US Net Neutrality Plan Faces Heat From Venture Capitalists

Pressure built on the U.S. Federal Communications Commission chairman on Thursday to delay or abandon a plan to relax Internet traffic rules, with more than 50 high-profile venture capitalists and another FCC member the latest to pile on.

Prominent investors including Ron Conway of SV Angel, Chris Dixon of Andreessen Horowitz, John Lilly of Greylock Partners, Jason Mendelson of Foundry Group, and dozens of other VCs wrote a joint letter to FCC Chairman Tom Wheeler, himself a former private equity investor, sharing their concerns about the proposed new "open Internet" rules.

"If established companies are able to pay for better access speeds or lower latency, the Internet will no longer be a level playing field," they said in a letter released on Thursday.

Wheeler has been under fire for proposing rules that would allow content companies to pay broadband providers for faster Internet speeds to deliver their traffic as long as the deals are deemed "commercially reasonable."

Ajit Pai, senior Republican commissioner at the five-member FCC, on Thursday said he had "grave concerns" about the plan and joined his Democratic colleague Jessica Rosenworcel in calling for a delay of the vote scheduled for May 15.

The FCC, however, issued a finalised agenda for the meeting that included the "open Internet" rules, indicating that the vote is still expected. The FCC has also moved to allow stakeholders and consumers to reach out to the agency staff until then to give feedback.

Though Wheeler has said he would use all tools necessary to prevent or punish Internet service providers who may "degrade the service for all for the benefit of a few," his proposal has triggered an outcry. Thousands of comments are pouring into the agency's inboxes and flooding its phone lines.

More than 100 technology companies, including Internet giants Google Inc, Facebook Inc, Twitter Inc and Amazon.com Inc wrote to Wheeler on Wednesday, warning that his proposal was a "grave threat to the Internet."

And more than 100 advocacy organizations, including the American Civil Liberties Union, Electronic Frontier Foundation and Writers Guild of America East, chimed in with a letter to Wheeler and U.S. President Barack Obama:

"Internet service providers should not be in the business of picking winners and losers online. But the proposal the FCC is currently considering gives ISPs the power to do exactly that, which is why it must be abandoned," the groups said.

Consumer advocates have long urged the FCC to reclassify Internet service providers as more highly regulated utilities, similar to phone companies, which has faced staunch opposition from Republican lawmakers and broadband companies.

Groups are planning online and in-person rallies on May 15 under the banner of "Save the Internet" and one of them, public interest group Free Press, on Thursday launched a website directing people to call the FCC and lawmakers or ping them on social media. Several protesters are already camped outside of FCC headquarters pledging to stay until May 15.

© Thomson Reuters 2014