FCC approves compromise Net neutrality rules

The U.S. Federal Communications Commission (FCC), in a historic vote Tuesday, approved network neutrality rules prohibiting broadband providers from blocking customer access to legal Web content, but many consumer groups decried the new regulations as weak and full of loopholes.

The new rules provide fewer protections for mobile broadband subscribers and may lead to a fractured Internet, critics said. The new rules, a compromise championed by FCC Chairman Julius Genachowski, would bar wireline-based broadband providers -- but not mobile broadband providers -- from "unreasonable discrimination" against Web traffic, prompting some consumer groups to call the rules "fake" net neutrality.

Genachowski's plan, approved after more than seven years of debate about whether net neutrality rules are needed, also contains several loopholes for broadband providers, critics said, including an exception for managed services separate from the public Internet.

But Genachowski defended the rules as "strong and balanced."

"As we stand here now, the freedom and openness of the Internet are unprotected," he said. "No rules on the books to protect basic Internet values. No process for monitoring Internet openness as technology and business models evolve. No recourse for innovators, consumers, or speakers harmed by improper practices. "And no predictability for Internet service providers, so that they can effectively manage and invest in broadband networks.

Critics on the other side of the net neutrality debate, including Commissioner Robert McDowell, ripped the action as unnecessary and legally dubious. The new order is an attempt to circumvent an April ruling by a U.S. appeals court striking down an FCC effort to enforce informal net neutrality principles, he said.

"This new effort will fail in court as well," McDowell said. The rules adopted Tuesday will be "tied up in courts for years," he predicted.

The National Journal reported Tuesday that Verizon Communications was mulling a lawsuit over the new rules. A Verizon spokesman wasn't immediately available for comment.

McDowell argued that the Internet is working and that new regulations would hurt investment in broadband. The FCC's action will put the agency on a "collision course" with Congress, where about 300 lawmakers have raised concerns about net neutrality rules, McDowell said.

There have been "fewer than a handful" of examples of net neutrality violations in recent years, he added, and the FCC has resolved those cases in favor of consumers under current law. "Nothing is broken in the Internet access market that needs fixing," McDowell said.

Genachowski disagreed, saying Internet investors need consistent rules going forward.

"We are told by some ... not to try to fix what isn't broken, and that rules of the road protecting Internet freedom would discourage innovation and investment," he said. "We have heard from so many entrepreneurs, engineers, venture capitalists, CEOs and others working daily to invent and distribute new Internet products and thereby maintain U.S. leadership in innovation. Their message has been clear: the next decade of innovation in this sector is at risk without sensible rules of the road."

The FCC approved the rules in a 3-2 party-line vote, with both of the commission's Republicans voting against the proposal. The rules adopted require broadband providers to disclose their network management practices and performance metrics to customers, in addition to prohibiting broadband providers from blocking legal Web content.

The rules create a handful of exceptions for mobile broadband. The FCC will not prohibit mobile carriers from unreasonable discrimination, with commissioners instead saying they will watch the industry for evidence of problems. The rules will prohibit mobile providers from blocking voice and other applications that compete with their services, but will not prohibit them from blocking other applications.

The new rules also exempt specialized, or managed, services offered by broadband providers from the rules. The FCC will monitor specialized services for signs that they are hurting the public Internet, FCC staff members said.

Commissioner Michael Copps, a Democrat, said he voted for the rules with reservations. Copps wanted broadband reclassified as a regulated, common-carrier service with more protections for mobile customers, but the FCC has improved the rules since Genachowski first proposed them in early December, he said.

The new version of the rules provide net neutrality protections for schools, libraries and small businesses, and not just consumers, Copps said. The new version also calls paid prioritization of Web content unreasonable discrimination that's prohibited for wire-based providers, he added.

Without action Tuesday, "the wheels of net neutrality would grind to a halt for at least two years," Copps said.

The new rules "fell far short" of what the FCC could have accomplished, said Gigi Sohn, president of Public Knowledge, a digital rights group in favor of strong rules.

"The commission could have established clear rules that would give more protections to Internet users than the one approved today," she said in a statement. "Instead, these rules will be subject to manipulation by telephone and cable companies. The commission will have to be very serious about the enforcement of these rules in order for them to succeed."

The Center for Democracy and Technology, a digital rights group, and the Telecommunications Industry Association, a trade group representing broadband providers, both praised the decision. The FCC showed restraint by not reclassifying broadband as a regulated service under Title II of the Telecommunications Act, the TIA said.

"We appreciate the commission's observation that its long-standing, light touch regulatory approach has fostered significant broadband investment and innovation, due in large part to the regulatory certainty provided by this framework," TIA President Grant Seiffert said in a statement. "Today's decision recognizes TIA's assertion that reclassification under Title II would stifle this growth."

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is grant_gross@idg.com.

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