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FCC Approves Net Neutrality in Partisan Decision

Passes in a 3-2 partisan vote. But Netflix should be happy.

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Federal regulators approved controversial new rules for broadband service Thursday in a partisan 3-2 vote that caps a decade-long fight over how to regulate Internet service.

While the outcome was something of a foregone conclusion, it still marks an important milestone, since it gives the Federal Communications Commission clearer authority to act as an Internet traffic cop and introduces new protections for consumers and content companies, such as Netflix, which now offer rival services to cable and phone companies, the primary providers of Internet service.

One of the key provisions of the new net neutrality rules forbids both wired and wireless Internet providers from blocking or slowing Internet traffic. They can’t charge content companies like Facebook or Amazon extra for priority, fast-lane access to consumers, and they can’t charge onerous fees to content companies such as Netflix to connect more directly to their services, what’s known as “middle-mile” connection agreements.

Main principles of FCC Chairman Tom Wheeler’s net neutrality plan
Main principles of FCC Chairman Tom Wheeler’s net neutrality plan

The new rules are designed to provide consumers some peace of mind by making sure Internet providers don’t mess around with their service, even though there have been few complaints about such problems. Broadband providers have previously promised to adhere to net neutrality principles and not block or throttle data.

“The Internet is too important for broadband providers to be making the rules,” FCC Chairman Tom Wheeler said at today’s vote. “It’s too important to be left without rules and a referee on the field.”

Victory for Net Neutrality Activists

The new rules also represent a significant victory for Internet companies large and small, which have worried about large broadband providers like Comcast* or Verizon using their gatekeeper power to hit them up for more money to reach consumers.

By themselves, the new rules won’t significantly improve the Internet services consumers already use. And they won’t do much to address consumer complaints about slow broadband speeds, high monthly costs or a lack of competition among providers.

But the new protections do have a better chance of being upheld by the courts since the agency is relying on clearer congressional authority for its rules compared to the last two times it tried to enact net neutrality protections.

A 2014 protest by net neutrality activists outside the FCC in Washington
A 2014 protest by net neutrality activists outside the FCC in Washington

The new proposal essentially reverses a 2003 agency decision to deregulate Internet lines. The FCC is relying on legal authority Congress granted it under Title II of the Communications Act, which was written for old phone lines, to police Internet providers.

Since many of the provisions of Title II don’t make sense when applied to modern networks, the agency is only using a few of those provisions when it comes to net neutrality. For example, FCC officials have vowed to not try and regulate broadband rates, or require current broadband providers to offer a potential rival access to their networks at reasonable rates.

Broadband Providers Expected to Sue

Despite those assurances, many broadband providers are deeply upset about the new rules, particularly wireless carriers, which were previously exempt. Several of the carriers are already expected to sue to overturn net neutrality as soon as possible.

Internet providers said Thursday the new rules will lead to new taxes on consumers, since they open the door to allowing states to tax broadband like phone lines.

In a statement, Verizon called the FCC’s move a “radical step that presages a time of uncertainty for consumers, innovators and investors” and “as a result, it is likely that history will judge today’s actions as misguided.”

National Cable & Telecommunications Association chief Michael Powell echoed that statement, saying the FCC has “breathed new life into the decayed telephone regulatory model” and it will mean “new taxes and increased costs” for consumers, who will “likely wait longer for faster and more innovative networks since investment will slow in the face of bureaucratic oversight.”

Some conservatives have also blasted the rules, saying they represent an effort to “regulate the Internet” by unelected officials at an agency not known for being particularly nimble. Congressional Republicans are already investigating whether the White House had undue influence over Wheeler’s late 2014 decision to push for stronger rules.

Republican FCC Commissioner Ajit Pai lamented it was “sad to witness the FCC’s unprecedented attempt” to replace Internet freedom with government control.

“We are flip-flopping for one reason and one reason only: President Obama told us to do so,” he said. “The courts will ultimately decide this order’s fate.”

There are still plenty of unknowns about how the proposal will work, since no one outside the agency has actually seen the language yet. Agency officials have offered vague outlines of what the rules say but few details. They added that small Internet providers could be exempt from some of the rules, but didn’t immediately say which ones.

FCC officials dropped some language from the plan after a last-minute push by Google and it’s allies to eliminate some language they thought might open the door to new fees on Internet companies by international broadband providers.

It could be a little while before the FCC actually releases the new plan, which is more than 300 pages long.

The Internet Association, which represents Google, Facebook and other Internet companies, applauded the decision in a statement, but sounded a note of caution, saying it was looking “forward to seeing the full text of the order to ensure that the end user experience and the free and open Internet is fully protected by the FCC’s action.”

Separately, FCC commissioners approved on a 3-2 partisan vote petitions from two communities — Chattanooga, Tenn., and Wilson, N.C. — that want to expand their municipal broadband networks to more local consumers. Tennessee and North Carolina are among 19 states that currently have laws which restrict communities from building or expanding broadband networks that compete with incumbent providers.

FCC officials are essentially moving to preempt those state laws, in hopes of spurring more competition in the broadband market and more choices for consumers. The move has White House support but is expected to be challenged by some states that think the FCC is overstepping its authority.

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

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