FCC Approves Plan to Regulate Internet

WASHINGTON -- The Federal Communications Commission on Tuesday approved a plan to regulate the Internet despite warnings that it could strangle industry investment and damage an economy that is still struggling to recover.

The 3-2 vote fell along partisan lines with Democrats capitalizing on their numerical advantage.

The rules would prohibit phone and cable companies from abusing their control over broadband connections to discriminate against rival content or services, such as Internet phone calls or online video, or play favorites with Web traffic.

Lawmakers in both parties have been arguing for months that Congress, not the Obama administration, should take the lead role in deciding whether and how much to police the web. But despite a brief backing-off earlier in the year, the FCC pushed ahead with its new regulatory plan.

President Obama said in a statement that the plan "will help preserve the free and open nature of the Internet while encouraging innovation, protecting consumer choice, and defending free speech."

"This decision is an important component of our overall strategy to advance American innovation, economic growth, and job creation," he said.

FCC Chairman Julius Genachowski secured the three votes needed for approval, despite firm opposition from the two Republicans on the five-member commission.

Commissioner Robert McDowell, a Bush appointee, said the FCC's plan "appears to some as an obsessive quest to regulate at all costs."

"Some are saying that instead of acting as a cop on the beat, the FCC looks more like a regulatory vigilante," he said.

Genachowski's two fellow Democrats voted for the rules, even though they have said they consider them too weak.

Commissioner Michael Copps said Tuesday that he "seriously" considered voting against the plan.

"But it became ever more clear to me that without some action today the wheels of network neutrality would grind to a screeching halt for at least the next two years," he said.

The outcome caps a nearly 16-month push by Genachowski to pass "network neutrality" rules and marks a key turning point in a policy dispute that began more than five years ago.

Genachowski said he's proud of the process and the results, saying that the plan has drawn a wide range of support from technology and Internet companies to investors to labor, civil rights and consumer groups.

"Our framework has been supported by a number of broadband providers, as well, who recognize the sensible balance of our actions and the value of bringing a level of certainty to this broad issue," he said.

But the move raises concern that the FCC could soon have its regulatory foot in the door of the wild wild West of the Internet -- with an eye toward eventually exerting tighter control over content at a time when sites like WikiLeaks openly snub the government.

Republicans warn that the new rules would impose unnecessary regulations on an industry that is one of the few bright spots in the current economy, with phone and cable companies spending billions to upgrade their networks for broadband.

Burdensome net neutrality rules, they warn, would discourage broadband providers from continuing those upgrades by making it difficult for them to earn a healthy return on their investments.

Senate Minority Leader Mitch McConnell told President Obama on Tuesday to leave the Internet alone, arguing that his administration has already nationalized health care, banks and student loans.

"That's why I and GOP senators have urged the FCC chairman to back off," he said on the Senate floor.

Sen. John Cornyn, whose amendment to prevent the FCC from regulating the Internet was blocked from a vote last week by Senate Majority Leader Harry Reid, said he was "disappointed" by the FCC's vote.

"Clearly, the Obama administration did not hear the clarion call from Americans in November that stated that they did not want more government regulations and restrictions, like those imposed through the new health care law," he said in a written statement. "Instead of trying to encourage our economic recovery, this administration has become a shackle to innovation and growth in America."

Republicans, who will control the House and an additional five seats in the Senate in the next Congress, may try to overrule the regulation. Under the Congressional Review Act, Congress can strike down a regulation by passing a joint resolution.

A number of big Internet companies, including Netflix Inc., Skype and Amazon.com Inc., have previously expressed reservations about the plan as well.

But the FCC defended the new rules.

"We adopted today a strong and balanced order that has widespread support and that focuses on the importance of Internet freedom, the importance of private investment, the importance of business model experimentation," Genachowski said at a news conference after the vote. "That's why we have so many different people from various parts of the ecosystem supporting it. It's a strong and balanced order. And I'm looking forward to talking with anyone who is interested."

Rep. Ed Markey, D-Mass., a longtime supporter of net neutrality and author of the first ever net neutrality bill, said the FCC plan is not perfect and does not contain all the protections and priorities that he has advocated.

"Still, it does represent a step forward in the process of preserving the Internet as a vibrant marketplace for commerce and communications while fostering innovation and job creation now and in the future," he said in a statement.

The chairman's proposal builds on an attempt at compromise crafted by outgoing House Commerce Committee Chairman Henry Waxman, D-Calif., as well as a set of broad net neutrality principles first established by the FCC under the previous administration in 2005.

The rules would require broadband providers to let subscribers access all legal online content, applications and services over their wired networks -- including online calling services, Internet video and other Web applications that compete with their core businesses.

But the plan would give broadband providers flexibility to manage data on their systems to deal with problems such as network congestion and unwanted traffic like spam as long as they publicly disclose their network management practices.

Senior FCC officials stressed that unreasonable network discrimination would be prohibited.

They also noted that this category would most likely include services that favor traffic from the broadband providers themselves or traffic from business partners that can pay for priority. That language was added to help ease the concerns of Genachowski's two fellow Democrats.

The proposal would, however, leave the door open for broadband providers to experiment with routing traffic from specialized services such as smart grids and home security systems over dedicated networks as long as these services are separate from the public Internet.

Public interest groups fear that exception could lead to a two-tiered Internet -- with a fast lane for companies that can pay for priority and a slow lane for everyone else.

They are also worried that the proposal lacks strong protections for wireless networks as more Americans go online using mobile devices.

The plan would prohibit wireless carriers from blocking access to any websites or competing applications such as Internet calling services on mobile devices. It would require them to disclose their network management practices too.

But wireless companies would get more flexibility to manage data traffic as wireless systems have more bandwidth constraints than wired networks.

"We are concerned that if these companies are allowed to block the applications consumers can access over their iPhones or BlackBerry devices, there's nothing to keep them from censoring political speech," said Bob Edgar, president of Common Cause. "The commission should look to ensure that net neutrality is fully extended to the wireless world."

Still, Genachowski's proposal is likely to win the support of the big phone and cable companies because it leaves in place the FCC's current regulatory framework for broadband, which treats broadband as a lightly regulated "information service."

The Associated Press contributed to this report.