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BREAKINGVIEWS-FCC opts for net reality over neutrality

Source: Reuters - Thu, 24 Apr 2014 20:09 GMT
Author: Reuters
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(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)

By Daniel Indiviglio

WASHINGTON, April 24 (Reuters Breakingviews) - The U.S. Federal Communications Commission has opted for net reality over neutrality. The watchdog will allow higher prices for carrying content faster but keep the internet open to all. That means data hogs pay extra and others still get access. It's a way to protect consumers while bowing to the need for more broadband investment.

In January, a U.S. court of appeals struck down the old FCC rules that barred internet service providers from discriminating among content. The court suggested possible ways for restoring so-called net neutrality. The regulator chose instead to avoid further legal wrangling and allow broadband firms like Verizon and Comcast to offer preferential treatment for a price.

The new proposal will probably appeal to Netflix, Skype and other content providers that eat up gobs of capacity, while leaving smaller players satisfied with paying current rates for standard service. Meanwhile, the scheme should compensate broadband companies for the higher costs of servicing the data hogs.

The new rule wisely retains the essence of net neutrality by making it illegal to block permissible content. That should promote innovation as well as competition. A cable company won't be allowed to, say, ban video streaming websites and leave customers with its on-demand programming as their only option.

Though the proposal seems to strike the right balance between profit and consumer choice, some net neutrality advocates are understandably disappointed. Fees for using the fast lane could create serious obstacles for startup companies hoping to compete with content giants. FCC Chairman Tom Wheeler on Thursday downplayed that risk, saying the watchdog would ensure fees were "commercially reasonable."

The regulator has its work cut out for it. The absence of a specific standard means broadband charges must be judged case by case. It won't always be clear when they are stifling competition.

Still, a two-tiered fee structure should provide operators with additional incentive to keep investing in their networks. That's reason enough to give the new rules a shot.

CONTEXT NEWS

- The U.S. Federal Communications Commission is expected on April 24 to propose new rules on how broadband providers treat internet data traffic. In a blog post on the FCC website, commission Chairman Tom Wheeler said the companies would be allowed to charge content providers higher fees for carrying their data faster but could not block any legal content. He added that the watchdog would not permit any "unreasonable discrimination among users."

- On Jan. 14, a U.S. appeals court struck down the commission's old rules requiring data traffic to be treated equally by broadband providers. The Court of Appeals in Washington, D.C. ruled that the FCC lacked the legal authority to enact the regulations without first declaring broadband providers to be so-called common carriers, a status that is subject to rate regulation and other extensive oversight.

- The court did, however, say the FCC had the authority to enact measures designed to encourage investment in broadband infrastructure and therefore could create rules governing how broadband providers handle internet traffic.

- FCC blog post: http://link.reuters.com/hap78v

- Reuters: FCC pushes back against criticism over Internet traffic plan

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- For previous columns by the author, Reuters customers can click on (Editing by Reynolds Holding and Martin Langfield)

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