November 25, 2010

FCC Delays December Net Neutrality Meeting

Telecommunications regulators have put an upcoming December meeting on hold, a move that could give them additional time to consider whether they will take on contentious Web traffic rules.

The Federal Communications Commission (FCC) was to meet Dec 15, but the agency said Tuesday it was postponing the meeting to Dec 21, giving the agency an extra week to prepare its agenda, which is usually released three weeks before the meeting date.

Industry followers said they expected the meeting would be delayed after reports that the FCC planned to take a stance on net neutrality at its December meeting spurred Republican opposition.

Rules placed on net neutrality could end the debate over whether high-speed Internet providers should be allowed to block or slow information or charge websites for faster connections meant to reach more users more quickly.

"The signals out there seem to be they are in fact contemplating a vote in December," Jeffrey Silva, a telecommunications policy analyst with Medley Global Advisors, told Reuters.

"The situation's very fluid at the present time, and I think they're carefully considering the message they've received from Capitol Hill and trying to figure out their next step," Silva said of the FCC.

Republicans have openly opposed Web traffic rules, saying regulations could force companies to cut investment budgets and jobs to preserve profits.

Nineteen House Republicans signed a letter last week saying that any action on net neutrality by the FCC would be a mistake.

The FCC listened to the oppositions of phone, cable and Internet companies over the summer to figure out how it should develop a framework for how Internet traffic should be managed, but talks fell apart, especially over the treatment of wireless broadband.

Wireless carriers are pushing for the allowance to be able to prioritize Internet traffic on congested wireless networks and have said they already do so to allow handsets to make and receive phone calls.

But supporters of net neutrality and public interest groups fear that creating a two-tiered Internet, where content providers who are able to pay more get faster speeds to reach their users more quickly, would harm consumers.

But analysts say any rules that may come from the FCC on net neutrality are likely to steer clear of broadband reclassification.

The FCC in June proposed reclassifying broadband regulation under existing phone rules, typically considered a stricter regulatory system. The proposal came as an attempt to reclaim oversight lost after a US appeals court ruled the FCC overstepped its bounds by endorsing Comcast Corp for blocking bandwidth-hogging online applications.

The rule would have allowed the agency to regulate broadband access as a telecom service instead of as an information service, putting the FCC's authority on sounder legal footing.

The FCC is likely to forego reclassification in favor of building on a draft net neutrality bill developed by House Commerce Chairman Henry Waxman in September, said Stifel Nicolaus analysts in a research note.

The draft legislation had support from industry players as a temporary legislative fix, but lacked enough bipartisan support to move forward.

Waxman's bill fell short of holding mobile providers to more stringent net neutrality standards. Silva said the FCC's rules would likely also treat wireless differently.

"Whatever comes out would leave a lot of flexibility for wireless in light of their spectrum challenges and some of the different network management challenges they have," Silva told Reuters.

Still, Republican-led House of Representatives next year will most likely heavily scrutinize any actions, and industry leaders could bring legal challenges.

"Post midterm (elections), the prospects are less that the FCC would go forward with the (reclassification) option. You have to wonder what the incentive would be for industry to go along with any kind of regulatory add-on," Silva said.


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