AT&T Gains FCC's Ear as Regulators Near Decision on Net Neutrality

http://www.bloomberg.com/news/2010-12-01/net-neutrality-vote-by-u-s-fcc-set-for-december-after-year-of-conflict.html

AT&T Gains FCC's Ear as Regulators Near Decision on Net Neutrality Rules
Todd Shields
Nov 30, 2010

A U.S. regulator set a vote on rules to bar Internet service providers led by AT&T Inc. and Comcast Corp. from interfering with subscribers’ Web traffic.

Federal Communications Commission Chairman Julius Genachowski said in a statement today that he sent colleagues “draft rules of the road to preserve the freedom and openness of the Internet” for adoption at the agency’s Dec. 21 meeting.

Genachowski, a Democrat appointed by President Obama, proposed net-neutrality rules in September 2009, and debate has expanded to involve Congress, courts and companies. Proponents including technology companies said regulations are needed to keep the Internet free of restrictions, while opponents such as telephone and cable companies said rules aren’t needed and may stifle investment.

Google Inc. and Verizon Communications Inc. struck a compromise in August that didn’t call for rules on wireless Internet service. The proposal wasn’t adopted by officials. Genachowski said his rules build upon a proposal advanced in September by Representative Henry Waxman, a California Democrat, who proposed less-stringent rules for the mobile Web than for service delivered over wires.

The net-neutrality regulations before the FCC “would ensure that the Internet remains a powerful platform for innovation and job creation,” Genachowski said in his statement released by e-mail.

The proposed rules would bar Internet-service providers from blocking or slowing access to lawful content and applications, he said.

Congestion, Harmful Traffic

Providers would have flexibility to deal with congestion or harmful traffic, Genachowski said. Wireless networks would be subject to different regulations that include a no-blocking rule, and the FCC would “be prepared to step in” to address anti-competitive behavior, he said.

Net neutrality encompasses the idea that Internet-service providers can’t interfere with content they deliver to subscribers, or favor their own offerings. Technology companies backing regulations include search company Google, Internet- retailer Amazon.com and Dish Network Corp., which provides on- demand movies to subscribers using Internet lines.

Cable and phone companies that provide Web service say rules may make it difficult to manage the growing traffic on their networks and would limit investment in new Internet capacity. AT&T and Verizon, the majority owner of the largest U.S. mobile provider, Verizon Wireless, have told the FCC that rules aren’t needed for wireless networks.

Obama ‘Big Believer’

President Barack Obama, as a candidate, made net neutrality a campaign issue and has called himself a “big believer” in the approach.

Last month, Republican lawmakers toldGenachowski not to set policy they said was best left to Congress.

Democratic lawmakers released a letter yesterday urging the chairman to act this year to ensure “that the Internet remains an open network.” The letter was signed by Senators John Kerry of Massachusetts, Byron Dorgan of North Dakota and Ron Wyden of Oregon.

The regulations need three votes to pass at the FCC, where two Democrats join Genachowski to form the agency’s majority.

Genachowski said he had abandoned his proposal to put Internet service under the regulatory regime used for telephone service -- a prospect opposed by companies that said such a move could lead to rate regulation.

Not applying rules for telephone companies would be a positive for AT&T, Comcast, Verizon, Time Warner Cable Inc. and Cablevision Systems Corp., Paul Gallant, a Washington-based analyst with MF Global, said in a Nov. 19 note to clients.

Telephone regulation offered a way to reclaim authority undermined by a U.S. court, Genachowski said in May. Judges ruled in April the the FCC lacked authority to punish Comcast for interfering with subscribers’ Web traffic.

“I am satisfied that we have a sound legal basis” for proceeding without using telephone rules, Genachowski said in his statement today.

To contact the reporter on this story: Todd Shields in Washington at tshields3@bloomberg.net

To contact the editor responsible for this story: Allan Holmes at aholmes25@bloomberg.net