FCC sets Internet regulation in motion

The Federal Communications Commission voted unanimously Thursday to get the ball rolling on creating regulation that will keep the Internet open.

All five commissioners voted in favor of advancing the rule-making process for a proposal that was put forth by FCC Chairman Julius Genachowski during the agency's open meeting Thursday.

With three Democrats on the commission, it was no surprise that Genachowski, who was appointed by President Obama, would have enough votes to push the measure through. But it was somewhat surprising that the two Republicans on the commission, who have each expressed disapproval of such regulations, also voted in favor of moving the process forward.

Despite their vote in favor of opening the rule-making process, the two Republican commissioners, Meredith Attwell Baker and Robert McDowell, also said they dissented on "facts" of the proposal. The commissioners said their votes are for the beginning of a data-gathering process, but they didn't say whether they would vote in favor of regulation that will ultimately be proposed.

In her comments, Baker said she didn't think there was a need for specific rules because she doesn't see a threat to Internet openness. McDowell said he doesn't think the FCC has the legal authority from Congress to impose such regulation.

The views of the two Republican commissioners are shared by some large Internet service providers. And in the days leading up to the FCC vote, debate heated up to a fever pitch with Net neutrality advocates, Internet companies (like Google), and venture capitalists all arguing for the need for rules to keep the Net open, while broadband service providers lobbied against over-reaching regulation.

As a general rule of thumb, broadband providers do not like being regulated. But the two biggest phone companies, AT&T and Verizon Communications, have conceded that if regulation is to be adopted, they'd be fine with it being limited to existing FCC open Internet principles, which can be summarized this way: network operators cannot prevent users from accessing lawful Internet content, applications, and services of their choice, nor can they prohibit users from attaching nonharmful devices to the network.

But the companies have taken issue with the newly proposed fifth principle, which would prevent Internet access providers from discriminating against particular Internet content or applications, while allowing for reasonable network management. They have also been concerned with the chairman's insistence on applying any new regulation to wireless networks as well as wireline networks.

At a high level, it appears that the phone companies got at least some of what they had asked for. The proposal that was presented during the FCC meeting allowed for "reasonable" network management as part of the nondiscrimination principle. Genachowski announced that the commission was creating a Technical Advisory Process, "so that the difficult engineering questions we face are fully informed by a broad range of engineers based on sound engineering principles and not on politics." He said this group, along with comments from experts in the process, would help the commission define "reasonable" network management.

The proposal already identifies blocking child pornography and blocking illegal copyrighted content as a legitimate network management. And the proposal also allows service providers to manage their networks and create new business models built on different tiers of service.

Genachowski's proposal also recognizes that wireless networks have different management requirements than wireline networks. And he promised that the commission would gather information on how best to craft rules that would not hamper innovation in the wireless market.

"Broadband providers must be allowed meaningful latitude to solve the difficult challenges of managing their networks and providing their customers with a high-quality Internet experience," Genachowski said in his statement. "We recognize that there are real congestion and other network-management issues, especially with respect to wireless broadband."

This seems to have satisfied Verizon to some degree.

"The Notice of Proposed Rulemaking announced today appears to be a substantial improvement from what we understand was in earlier drafts," Tom Tauke, executive vice president of public affairs for Verizon, said in a statement. "This is a better starting point for the discussion of the policies that will govern the Internet."

AT&T's top lobbyist also seemed relieved by what the FCC presented.

"Today's action by the FCC has allayed a number of our concerns, and while there are crucial issues remaining, we are encouraged by the Commission's action," said Jim Cicconi, senior executive vice president at AT&T. "In particular, we appreciate that Chairman Genachowski has demonstrated that he is open to the industry's concerns and willing to address those he feels have merit."

Comcast, which was reprimanded by the FCC for violating its open Internet principles when it was caught throttling Bit Torrent traffic, said it doesn't believe regulations are needed, but it also appreciates how the process is being handled. Comcast is currently challenging the FCC's enforcement authority of its open Internet principles in court.

AT&T and Verizon also said they didn't think regulation was necessary, and Verizon's Tauke expressed concern that new regulation could unwittingly harm Internet innovation.

"After listening carefully to comments from all of the advocates of regulation, one thing remains clear: the Internet ecosystem is serving consumers very well, and there is no problem that requires new government regulation," Tauke said. "As we engage in this process, we remain concerned that the unintended consequences of regulation could bring substantial harm to consumers and the ability of the Internet sector to innovate, contribute to economic growth and productivity, create new jobs, and deliver social benefits to our nation."

As expected, advocacy groups, such as the Open Internet Coalition, Public Knowledge, and Free Press, were happy with the vote.

The comment period on the proposal will last 120 days or about six months, at which point the FCC's staff will sift through the comments and begin crafting the rules that will be debated among and voted on by the five FCC commissioners.