FCC Unveils Controversial New Draft of Net Neutrality Rules
The Federal Communications Commission has prepared some revised net neutrality rules to be distributed on Thursday that Chairman Tom Wheeler hopes will result in the measures being reinstated after an FCC vote on May 15, The Wall Street Journal reported on Wednesday. According to that report, the FCC’s new draft of the rules will basically invalidate the entire concept of an open Internet, and consumer groups aren’t happy that the FCC seems to be caving on the issue.
Given that an appeals court in Washington, D.C., ruled that the FCC was overstepping its bounds by trying to bar Internet providers from blocking certain kinds of online content or charging the companies that take up the most bandwidth a higher fee at the beginning of the year, it’s uncertain what the organization can do to keep an open Internet if the rules don’t stand up in court.
That lawsuit, between Internet service provider Verizon Communications (NYSE:VZ) and the FCC, resulted in net neutrality being invalidated. Content providers are already feeling the effects of that ruling, as Netflix (NASDAQ:NFLX) has had to pay Comcast (NASDAQ:CMCSA), the country’s largest broadband provider, to increase its bandwidth and give disgruntled customers fast enough speeds to stream the television and movies that they’re paying for.
After the court’s decision in January, Wheeler said that the agency would draft new net neutrality rules. The FCC believes it has to make sure the Internet remains an open place, or else innovation could be stunted, and “The next Google (NASDAQ:GOOG) or Facebook (NASDAQ:FB) might never begin,” the commission said in a statement seen by The Wall Street Journal when the case was heard in September.
But the reported changes the FCC has made allow for ISPs to charge content providers for access to higher broadband speeds, something that has been compared to paying to drive in the carpool lane on a crowded highway. Net neutrality was created in order to prevent such practices, as they give big companies an inherent advantage over smaller ones and make it that much more difficult for Internet companies to get started. If only established companies rule the Internet, then new ideas from companies without the huge financial muscle needed to pay for faster broadband speeds will be stifled.
According to The Wall Street Journal, the FCC’s new draft will allow content providers to buy faster Internet speeds if such deals are made on “commercially reasonable” terms. Such terms would be determined by the FCC on a case-by-case basis. This is an attempt to make a version of net neutrality that will keep an open Internet monitored by the FCC while allowing companies to adapt to a changing marketplace, which has seen Internet traffic skyrocket.
The winner here is still the ISPs, which will be able to both charge content providers and consumers for faster Internet speeds. The Journal quoted one cable executive as saying he was “pleased” by the new draft of net neutrality. The people not so pleased are consumer advocates, who say that not only will new ideas face more difficulties, but consumers will also wind up paying more. Companies that run on the Internet, like Netflix, will likely have to raise subscription fees if they continue to be charged for taking up so much bandwidth, and the cost of a broadband Internet subscription is also expected to keep rising.
“For technologists and entrepreneurs alike this is a worst-case scenario,” said Eric Klinker, chief executive of BitTorrent Inc., a popular Internet technology for people to swap digital movies or other content, to The Wall Street Journal. “Creating a fast lane for those that can afford it is by its very definition discrimination.”
“If the FCC embraces this reported reversal in its stance toward net neutrality, barriers to innovation will rise, the marketplace of ideas on the Internet will be constrained, and consumers will ultimately pay the price,” said consumer advocates group American Civil Liberties Union to the Journal.
Wheeler fired back against the criticism in a statement to The New York Times, saying: “There is no ‘turnaround in policy.’ The same rules will apply to all Internet content. As with the original open Internet rules, and consistent with the court’s decision, behavior that harms consumers or competition will not be permitted.”
The death of net neutrality, along with the upcoming merger between Comcast and Time Warner Cable (NYSE:TWC), the number one and number two cable providers in the country, respectively, represent a lose-lose situation for consumers. While some groups are pointing fingers at Wheeler and the FCC, it’s uncertain what else the organization can do, since net neutrality laws have been repeatedly overthrown in court.
More From Wall St. Cheat Sheet:
- Netflix Speeds Are Up 65 Percent, If Comcast Is Your ISP
- One Carrier to Rule Them All: Why Comcast Wants to Conquer Cable
- Comcast: Do Strong Earnings Sweeten the Time Warner Cable Deal?
Follow Jacqueline on Twitter @Jacqui_WSCS