FCC chief said to propose 'network neutrality' rules

The chairman of the Federal Communications Commission will propose rules on Sept. 21 requiring Internet companies to treat content providers equally, a person familiar with the matter said.

Chairman Julius Genachowski will ask fellow commissioners to adopt the "net neutrality" rules, said the person, who asked not to be identified because the proposal hasn't been made public.

The proposal may ignite a clash between the Obama administration and AT&T Inc., Verizon Communications Inc. and Comcast Corp., which along with some Republicans say regulations could choke investment and stem growth in the Internet. The FCC rebuked Comcast last year, saying it interfered with customers who were sharing videos and other large files.

Rules would be "generally negative" for telephone, cable and wireless providers of high-speed Internet services, and would be "generally welcomed" by Internet companies such as Amazon.com Inc., Yahoo! Inc. and Google Inc., David Kaut and Rebecca Arbogast, Washington-based analysts for Stifel Nicolaus & Co., said in a note to investors.

Net neutrality includes the idea that Web providers shouldn't be permitted to favor some Web sites by delivering their content faster than similar material from other sites.

President Barack Obama said on May 29 that he was "firmly committed" to net neutrality, "so we can keep the Internet as it should be, open and free."

Majority Needed

Genachowski would need to win a majority on the commission, which is made up of him, two fellow Democrats and two Republicans. He will use a speech at the Brookings Institution in Washington to lay out his proposal, the person said.

House Energy and Commerce Committee Chairman Henry Waxman, a California Democrat, said yesterday that Congress or federal regulators should set rules. "The time is right," Waxman said at a hearing attended by Genachowski and the other four FCC commissioners.

Republican Representative Cliff Stearns of Florida said at the hearing that net neutrality policies could discourage new Internet-based products and services.

"Government intervention in the form of net neutrality regulation is both unnecessary and anti-consumer," said Stearns, leader of the minority on the House Subcommittee on Communications, Technology and the Internet.

President George W. Bush's administration said new rules weren't needed, and a Republican-dominated House refused to adopt a Democratic net neutrality proposal in a 2006 vote.

The FCC in 2005 issued four principles that said consumers may access the lawful Internet content of their choice with the device of their choice. It stopped short of imposing regulation.

Genachowski's proposal will include at least the four principles, the person said.

In July, other agencies said companies taking part in a broadband program must treat Web traffic equally. The person declined to say if Genachowski would advocate such a requirement.

The FCC has said it has authority to rectify abuses. Last year it censured Philadelphia-based Comcast after concluding the largest cable provider had interfered with customers' Web traffic. The company is challenging the FCC in federal court, saying the agency's action was "legally inappropriate" because it hadn't passed rules.

Gigi Sohn, president of Public Knowledge, a Washington- based public-interest group, called news of Genachowski's proposal "a very welcome development."

Rules "will bring a degree of certainty that will help both carriers and consumers alike," said Sohn in an e-mailed statement. "They will encourage investment."

New rules could "prevent carriers from managing their networks -- such as curtailing viruses and other harmful content," said Chris Guttman-McCabe, a vice president at CTIA- The Wireless Association, in an e-mailed statement today. The Washington-based trade group represents AT&T, Verizon Wireless and other companies.

New York-based Verizon and Verizon Wireless said in joint comments to the FCC that "new net regulation is not justified and would harm consumers" in part because it could discourage investment.

Regulations would deter "multibillion-dollar investment gambles" to build high-speed Internet networks, Dallas-based AT&T said in remarks filed July 21 at the FCC.

Cisco Systems Inc., Motorola Inc. and other equipment makers opposed non-discrimination requirements in the administration's $7.2 billion program to build high-speed Internet connections.

The Agriculture and Commerce Departments adopted the non- discrimination requirement, saying it would keep network operators from charging for a so-called Internet fast lane that would leave non-paying services at a disadvantage.