The Federal Communications Commission on Thursday voted in favor of advancing a proposal that could dramatically reshape the way consumers experience the Internet, opening the possibility of Internet service providers charging Web sites for higher-quality delivery of their content to American consumers.
The plan, approved in a three-to-two vote along party lines, could unleash a new economy on the Web where an Internet service provider such as Verizon would charge a Web site such as Netflix for the guarantee of flawless video streaming.
The proposal is not a final rule, but the vote on Thursday is a significant step forward on a controversial idea that has invited fierce opposition from consumer advocates, Silicon Valley heavyweights, and Democratic lawmakers. The FCC will now open the proposal to a total 120 days of public comment. Final rules, aimed for the end of the year, could be rewritten after the agency reviews the public comments.
After weeks of public outcry over the proposal, FCC Chairman Tom Wheeler said the agency would not allow for unfair, or "commercially unreasonable," business practices. He wouldn't accept, for instance, practices that leave a consumer with slower downloads of some Web sites than what the consumer paid for from their Internet service provider.
He said his plan asks whether paid prioritization should be banned outright, but he still moved forward with a proposal allowing new business arrangements between Internet service providers--such a AT&T, Verizon and Time Warner Cable--and Web content providers, such as Facebook, Google and online startups.
"There is one Internet. It must be fast, it must be robust, and it must be open," Wheeler said. "The prospect of a gatekeeper choosing winners and losers on the Internet is unacceptable."
He stressed consumers would be guaranteed a baseline of service and that the agency would beef up enforcement of companies that strike deals that are harmful for consumers or anticompetitive.
"If a network operator slowed the speed of service below that which the consumer bought, it would be commercially unreasonable and therefore prohibited," Wheeler aid. "If the network operator blocked access to lawful content, it would violate our no-blocking rule and therefore be doubly prohibited."
Such business models have drawn fierce criticism from investors, startups and big Silicon Valley firms. They say smaller companies that can't afford to pay for faster delivery would likely face additional obstacles against bigger rivals. And consumers could see a trickle-down effect of higher prices as Web sites try to pass along new costs of doing business with Internet service providers.
One of the Democratic commissioners who voted yes on Thursday expressed some misgivings about how the proposal had been handled.
"I would have done this differently. I would have taken the time to consider the future," said Democratic Commissioner Jessica Rosenworcel, who said the proposal can't allow for clear fast lanes for the most privileged companies. She said she supported a proposal allowing the agency to consider questions on how it could prevent certain Web sites from being blocked, in addition to figuring out the overall oversight of broadband Internet providers.
"I believe the process that got us to rulemaking today was flawed," she said. "I would have preferred a delay."
Wheeler's proposal is part of a larger "net neutrality" plan that forbids Internet service providers from outright blocking Web sites. And he promised a series of measures to ensure the new paid prioritization practices are done fairly and don't harm consumers. The agency said it had developed a "multifaceted dispute resolution process" on enforcement and would consider appointing an "ombudsman" to oversee the process.
But some consumer advocates doubt the FCC can effectively enforce anti-competitive practices or ensure consumers aren't stuck with fewer choices or poorer service. They note that the FCC will only investigate complaints brought to them, and many small companies and consumers don't have resources to alert the agency.
One proposal that consumer groups applauded was on the open question of whether the government should redefine broadband Internet as a public utility, like phone service, which would come with much more oversight from the FCC.
"Agencies almost always change their rules from the initial proposal -- that is why we have a whole notice and comment period, so that the agency can hear from the public and be educated into making the right decision (or at least the least bad decision)," said Harold Feld, a vice president at Public Knowledge, a media and technology policy public interest group. "Do not freak about the tentative conclusion and proposed rules."
The next phase will be four months of public comments, after which the commissioners will vote again on redrafted rules that are meant to take into account public opinion. But the enactment of final rules faces significant challenges.
The proposal has sparked a massive fight between two of the most powerful industries in the country — on one side, Silicon Valley, and on the other, companies such as Verizon and AT&T that built the pipes delivering Web content to consumers’ homes. The telecom companies argue that without being able to charge tech firms for higher-speed connections, they will be unable to invest in faster connections for consumers.
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