In Op Ed, FCC Chair Proposes Regulating Internet as Utility

After considerable speculation in recent weeks, FCC Chairman Tom Wheeler made his position on net neutrality official. Wheeler came out in support of Title II reform, a move that would regulate the Internet as a telecommunications service.

“This proposal is rooted in long-standing regulatory principles, marketplace experience, and public input received over the last several months,” Wheeler wrote in an op-ed in Wired Magazine.

Wheeler was previously expected to come out against regulating the Internet, but in recent weeks, there was talk that he had in fact changed his position and favored the controversial policy.

“There were no major surprises but of course the devil is in the details. It was good to see him specifically say no rate regulation, no tariffs and no last mile unbundling, but I don’t think he needs to use Title II to accomplish these goals,” Jeff Wlodarczak, an analyst at Pivotal Research Group, said. “I still expect the industry to sue over this given the concern that one day another FCC could un-forbear the nastier parts of the regulation.”

Todd Mitchell, an analyst at Brean Capital, did not expect this outcome, saying, “to those of us that have watch the FCC for years, the strength of their resolve on this issue is a little bit of a surprise.” Mitchell added that this was likely done for political reasons. “The only thing people hate paying more than taxes is their cable bill," he said.

The move is considered a blow to cable companies, including Comcast (NASDAQ:CMCSA). Although they maintain that they have no intention of implementing a “fast lane,” or charging Internet companies based on bandwidth usage, the concern is that using outdated regulation designed for telecommunications companies could have unintended consequences.

The implementation of Title II reform could be considered a victory for Internet giants like Google (Nasdaq:GOOGL) and Netflix (NASDAQ:NFLX), who have been strongly in favor of this “net neutrality” reform. Some in Silicon Valley have argued that a lack of regulation could curtail innovation, should the cable companies implement unreasonable fees.

Wheeler’s proposal will still have to be approved by the commission when it is scheduled to vote on Feb. 26. It is expected to pass, but will likely become a courtroom battle.