Amid Protests, FCC Advances Net Neutrality' Regulations

The Federal Communications Commission on Thursday moved forward with new regulations regarding so-called net neutrality, voting to advance rules that could have far-reaching implications on how Internet content is delivered and how much consumers pay to have it delivered.

The new regulations, if approved after a four-month period of comment and review, could allow big Internet service providers such as Comcast (NASDAQ: CMCSA) and Verizon (NYSE: VZ) to charge more for faster and more efficient delivery of content.

The vote was along party lines, with Democratic appointees Tom Wheeler, the chairman, Mignon Clyburn and Jessica Rosenworcel approving the effort to develop new rules they argue will keep the Internet “open.” The FCC vote comes in the wake of two recent court rulings that struck down past FCC efforts to impose regulations on the Internet.

Republican appointees Ajit Pai and Michael O'Reilly voted against moving forward with the new regulations, saying the proposal reaches beyond the scope of the FCC’s responsibilities. Pai said if new regulations are needed, Congress should legislate them.

The vote  kicks off a 120-day rulemaking process, with public comments due July 15.

Responding to vocal public opposition to his proposal, Wheeler defended the new regulations, saying they are intended to preserve an “open” Internet and would prevent discrimination of content.

“There is one Internet. It must be fast, it must be robust, it must be open,” Wheeler said in comments prior to the vote. “The prospect of a gatekeeper choosing winners and losers is unacceptable. I will not allow the national asset of an open Internet to be compromised.”

Critics of the proposal, which include consumer activist groups and a large swath of web content and service providers, say approval of the plan would create a two-tiered Internet, where deep-pocketed companies could pay for better service and start-ups would be left behind.

The critics say the FCC’s proposal would create a “fast lane” and a “slow lane” on the Internet.

“Giving ISPs the green light to implement pay-for-priority schemes will be a disaster for startups, nonprofits and everyday Internet users who cannot afford these unnecessary tolls. These users will all be pushed onto the Internet dirt road, while deep-pocketed Internet companies enjoy the benefits of the newly created fast lanes,” Craig Aaron, president of activist group Free Press said in a recent statement.

Wheeler released a draft of his plan last month, but then revised it after a number of tech companies including Google (NASDAQ:GOOG) and Netflix (NASDAQ:NFLX) as well as two FCC commissioners criticized the plan for dividing the Internet into slow and fast lanes.

The plan, according to the critics, would eliminate net neutrality -- the principle that all traffic on the Internet should be treated equally.

The revised draft doesn’t allow companies to prioritize content delivery and includes language that ensures providers don't unfairly put nonpaying companies' content at a disadvantage.

The decision is likely to face legal challenges.

The FCC’s meeting in Washington drew hundreds of protesters, rare for a vote by the federal regulatory agency and an indication of the broad ramifications and strong emotions surrounding the issue.

The opponents of the FCC proposal support converting ISPs into utilities like telephone companies that would be subject to even greater government regulation.

Most Republicans in Congress say further regulations on the web would curb investment and stifle innovation.

George Foote, a Washington-based attorney who has represented telecommunications companies in regulatory cases, said the revisions proposed by Wheeler would protect and ultimately benefit Internet users.

“The whole debate about net neutrality has been hijacked by self-interest and sidetracked by a poor metaphor,” he said. “If service is to be upgraded in the future, who pays for the improvement? If the new policy strengthens the FCC’s hand to prevent discrimination in favor of affiliated companies, who is to complain?”

Last week 100 Internet companies, including powerhouses Google, Facebook (NASDAQ:FB), Microsoft (NASDAQ:MSFT) and Yahoo (NASDAQ:YHOO), signed a letter voicing opposition to the proposal.

The companies advocated for a “free and open Internet,” suggesting the proposed rules could create an Internet where larger, wealthier companies would have a distinct advantage over smaller companies.