Wireless Carriers Stand Up to Shareholders on Net Neutrality

AT&T (NYSE:T), Sprint (NYSE:S), and Verizon (NYSE:VZ) are standing up against shareholders’ proposals that the companies adopt “net neutrality” rules that would be more severe than those currently in place under federal regulations. Some shareholders have asked the carriers to refrain from degrading or prioritizing any traffic over their wireless networks.

AT&T (NYSE:T) shareholders voted against the proposal last week, with only 5.9 percent of the votes in favor. On Thursday, Verizon’s (NYSE:VZ) shareholders will put net neutrality to a vote. Under the stipulations of the proposal, Verizon (NYSE:VZ) would have to publicly commit to adopt net neutrality principles without forfeiting any related issue in litigation.

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Shareholders want Verizon (NYSE:VZ) to operate a neutral network with neutral routing along the company’s wireless infrastructure so that the company does not privilege, degrade, or prioritize any packet transmitted over its wireless infrastructure based on its source, ownership, or destination. Essentially, proponents of the proposal state the need to preserve the openness of the Internet for millions of Americans, including minorities who are more likely to access the Web on a cell phone.

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Verizon (NYSE:VZ) has appealed the FCC’s net neutrality rules, and that appeal is currently pending before a federal court in the nation’s capital. Verizon declared that the FCC actually rejected such a proposal in its net neutrality rules, which are collectively, officially known as the Open Internet Order, under effect since November 2011.

Verizon (NYSE:VZ), the biggest wireless carrier in the nation, asserts that the proposal will interfere with technical operations of its wireless broadband network and impact business and operations. The company also said that the proposal would ban the company from giving priority to fire, police, and military communication of its wireless broadband network in cases of emergency.

The FCC rules currently prohibit mobile-phone companies from blocking access to lawsuit websites of applications that compete with their own voice or video telephony services, while mobile broadband providers like Comcast (NASDAQ:CMCSA) face even more strict requirements under the FCC’s Open Internet Order.

In addition, AT&T (NYSE:T), Sprint (NYSE:S), and Verizon (NYSE:VZ) assert that the proposal would position them at a severe disadvantage in the marketplace because their competitors would not be bound by the same constraints.