FCC Votes to Pass New Net Neutrality Rules

The Federal Communications Commission on Thursday voted to pass new net neutrality rules, by a three to two vote, to regulate the Internet like a utility.

In a statement, the FCC touted the move as one that sets "sustainable rules of the roads that will protect free expression and innovation on the Internet and promote investment in the nation’s broadband networks."

Proponents of the newly-approved, robust rules believe they will prevent larger conglomerates, like AT&T (NYSE:T), Comcast (NYSE:CMCSA), and others, from controlling the flow of content online, while critics say it is a regulatory overreach. The controversial move reclassifies the Internet as a Title II telecommunications service, giving it a designation similar to other public utilities including telephone companies.

The regulations ban Internet service providers from "throttling," or blocking and unfairly slowing down web traffic, or crafting deals with content companies like Netflix (NASDAQ:NFLX), or Hulu, for faster connectivity. Twenty-First Century Fox (NASDAQ:FOXA), the parent of FOX Business Network, is an investor in Hulu.

These so-called “Internet fast lanes,” in the past, would have allowed companies to give preferential treatment, or faster Internet service, to customers who could afford to pay more for the service.

The FCC said the vote followed a majority opinion from nearly four million commenters during the open Internet proceeding, who said the nation's networks should be fast, fair, and open.

Earlier this month, FCC Chairman Tom Wheeler revealed in an op-ed for 'Wired' magazine his support of the new net neutrality regulations. The publication of the piece came on the heels of President Obama's urging the FCC to adopt the new rules.

The debate over whether and how best to regulate the Internet has been a hot one in America. The FCC's decision Thursday comes after a nearly year-long debate between cable and telecom companies and  advocates of net neutrality. And the conversation isn’t over yet. The FCC’s move is widely-expected to spur a series of lawsuits from cable and telecom giants.

Following the news, Verizon Communications (NYSE:VZ) Senior Vice President Michael E. Glover said in a statement, the decision “to encumber broadband Internet services with badly antiquated regulations is a radical step that presages a time of uncertainty for consumers, innovators, and investors.”

As a tongue-in-cheek way to prove the point, the Verizon statement was released in typewriter font, dated February 26, 1934.

In 2010, Verizon successfully sued the FCC to block a similar set of rules. Glover added in the statement, any changes to the Internet “should be done, if at all, only after careful policy analysis, full transparency, and by the legislature.”

Meanwhile, Charter Communications (NASDAQ:CHTR) released a statement both backing the move, but also calling for new legislation to protect both consumers and providers. The company said it would like to see more certainty for Wall Street, and freedom to allow for more innovation in the space.

"Our subscribers expect nothing less than a free and open Internet. This means that Charter does not block, slow down or prioritize Internet traffic,” the company’s statement said.

It went on to caution, though, the new rules will result in new fees to customer bills, and will lead to regulatory uncertainty for years to come.