commission as Chairman Tom Wheeler is leaning toward using authority to regulate Internet service providers like phone companies – a move that would infuriate Republicans, Wall Street and telecom firms.

Democrats and consumer advocacy groups including Free Press, however, would be pleased with that decision since it may withstand a court challenge and limit the ability of Internet providers to offer paid prioritization of online traffic.

[ READ: FCC Proposed Net Neutrality Change Sparks Internet Rage]

The commission is considering rules that would mandate that all traffic be treated equally to replace the 2010 open Internet rules struck down by a federal appeals court in January. The court did not oppose the FCC’s goal of net neutrality but said the rules illegally treated broadband providers differently than phone companies. Wheeler has thus been careful about crafting rules that would give the FCC legal authority to enforce net neutrality and could survive scrutiny of the court if the rules were challenged again.

The commission decided more debate and public input is needed on the controversial issue after more than 1.1 million public comments about the proposed rules on the FCC’s websites, so it will host a series of round-table discussions on the issue in September and October. The public comments to the FCC about the policy were so heated they included 7,817 instances of the obscenity f---.

^{Lindsey Cook for USN≀ Source: FCC, via Reddit user minimaxir}

Wheeler's proposal approved in May includes options the FCC will consider for its final rules depending on public comments. Wheeler is “ seriously considering” using its authority under existing communications law to extend the FCC’s authority to regulate Internet providers like phone companies, according to a letter that he sent to a group of Democratic senators.

Those senators including Ron Wyden, D-Ore., Elizabeth Warren, D- Mass., and Cory Booker, D-N.J., sent a letter to Wheeler in July calling for him to use his authority to “reclassify broadband to reflect the vital role the Internet plays in carrying our most important information.”

The proposed rules currently use a different section of the Communications Act as legal authority for net neutrality, which cites the FCC can change its policies if it believes that broadband is not being deployed quickly enough around the U.S., says Paul Gallant, a telecom policy analyst at Guggenheim Partners, an advisory group. Legal authority is important for any net neutrality rules because they “absolutely would face a court challenge,” says Gallant, a former FCC official.

“The commission has discretion to classify broadband, according to federal courts, but it is not a given that they would approve Title II in this case,” Gallant says. “The reason some are pushing Title II is that it might be a stronger legal basis to ban all traffic prioritization by Internet service providers, but there is a big debate about whether that is true.”

[ ALSO: Antitrust Rules or Net Neutrality: Which Should Rule the Web?]

The FCC has faced backlash from Democrats and consumer advocacy groups including Public Knowledge out of concern that Wheeler’s proposed rules would enable ISPs to allow “ Internet fast lanes.” While it would not allow the slowing down of certain websites, that practice of allowing fees for faster Internet use would effectively allow providers to choose winners among those who can afford the better service, Democratic FCC Commissioner Jessica Rosenworcel has said. Those higher costs for doing business on the Internet may also be passed on to consumer bills, Public Knowledge has said.

If the FCC uses Title II then Wall Street might react negatively to broadband providers, fearing they would be regulated more heavily, Gallant says.

“Under Title II, cable and phone companies would probably end up paying higher borrowing rates for future network investments that they pay today,” he says.

Republicans also fear that regulating the Internet would stifle the free market, and instead prefer existing antitrust rules to enforce competition online.

“Imposing expansive network neutrality regulations would only serve to deter investment and stifle one of the brightest spots in our economy,” House Speaker John Boehner, R-Ohio, and other Republican House leaders said in a letter to Wheeler in May.

Even if Internet providers were regulated by the FCC using the same authority as phone companies, rules would still need to be put in place to prevent the anti-competitive risks of allowing paid prioritization, says John Bergmayer, senior staff attorney at Public Knowledge.

“We tend to think that any paid prioritization deal on the last mile would be anti-competitive, and a legal regime that tried to look at deals case by case might be unworkable,“ Bergmayer says.