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Web backbone companies warn against Net neutrality regulation

Companies including Intel, Qualcomm, IBM and Cisco claim tightened rules by the FCC could pinch broadband providers and lead to billions of dollars in lost investments.

The issues of Net neutrality are tangled, messy and contentious. Michael Bocchieri/Getty Images

Sixty companies involved in building the Internet's backbone cautioned US government officials Wednesday against placing stricter rules on broadband Internet providers, saying such a change would bring a huge drop in investment for infrastructure projects.

The Federal Communications Commission is working on new guidelines for how broadband providers can manage Web traffic on their networks. Sitting in the middle of a contentious debate, the FCC has to weigh the interests of Internet service providers against those of Web companies and users. Service providers could profit if they were to charge some companies more money for better Internet speeds, while many Internet companies and users want to ensure all online traffic is treated the same, a concept known as Net neutrality.

In an open letter to the FCC and congressional leaders, companies including Intel, Qualcomm, IBM, Cisco, Juniper Networks and Ciena -- which supply services and equipment for telecommunications networks -- said that any plans to place the Internet under Title II public utility rules would be harmful for the economy and for the Internet's development. Those rules, under the Telecommunications Act, already tightly control phone services and could prevent broadband providers from charging more for better service.

"Title II would lead to a slowdown, if not a hold, in broadband buildout, because if you don't know that you can recover on your investment, you won't make it," the letter said. "The investment shortfall would then flow downstream, landing first and squarely on technology companies like ours, and then working its way through the economy overall."

The companies claimed in the letter that tighter rules could result in the loss of up to $45.4 billion in Internet-related capital investment over the next five years.

The letter was organized by the Telecommunications Industry Association, a trade group for communications-network suppliers and manufacturers. Many of the signers are members of the group. The letter aligns closely with the position of telecommunications companies such as AT&T and Verizon, which are major customers for many of the group's members and have spoken out repeatedly against reclassifying broadband under Title II.

The letter comes after President Obama last month said he was in favor of treating broadband service as a utility, to help preserve a "free and open Internet."

Proponents -- which include Internet companies such as Google, Amazon and Facebook -- argue that Title II regulation would ensure the free and fair flow of traffic across the Web.

Opponents believe the reorientation would mean onerous rules that would limit investment in infrastructure and new services. Instead, opponents say Internet toll roads of sorts would provide better service to companies that can support their higher traffic volumes. That proposal has created widespread concern that broadband providers could throttle service in some instances, intentionally slowing some content streams and speeding others.

The FCC's official guidelines were expected to be made available later this year, though reports now claim they may be delayed until early 2015.