Utility-Type Oversight for Web Is FCC Aim

The chairman of the Federal Communications Commission this week is widely expected to propose regulating Internet service like a public utility, a move certain to unleash another round of intense debate and lobbying about how to ensure so-called net neutrality, or an open Internet.

It is expected that the proposal will reclassify high-speed Internet service as a telecommunications service, instead of an information service, under Title II of the Communications Act, according to industry analysts, lobbyists and former FCC staff members.

The change, the analysts and others say, which has been pushed by President Barack Obama, would give the commission strong legal authority to ensure that no content is blocked and no so-called pay-to-play fast lanes exist - prohibitions that are hallmarks of the net neutrality concept.

But Tom Wheeler, the FCC chairman, will advocate a light-touch approach to Title II, they say, shunning the more intrusive aspects of utility-style regulation, like meddling in pricing decisions. He may also suggest putting wireless data services under Title II and adding regulations for companies that manage the backbone of the Internet.

The proposal is expected to be submitted to the agency's commissioners by Thursday. Although the FCC is not expected to release a copy of the plan this week, the contents are almost certain to leak out. A vote on the proposal by the full commission is scheduled for Feb. 26.

The maneuvering in Washington over the proposal has already started. Congressional Republicans have proposed net neutrality legislation that bans content blocking and fast and slow lanes, but also prevents the FCC from issuing regulations to achieve those goals.

The FCC proposal is Wheeler's latest attempt to find a way to write open Internet rules that are politically palatable and that will stand up to legal scrutiny. Wheeler had initially proposed net neutrality rules that would not have classified Internet service providers as common carriers under Title II, and would have allowed the cable and telecommunications companies to strike deals with content companies and online services as long as they were "commercially reasonable."

That approach brought a flood of critical comments into the FCC last summer, saying it would open the door to fast lanes on the Internet for deep-pocketed companies and slow lanes for everyone else.

Then, in November, Obama took the unusual step of weighing in. He called on the FCC to adopt the "strongest possible rules" on net neutrality, and specifically to classify high-speed broadband service as a utility under Title II. His rationale: "For most Americans, the Internet has become an essential part of everyday communication and everyday life."

That changed the political calculus for Wheeler, even though the FCC is an independent agency. On most key votes, the five-member commission votes 3-2, with Wheeler joined by the other two Democrats.

"The moment Obama issued that statement, it meant the FCC was going to adopt a Title II rule," said Kevin Werbach, a former FCC counsel and an associate professor at the Wharton School of the University of Pennsylvania.

The industry response to Obama's declaration was swift and divided along predictable lines. The Internet Association, whose members include Amazon, Facebook, Google and Netflix, applauded Obama and urged the FCC to follow his lead to "ensure a free and open Internet."

The major Internet service providers, like Comcast and AT&T, protested and said utility-style regulation would threaten their investment in faster broadband service, ultimately harming consumers.

In response to those critics, Wheeler is expected to point to the agency's handling of mobile voice services.

In 1993, Congress deregulated the cellphone business, allowing new carriers to enter the market. The FCC has regulated mobile voice services under Title II since then, applying a light-touch approach and the industry has grown and thrived.

Mobile data services, however, have not been regulated as a telecommunications service. Wheeler, industry experts and lobbyists predict, will include mobile data services in his proposal. Today, about 55 percent of online traffic happens on smartphones and tablets, according to the FCC.

David J. Farber is among those who have misgivings about going the Title II route. Farber helped design parts of the Internet, served on the board of the Internet Society and is a former chief technologist of the FCC.

"My fear," Farber said, "is that regulating the Internet like a telecommunications service potentially opens a Pandora's box."

This commission, said Farber, a professor of computer science and public policy at Carnegie Mellon University, may well have no intention of deploying the broader powers of Title II. But, he added, there is no guarantee that future commissions will be similarly restrained.

Information services, Farber noted, are relatively free of taxes, while telecommunications services are not, especially at the state level.

Telecommunications regulation, Farber said, is a step toward a more rigid regime at odds with the freewheeling innovation of the Internet economy.

Tim Wu, a professor at Columbia Law School, sees the strong rules the FCC is moving toward as a way to safeguard the norm of equal treatment of content on the Internet, rather than viewing them as a threat.

"And the norm - no fast lanes - has worked awfully well," said Wu, who is credited with coining the term "net neutrality."

"The reality," he added, "is that we've seen startups in San Francisco, New York and across the country build new businesses on the Internet."

Most of the focus of net neutrality has been on the broadband gateway into households. But Wheeler, according to industry experts and lobbyists, will probably also take up the issue of handling Internet traffic before it makes its way to consumer devices.

These Internet backbone companies that shuttle data, voice and video across the country are unseen by consumers. But the behavior and treatment of companies that operate in the so-called interconnect market does affect the user's experience.

How smoothly a Netflix video stream of "House of Cards" plays on a subscriber's screen, for example, reflects the performance of all the network operators that have transported the digital bits of that hit program.

These networks hand off their data payloads to the Internet service providers that serve households. The handoff arrangements are private business deals. But industry experts and lobbyists say the FCC wants to deter content blocking or discrimination in this market as well.

"If you prohibit paid fast lanes by the Internet service providers themselves, you want to make sure fast lanes aren't just moving up and being created in the interconnect market," Wu said.

© 2015 New York Times News Service