New net neutrality rules coming from FCC

The chair of the U.S. communicationsregulator is defending proposed new net neutrality rules that would allow internet providers to charge content providers for priority access to customers provided the agreement is "commercially reasonable."

"To be very direct, the proposal would establish that behaviour harmful to consumers or competition by limiting the openness of the internet will not be permitted," Tom Wheeler, chair of the Federal Communications Commission, wrote in a blog post.

• FCC blog post on the new rules

Wheeler said there has been a lot of misinformation about the notice of proposed rules that will be circulated to commission members today.

Most of the criticism has been directed at a rule that would allow deals between content providers and internet providers on the way traffic is delivered to customers across the connection to the customer's home, known as the "last mile," provided the deals are "commercially reasonable."

"The notice will propose rules that establish a high bar for what is 'commercially reasonable,'" Wheeler wrote.

He added that the test will be whether the deal results in "harm to competition and consumers stemming from abusive market activity."

The FCC is also looking for other ideas for how to prevent that kind of harm, Wheeler wrote.

He clarified that the main rules in the proposal will be that:

• All internet providers must transparently disclose to their subscribers and users all relevant information about how they manage traffic on their networks.
• That no legal content may be blocked.
• Internet providers may not act in a commercially unreasonable manner to harm the internet, includingfavouringthe traffic from an affiliated entity.

U.S. regulators are expected to vote on May 15 on the proposed rules.

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Wheeler has also said he planned to review the practices adopted by internet providers on a case-by-case basis.

'Baseline' service level required

The rules will propose "that broadband providers would be required to offer a baseline level of service to their subscribers, along with the ability to enter into individual negotiations with content providers," an FCC spokesman told Reuters.

Exactly what the baseline level of service and commercially reasonable standard are going to be or how the FCC would resolve disputes will be established after the FCC collects public comment on the proposed rules, according to the spokesman.

Wheeler on Wednesday said he plans to share his proposed rules with other commissioners on Thursday, who may seek changes before the agency votes on May 15 to formally propose the rules and seek public comment.

Consumer advocates had criticized the FCC potentially allowing "commercially reasonable" negotiations with content providers, concerned that it could lead to deals that would offer a "fast lane" to content providers who pay up for better traffic delivery to the user.

"This standard allowsISPs(Internet service providers) to impose a new price of entry for innovation on the internet," Michael Weinberg, vice president at public interest group Public Knowledge, said in a statement.

Netflix objects

Video streaming service Netflix Inc, which relies on internet providers to deliver its movies and TV shows, also objected. "The proposed approach is the fastest lane to punish consumers and internet innovators," a Netflix spokesman said.

Virtually all large internet service providers, such as Verizon Communications Inc and Time Warner Cable Inc , have pledged to not restrict consumers' access to web content whether the FCC writes new rules or not.

But critics have raised concerns that without a formal rule, the voluntary pledges could be pulled back over time and leave the door open for deals that would give unequal treatment to websites or services.

The U.S. Court of Appeals for the District of Columbia Circuit in January for the second time struck down the FCC's previous version of the open internet order, which prohibited discrimination against web traffic more broadly.

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The court said the FCC had improperly treated internet service providers as regulated public utilities providing telecommunications services, like telephone companies, while they were actually classified as information service providers.

Consumer advocates have called on the FCC to reclassify internet providers as more heavily regulated telecommunications services, an idea that has faced tremendouspushbackfrom the broadband industry and Republican lawmakers who have urged the FCC to tread lightly.

The new effort to rewrite the Open Internet rules rely on other legal standards, affirmed by the court's ruling that the FCC did have authority to regulate broadband.

Affects consumer connection only

The new rules, in line with the FCC's approach to net neutrality in the past, would only regulate deals between businesses on connections in the last leg of the network that reaches the consumer.

Deals on connections that happen on the part of the network further away from the customer, known as interconnection agreements, are outside of their scope.That means the ruleswon't have any bearing onNetflix's recent agreement to pay Comcastto improve the hand-off of traffic to its network. Netflix had called for the FCC to expand its definition of "net neutrality" rules to cover such connections and guarantee that they would be free of charge. Internet providers say they should be allowed to charge content companies when they absorb more traffic than they send back, like in the case of Netflix.

• Netflix Comcast deal targets throttling

Comcast, through conditions placed on its 2011 merger with NBC Universal, is the only internet provider still bound by the earlier FCC net neutrality rules through 2018.