U.S. net neutrality rules approved

A divided U.S. Federal Communications Commission has approved new rules meant to prohibit broadband companies from interfering with internet traffic flowing to their customers.

The 3-2 vote Tuesday marks a major victory for FCCchair Julius Genachowski, who has spent more than a year trying to craft a compromise.

The commission's three Democrats voted for the rules, whileits two Republicans opposed them, calling them unnecessary regulation. The new rules are likely to face intense scrutiny on Capitol Hill once Republicans take over the House. Meanwhile, public interest groups decried the regulations as too weak, particularly for wireless systems.

Known as "net neutrality," the rules prohibit phone and cable companies from favouring or discriminating against internet content and services, such as those from rivals.

The rules require broadband providers to let subscribers access all legal online content, applications and services over their wired networks including online calling services, internet video and other web applications that compete with their core businesses.

Flexibility to handle congestion, spam

But the rules give broadband providers flexibility to manage data on their systems to deal with problems such as network congestion and unwanted traffic, including spam, as long as they publicly disclose their network management practices.

The regulations prohibit unreasonable network discrimination a category that FCC officials say would most likely include services that favour traffic from the broadband providers themselves or traffic from business partners that can pay for priority. The rules do, however, leave the door open for broadband providers to experiment with routing traffic from specialized services such as smart grids and home security systems over dedicated networks as long as these services are separate from the public internet.

In addition, the regulations prohibit wireless carriers from blocking access to any websites or competing applications such asinternet calling services on mobile devices and require them to disclose their network management practices, too. But the rules give wireless companies more leeway to manage data traffic because wireless systems have more bandwidth constraints than wired networks.

Genachowski said the regulationswill prohibit broadband providers from abusing their control over the on-ramps that consumers use to get onto the internet. He said the companies won't be able to determine where their customers can go and what they can do online.

"Today, for the first time, we are adopting rules to preserve basic internet values," Genachowski said. "For the first time, we'll have enforceable rules of the road to preserve internet freedom and openness."

Public interest groups disappointed

Still, the final rules came as a disappointment to public interest groups. Even Genachowski's two Democratic colleagues on the five-member FCC were disappointed, though they still voted to adopt the rules after concluding some safeguards are better than none.

They warn that the new regulations may not be strong enough to prevent broadband companies from picking winners and losers on the internet, particularly on wireless systems, which will have more limited protections. They also worry the rules don't do enough to ensure that broadband providers cannot favour their own traffic or the traffic of business partners that can pay for priority resulting in a two-tiered internet.

"Today's action could and should have gone further," said Michael Copps, one of the other two Democrats on the commission. But, he added, the regulations do represent some progress "to put consumers not Big Phone or Big Cable in control of their online experiences."

At the same time, the two Republicans on the FCC worried the rules will discourage phone and cable companies from continuing to upgrade their networks by making it difficult for them to earn a healthy return on their investments. They also insist the regulations are intended to fix a problem that does not exist, as all the major broadband providers have already pledged not to discriminate against internet traffic on their networks.

"The internet will be no more open tomorrow than it is today," said Meredith Attwell Baker, a Republican.

Republicans on Capitol Hill vowed to try to block the new regulations. Kay Bailey Hutchison of Texas, the top Republican on the Senate commerce committee, plans to introduce a "resolution of disapproval" to try to overturn what she called "troubling regulatory overreach by the FCC."

Robert McDowell, the FCC's other Republican, predicted that the FCC will face court challenges to its regulatory authority, too. In April, a federal appeals court ruled that the agency exceeded its existing authority in sanctioning Comcast Corp. for discriminating against online file-sharing traffic on its network violating broad net neutrality principles first established by the FCC in 2005.

Those principles serve as a foundation for the formal regulations adopted Tuesday.