Bloomberg News

FCC’s Wheeler Raises Possibility of Web Price Rules in New Plan

May 12, 2014

Federal Communications Commission Chairman Tom Wheeler has revised his open-Internet proposal to include possible changes that service providers say could lead to price regulation.

Wheeler’s proposal today includes language to bring Internet services under tougher oversight after his initial plan to allow paid fast lanes for Web traffic drew resistance from other FCC commissioners. The new plan doesn’t change his preference for a case-by-case approach on a pay-for-priority system, said an agency official who spoke on condition of not being named because the proposal hasn’t been made public.

The new wording lets the FCC consider a tougher approach urged by advocacy groups, who say the agency needs to protect “net neutrality,” the concept that all Web traffic is treated equally. Service providers including AT&T Inc. and Verizon Communications Inc. (VZ:US) say such an approach would deter investment.

Wheeler’s revised open-Internet plan offers more checks on Web fast lanes than what he proposed earlier, which had sparked a backlash with companies such as Google Inc. (GOOG:US) saying the idea poses a “grave threat” to an open Internet. He set a preliminary vote for May 15.

Wheeler is responding to a court’s rejection in January of rules the FCC passed in 2010 -- and to objections from two Democratic colleagues who join him in the FCC’s majority. Commissioner Jessica Rosenworcel last week said she was concerned with his proposal and called for delaying the vote for a month. Commissioner Mignon Clyburn said she has been opposed to payment for faster service.

FCC Votes

The agency’s two Republicans have criticized open-Internet rules, saying they represent unnecessary regulation. In 2010, rules passed with only Democratic votes at the agency.

The proposal would let service providers such as AT&T Inc. (T:US) and Comcast Corp. negotiate deals with content makers such as Netflix Inc. (NFLX:US), the biggest subscription video-streaming service, for preferential connections to consumers’ televisions and computers.

“Netflix is not interested in a fast lane,” said Joris Evers, a spokesman for Los Gatos, California-based Netflix. “When it comes to the FCC’s vote on Thursday, we’d prefer no rules at all rather than one that legalizes discrimination.”

Wheeler’s revised plan asks whether companies should be forbidden from allowing fast-lane service for their affiliates, said the FCC official. Some media companies that offer Internet service also offer Web content, including Comcast Corp.’s NBC and on-demand movies.

Advocacy Groups

The revised proposal asks more questions about adopting rules that would apply a section of law written last century for telephone networks.

Advocacy groups such as Washington-based Public Knowledge are asking the FCC to take a stronger approach.

“We are encouraged,” Michael Weinberg, vice president at Public Knowledge, said in an e-mail. “The FCC must take public concerns about a fast lane and slow lane online seriously, and the first step to doing so is asking real questions that explore all of its options.”

Robert Quinn, AT&T’s senior vice president for federal regulatory issues, in a filing posted today on the FCC website said adopting the more stringent path would pose “risks and harms” such as deterring investment and “all but scuttle the administration’s ambitious broadband agenda.”

President Barack Obama has made it a priority to expand access to high-speed Internet service, or broadband.

When the FCC considered applying the more-stringent rules in 2010, AT&T said in a filing the approach could include price regulation of retail Internet service offerings.

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

To contact the editors responsible for this story: Bernard Kohn at bkohn2@bloomberg.net Romaine Bostick, Elizabeth Wasserman


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