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What President Obama's Net Neutrality Proposal Means

It may seem like a big victory for net neutrality activists and Web content companies like Netflix, but the President's statement is just a statement, not law.

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President Obama’s broadband announcement seems like a big victory for net neutrality activists, as well as Web content companies like Netflix.

But it’s important to remember that his announcement is just that — a statement, not a law. Obama has laid out a roadmap for the FCC, but that doesn’t mean U.S. broadband policy is going to end up there. And Obama’s statement also appears — perhaps intentionally — to be vague about some crucial elements regarding broadband policy.

FCC Chairman Tom Wheeler offered a noncommittal response to the president’s announcement Monday, calling it an “important and welcome addition” to the debate. While he didn’t endorse Obama’s statement, he would face fierce opposition from other Democrats if he didn’t go along with most of what the White House suggested. He also noted writing the rules is taking longer than anticipated so don’t expect to see anything soon.

Nevertheless, there are plenty of known unknowns about today’s announcement, and what it means for Internet providers, Internet users and content companies.

How likely is it that Obama’s statement will become U.S. policy in the long run?

Now that FCC head Tom Wheeler has the go-ahead from President Obama, he has more political cover to create net neutrality rules designed to regulate broadband providers. Those rules will likely become the law of the land since the new Republican-controlled Congress will still have a hard time mustering enough votes to override it.

But that doesn’t mean those laws will stick around. Verizon, which previously won a legal fight against the FCC’s old broadband rules, has already made noises it will head to the courts to challenge them. AT&T said Monday it would join any lawsuit against the FCC, and chances are so will other broadband providers. If the FCC uses Title II to back up new rules (which is what Obama wants), the rules are more likely to survive a court challenge.

That could still change in 2017 if Republicans retake control of the White House (and, by default, the FCC). A Republican president could always tell the FCC — an agency run by political appointees — to go back and reverse the rules.

Will cable companies be able to charge heavy Internet users higher fees?

People who stream lots of video on the Web use lots of broadband. But for now, they generally pay the same fees as light users. But broadband providers have been tinkering with the idea of instituting “caps” or “usage-based pricing” similar to how wireless providers charge their customers. It’s not clear whether the President wants the FCC to do anything to stop that.

Obama’s memo says the FCC shouldn’t allow “paid prioritization” — which would allow, say, Comcast to stream video faster or more cheaply on its own movie services or sell that service to other content companies. But it also says the FCC should “forbear” from rate regulation, which means he’s telling the FCC it shouldn’t be in the business of setting rates for Internet providers. But it’s not clear if that also means he doesn’t want the agency getting involved with tiered pricing and similar ideas. This idea will become more important in the coming months, as new video services from the likes of Dish, Sony and HBO make it more feasible for Internet users to watch a lot of TV programming on the Web.

Did Netflix get what it wants?

The battle between Netflix and Internet providers like Comcast over “interconnection” fees is complicated. But the simplest version is that Netflix says it shouldn’t have to pay fees to bring its video streams into the networks owned by Comcast, Verizon and others. In the past, the FCC hasn’t dealt with these issues, but Obama says that should change. This makes Netflix happy — “A bold move by the President,” Netflix spokesman Jonathan Friedland said today.

But again, Obama’s specific language about interconnection is vague. He wants the FCC to “increase transparency” around the subject, and says that “if necessary” it “should apply net neutrality rules to points of interconnection between the ISP and the rest of the Internet.” If you’re Netflix, you’ll view that vagueness as a tactic — you’ll want to read between the lines, and assume that Obama is giving Web companies the ability to complain to the FCC.

What does this mean for my phone?

The FCC chairman had already been making loud noises about extending net neutrality to cover wireless carriers, an idea President Obama clearly favors.

That means wireless carriers wouldn’t be able to block video-streaming or other bandwidth-hogging apps that they say would slow down their networks. Even with the rules in place, things may not change much for consumers since they’d still be trying to keep under the monthly data caps imposed by wireless providers.

* Comcast owns NBCUniversal, which is a minority investor in Revere Digital, Re/code’s parent company.

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