Net neutrality: Will the FCC's new Internet policy help consumers?

A divided FCC approved regulation aimed at protecting 'Internet freedom and openness.' But critics of Net neutrality say the policy is unnecessary and will squelch innovation.

The Federal Communications Commission moved Tuesday to tighten regulation of the Internet, the fast-changing communication platform that plays an increasingly vital role in the global economy.

The FCC, in a vote that broke along party lines, approved a new set of rules promoting "network neutrality," the idea that the Internet should not be dominated by a few large gatekeepers of network traffic.

"For the first time, we'll have enforceable rules of the road to preserve Internet freedom and openness," FCC Chairman Julius Genachowski said before voting in favor of the rules.

There has long been a consensus among consumer advocates and high-tech entrepreneurs that the Internet should be an open forum for communication and commerce. But how to achieve that has been a source of heated debate, with free-market critics maintaining that any regulation would stifle innovation.

It remains to be seen whether the FCC's effort will succeed at protecting consumers. The commission itself was sharply divided on that point.

Why regulate?

Proponents of a "net neutrality" policy argue that a failure to act would allow a service provider like Comcast to give preferential treatment to its own content and services over those of another company, such as Netflix, that seeks to reach its customers over Comcast infrastructure.

But another commission member, Robert McDowell, voiced concerns shared by many opponents of the new policy.

"Nothing has been holding back Internet investment and innovation – until now," he said before becoming a "no" in the 3-2 vote by commission members.

Mr. McDowell warned that "capital will be diverted to pay lawyers fees" instead of to develop new services, as companies vie for FCC support under a new regulatory framework. He said the grass-roots structure that has allowed the Web to flourish will become politicized.

How the as-yet mostly unpublished rules will work remains to be seen. But, after a process fraught with opposition from high-tech firms, the plan represents a compromise that has drawn greater industry support.

Basic principles

Mr. Genachowski outlined the plan's basic principles:

• Transparency for consumers about how the Internet's core players manage the network.

• A right for consumers and innovators to send and receive lawful traffic and to connect devices of their choice to the network.

• A level playing field, in which government regulators don't pick winners and losers.

• Reasonable flexibility for network management and service pricing, to promote investment and innovation by private firms.

FCC critics on the left say that, by stepping back from bolder ideas it had considered earlier this year, the agency has caved in to corporate interests. The group Free Press, for example, argues the commission should issue an outright ban on "paid prioritization" deals, in which an Internet service provider cuts deals that put data from some clients on a faster track than others. (The FCC said such deals are "unlikely to satisfy" its new policy.)

But on the right, critics say the FCC is trying to fix something that's not broken, and that existing antitrust laws can be used to protect consumers if the need arises. Further, they say, the FCC has no authority from Congress to regulate the Internet.

Some rules better than none

A middle view, held by other analysts of the high-tech scene, is that the new rules will be better than either tougher regulation or taking no new action. The policies may help consumers while defusing a battle within the industry over how to regulate the Web.

President Obama issued a statement calling the FCC's decision a victory for consumers, free speech, and "American innovation."

Consumers Union, the publisher of Consumer Reports, joined the Consumer Federation of America in issuing a statement supportive of the new plan.

"Unanimity on Net Neutrality may be impossible, but inaction is unacceptable," the groups said this month, as the FCC unveiled general outlines of the plan. They argued that a failure to act would allow "network operators to discriminate at will."

Some tech analysts warn that the new proposal will cause some Web users to pay higher prices.

The new policy allows Internet service providers to charge heavy users more than light users. Someone who gets lots of video feeds via Netflix, for instance, could end up paying a higher price for their Web access than someone who doesn't use the Web for video.