FCC passes net neutrality rules, reclassifies broadband as utility

The commission voted 3-2 Thursday to approve net neutrality rules that prohibit broadband providers from selectively blocking or slowing Web traffic and from offering paid traffic prioritization services. The commission's vote on the new rules prompted loud applause from the audience at the FCC meeting.

The new regulations will almost certainly face a court challenge from broadband providers, and a court case could drag out for years. Verizon Communications, AT&T and Comcast have all opposed reclassification of broadband.

The rules are grounded in a reclassification of broadband from a lightly regulated information service to a more heavily regulated telecommunications service, although FCC staff said the agency will forbear from applying about 700 traditional telecom rules, such as price regulation and forced sharing of networks with competitors.

The order applies net neutrality regulations to mobile, as well as fixed, broadband providers, but temporarily exempts small broadband providers from some of the new rules.

The new rules will prohibit broadband providers from acting as gatekeepers to Web content, said Democratic Commissioner Jessica Rosenworcel. The Internet is "our printing press, our town square," she said. "We cannot have a two-tiered Internet with fast lanes that speed the traffic of the privileged and leave the rest of us lagging behind."

The commission's two Republicans protested the order, saying it ends 20 years of bipartisan agreement on light-touch regulation of the Internet. The new rules potentially open Internet service up to new taxes, including state taxes that broadband providers will have to pass on to customers or cut from their deployment budgets, said Republican Commissioner Ajit Pai.

The FCC could eventually use the order to subject broadband service to Universal Service Fees, a current 16 percent tax on telephone service, he said.

The FCC "flip-flopped" from an earlier net neutrality proposal from Chairman Tom Wheeler that didn't include reclassification of broadband because President Barack Obama pressured the agency, Pai said.

"Put simply, President Obama's plan to regulate the Internet is not the solution to a problem," Pai said. "His plan is the problem."

The FCC order also opens up broadband to rate regulation, with the agency banning commercial arrangements involving traffic prioritization, Pai said.

The agency's ban on commercial arrangements involving traffic prioritization amounts to rate regulation, Pai said.

Wheeler defended the rules, saying free expression on the Internet is too important "to be left without rules and without a referee on the field." He also disputed critics who say the net neutrality rules amount to regulation of the Internet.

"This is no more a plan to regulate the Internet than the First Amendment is a plan to regulate free speech," he said. "They both stand for the same concept."

The FCC's vote comes after a year of debate over net neutrality rules, with about 4 million public comments filed in the proceeding, with many of the comments calling on the agency to pass strong rules grounded in the telecom regulations in Title II of the Telecommunications Act. In early 2014, a U.S. appeals court overturned net neutrality rules the agency passed in 2010, saying the FCC pegged the rules to the wrong section of the Telecommunications Act.

In May, Wheeler proposed new rules that would have allowed broadband providers to engage in "commercially reasonable" traffic management, with no reclassification of broadband under Title II. But huge numbers of people filing comments with the agency called for reclassification, and Obama joined their ranks in November.

Dozens of digital rights and consumer groups applauded the FCC's decision. The vote "preserves the ethos of permissionless innovation that's always been at the heart of the Internet," Tim Berners-Lee, inventor of the World Wide Web, said in a video shown during the FCC meeting.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's email address is grant_gross@idg.com.