FCC Chairman Wheeler hints at shift in net neutrality rules

FCC Chairman Thomas E. Wheeler suggested that he would propose rules next month that would treat broadband Internet service providers as utilities subject to more intense regulation than they have been in the past. Above, Wheeler speaks at an event last year.

Jan. 7, 2015 6:10 PM PT

Reporting from las vegas — The nation’s top telecom regulator strongly hinted that he plans to propose more rigorous regulations on Internet service providers — setting up a potentially bitter clash with powerful cable television operators and others that offer Internet access.

A new set of Internet regulations is shaping up to become one of the most fiercely debated issues in Washington this year as the Federal Communications Commission tries to replace the neutrality rules tossed out by a federal appeals court last year.

On Wednesday, FCC Chairman Thomas E. Wheeler suggested that he would propose rules next month that would treat broadband Internet service providers as utilities subject to more intense regulation than they have been in the past.

Such a move is expected to draw challenges in court from industry opponents and in Congress from the Republican majority which favors a more permissive approach and probably would try to overturn new rules or deny the agency funding to enforce them.

Any FCC decision to reclassify Internet service providers and regulate them under Title II of the Communications Act would be a stinging defeat for Comcast Corp., AT&T Inc., Verizon Communications Inc. and other broadband providers.

It would be a victory for President Obama and other advocates of a stringent approach to so-called network neutrality, the notion that Internet providers not favor traffic from some websites over others.

During a question-and-answer session at the Consumer Electronics Show, Wheeler declined to provide details on the new approach, insisting that the public would have to wait until February when the proposal is unveiled.

The five-member FCC is expected to vote on a new set of net neutrality rules on Feb. 26.

“We’re going to propose rules that say that no blocking, no throttling, [no] paid prioritization — all that list of issues — and that there is a yardstick against which behavior should be measured. And that yardstick is ‘just and reasonable,’” Wheeler told a packed conference room at the Las Vegas Convention Center.

Initially, Wheeler had resisted the idea of bringing Internet providers under Title II, hoping to craft net neutrality rules that continued to treat Internet providers as lightly regulated entities called information services.

Wheeler’s original proposal would have allowed Internet providers to strike deals with content companies and online services as long as they were “commercially reasonable.”

That approach drew support from the telecommunications industry, but many net neutrality advocates argued that it would allow broadband providers to divide their networks into fast and slow lanes. That would give deep-pocketed companies another advantage over start-ups, harming competition and innovation, they said.

Obama forcefully jumped into the debate in November, saying the FCC should adopt strict rules that would reclassify the Internet as a utility.

“For almost a century, our law has recognized that companies [that] connect you to the world have special obligations not to exploit the monopoly they enjoy over access into and out of your home or business,” Obama said in a video message that was received as a warning shot from the White House.

Key GOP members blasted Obama’s call for tough regulations. But such net neutrality rules are strongly supported by most Democrats.

Wheeler, who was appointed by Obama, said that as the FCC studied the issue, it “became obvious” that the “commercially reasonable” standard he originally proposed for judging Internet providers “could be interpreted as what is reasonable for the [Internet providers], not what’s reasonable for consumers or innovators.”

“And that’s the wrong question and the wrong answer,” he said, “because the issue here is how do we make sure that consumers and innovators have access to open networks.”

The better standard for judging behavior of network operators is the “just and reasonable” standard under Title II, Wheeler said.

A spokesman for the National Cable and Telecommunications Assn. blasted Wheeler’s shift in strategy.

“Ironic to hear that 1930s regs will likely be imposed on the Internet at an international event that is all about the future,” Brian Dietz wrote in a message on his Twitter account.

The latest net neutrality proposal comes as the FCC separately is reviewing two colossal media mergers: Comcast’s proposed $45-billion takeover of Time Warner Cable Inc., which would make it the nation’s dominant Internet provider; and AT&T’s proposed takeover of satellite-television carrier DirecTV, a $49-billion deal.

The two mergers, which both need federal approval, are expected to reshape the media industry by giving more clout to the owners of the broadband networks.

Comcast declined to comment Wednesday. However, in a filing with the FCC last month, the Philadelphia cable giant said that a utility reclassification “not only would be harmful, but also is completely unnecessary and would not accomplish the commission’s core public interest objectives.”

Verizon echoed Dietz, saying such regulations “would be a radical reversal for what has been an open, competitive and innovative Internet economy.”

“Such an approach would be particularly harmful to wireless broadband, which unlike traditional voice services, developed free of legacy Title II regulations,” the telecom company said.

The companies have argued their main concern about using Title II is that it would deter them and other broadband providers from investing in their networks, which would also be bad for innovation and the development of data-intensive applications online.

Wheeler, though, said he had an “aha moment” over the summer when he considered how the Telecommunications Act of 1996 treated wireless phone networks.

That law applied Title II rules to wireless companies, but exempted them from most of its more onerous provisions — most notably, the ones requiring regulators to approve changes in rates.

“Under that for the last 20 years, the wireless industry has been monumentally successful,” Wheeler said.

The chairman failed to mention, though, that the law specifically exempts wireless data networks from Title II. And much of the wireless industry’s prodigious investment has been in its data networks, which eventually will carry mobile phone calls as well as data traffic.

Meredith Attwell Baker, a former Republican FCC commissioner who now heads the wireless phone industry trade group, pushed back against Wheeler’s comments.

“Comparisons to the regulatory framework for mobile voice are misplaced and irrelevant,” Baker said, noting that Congress applied parts of Title II to the mobile phone companies to reduce their regulatory load.

Wheeler “cannot now use that same deregulatory tool to extend regulation and government intrusion where it has never been before,” she said.

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Times staff writer Jim Puzzanghera in Washington contributed to this report.