September 30, 2010

Net Neutrality Proposal Abandoned By Democrats

Democratic Members of the House Commerce Committee abandoned a last-ditch effort to broker a compromise between phone, cable and Internet companies on rules that would bar providers from blocking or degrading online traffic flowing over their networks.

The Associated Press (AP) reports that Chairman Henry Waxman, D-California, ditched the effort late Wednesday after heavy opposition to his proposed "network neutrality" rules came from Republicans for some time. The rules were intended to prevent broadband providers from becoming online gatekeepers by playing favorites with traffic.

The battle has pitted public interest groups and several Internet companies against the country's main phone and cable companies, including AT&T, Verizon and Comcast.

Internet companies say regulations are needed to prevent phone and cable companies from slowing or blocking Internet phone calls, online video and other Web services that compete with their core businesses. Along with the public interest groups, they also want rules put in place to ensure that broadband companies cannot favor their own online traffic or that from business partners that can pay for priority access.

But phone and cable companies insist they need flexibility to manage network traffic so that high-bandwidth applications don't slow down and overload their systems. This is true especially for wireless networks, which have more bandwidth constraints than wired systems, the companies said.

The communications companies also argue that after spending billions to upgrade their networks for broadband, they need to be able to earn a healthy return by offering premium services. Net neutrality rules, they argue, would discourage future investments.

The net neutrality proposal, which spent weeks under intense negotiations, attempted to carve out a middle ground by barring Internet traffic discrimination over hard-wired networks while giving broadband providers more freedom when it came to managing traffic on wireless networks. The plan would have given the FCC authority to fine violators of net neutrality up to $2 million.

The shelving of the proposal is a setback for broadband companies. They fear the issue could now go back to the FCC, which was deadlocked over the issue in August. The FCC could impose more restrictive rules on the industry than a House compromise would have had.

"If Congress can't act, the FCC must," said Waxman in a statement, adding that "this development is a loss for consumers."

The Obama administration campaigned heavily for net neutrality, along with FCC chairman, Julius Genachowski, a key architect of Obama's technology platform. But frustration is growing as the debate has dragged on over the better part of the last year without any resolution either at the FCC or in Congress.

The proposal was hit hard by today's political climate, with Republicans hoping to rack up gains in the upcoming midterm elections apparently unwilling to help Democrats make progress on such a touchy issue. Republicans also were reluctant to support a proposal that opponents equate to regulating the Internet.

Yet in what would have been a big victory for the phone and cable companies, Waxman's proposal would have headed off an effort by the FCC chairman to redefine broadband as a telecommunications service subject to common carrier requirements to treat all traffic equally.

The FCC has been trying to find ways to regulate broadband since a federal appeals court threw out its current approach in April, which treated broadband as a lightly regulated "information service." The agency argued that this approach gave it sufficient jurisdiction to enforce net neutrality.

But the US Court of Appeals rejected the argument. It ruled that the agency had exceeded its authority when it ordered Comcast to stop blocking subscribers from using on online file-sharing service to swap movies and other files.

Now that Congress failed to make progress on the issue, several public interest groups on Wednesday asked Genachowski to move ahead with his plan to reclassify broadband as a telecom service.

"The FCC must act now to protect consumers by reinstating its authority over broadband," said Gigi Sohn, president of public interest group Public Knowledge. "We expect the FCC to do so to carry out one of the fundamental promises of the Obama administration."