3 Things Investors Need to Know About FCC Chair Tom Wheeler's Open Internet Plan

By Markets Fool.com

Federal Communications Commission Chairman Tom Wheeler has confirmed that his agency will useTitle II of the Telecommunications Act to regulateconsumer Internet service as a public utility.

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The move, which he will formally present to FCC commissioners on February 26, comes after months of Wheeler studying how to best deliver netneutrality, which is alternately referred to as the "open Internet." Though Wheeler's decision was expected, it's not a move likely to be embraced by Internet service providers.

Essentially, using Title II will reclassify high-speed Internet service as a telecommunications service instead of an information service. This allows the FCC to regulate the industry and set standards for companies includingTime Warner Cable,Comcast,Verizon, and others.

Wheeler, who despite being a former cable industry lobbyist, has run afoul of his past colleagues in recent months, laid out his plans in an opinion piece forWiredon February 4:

After more than a decade of debate and a record-setting proceeding that attracted nearly 4 million public comments, the time to settle the Net Neutrality question has arrived. This week, I will circulate to the members of the Federal Communications Commission (FCC) proposed new rules to preserve the Internet as an open platform for innovation and free expression. This proposal is rooted in long-standing regulatory principles, marketplace experience, and public input received over the last several months.

The chairman has a fight a head of him and faces challenges from Congress as well as Verizon andAT&T, which plan to sue to prevent the use of Title II,Venturebeatreported. Wheeler has at least set a plan in motion, and though it's possible the destination will not be exactly what he intends, at least he has moved forward.

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The people have the power
In June, comedian John Oliver devoted a lengthy, hilarious segment to the idea of net neutrality, pointing out that it's a topic so boring, the public has largely ignored it. At the time, the FCC was considering a very different net neutrality proposal -- one that was dictated by the cable companies.

Source: YouTube.

Oliver's piece, which became a viral sensation, took an issue which the public did not understand, even though it affected them greatly, and made it understandable. This led to massive public outcry, and, as Wheeler mentioned in the comments above, millions of comments.

What's interesting is not that when spurred into action, people did something, but that the FCC actually listened. In the past, the agency has largely been an industry tool, but Wheeler's actions suggest that those days are over.

"The Internet must be fast, fair and open. That is the message I've heard from consumers and innovators across this nation," he wrote.

The FCC may not be striving to do public good on its own accord, but Wheeler has shown that he will at least respond to pressure. That's good for the American people, and at least a little bad for the ISPs.

It's not just bad for ISPs
One of the new tidbits, Wheeler released in theWiredpiece, is that his proposal would also apply to mobile broadband, which is why AT&T and Verizon are threatening legal action. Wheeler wants not only an open Internet for your home and business, but one that is device- and network-agnostic.

"I propose to fully apply -- for the first time ever -- those bright-line rules to mobile broadband," he wrote. "My proposal assures the rights of Internet users to go where they want, when they want, and the rights of innovators to introduce new products without asking anyone's permission."

Wheeler believes his proposal will spur innovation and stop ISPs or phone companies from using their dominance over the Internet to freeze companies out of it.

Wheeler is not worried about infrastructure
At the 2015 Consumer Electronics Show, Wheeler appeared in a public question-and-answer session. During his often lighthearted talk, he made it clear that while Title II may not be what the ISPs want, he did not think it would negatively impact their growth or ability/incentive to build and improve their networks.

Big ISPs came in and said "Title II would disincentivize us," he said, dismissing the notion based on the history of the wireless industry.

Wireless companies, he explained, are regulated under Title II, and "for the last 20 years the wireless industry has been monumentally successful -- hundreds of billions of dollars of investments as a Title II regulated [industry]."

Wheeler reiterated that point in hisWiredpiece:

Over the last 21 years, the wireless industry has invested almost $300 billion under similar rules, proving that modernized Title II regulation can encourage investment and competition.

Could this be good for everyone?
One of the things Wheeler stressed in his CES appearance was that while the ISPs may not want to be regulated under Title II, he does not expect their businesses to suffer because of the regulation. He made it clear there and in his Wiredpiece that net neutrality was essential to ensure that the Internet remains a platform for innovation.

That innovation, he explained, was not only good for the public, but good for the ISPs, which will benefit from customers wanting access to these new technologies. Think how many people have upped their wireless data plans in order to access streaming music or video.

Title II may not be popular with ISPs, but ultimately, it may be good for them.

The article 3 Things Investors Need to Know About FCC Chair Tom Wheeler's Open Internet Plan originally appeared on Fool.com.

Daniel Kline owns shares of Apple. The Motley Fool recommends Apple and Verizon Communications. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.