FCC Chairman Tom Wheeler
FCC Chairman Tom Wheeler

The US is planning sweeping changes to the regulation of broadband by reclassifying it as a public utility and using new powers to stop internet service providers from blocking or favouring particular websites.

The head of the Federal Communications Commission, the US telecoms regulator, announced steps on Wednesday to ensure that all internet traffic is treated equally — satisfying a call by President Barack Obama but dismaying the wireless industry by including mobile broadband.

The proposal from Tom Wheeler, the FCC’s chairman, marked a victory after years of fighting by a coalition of advocates for an open internet — or “net neutrality” — that spans Silicon Valley tech companies and Democratic internet activists.

But it signalled a defeat for mobile and fixed broadband providers such as Verizon, AT&T and Comcast, which say they support an open internet but object to the FCC treating broadband as a utility, because they fear it will usher in a new era of heavy-handed regulation.

Mr Wheeler said in an op-ed on Wired: “I am submitting to my colleagues the strongest open internet protections ever proposed by the FCC. These enforceable, bright-line rules will ban paid prioritisation, and the blocking and throttling of lawful content and services.”

Last November Mr Obama called on the FCC to ban fee-based internet “fast lanes”.

Berin Szoka, President of TechFreedom, a pro-cable lobby group, said Mr Wheeler had “just shot himself in the foot” and accused him of rewriting the law to suit a political agenda. “The FCC was always going to face a difficult court fight, but Wheeler’s grandiose framing makes it even more clear that the FCC is heading for its third loss in court on net neutrality,” he said.

The US has spent more than a decade debating net neutrality and two previous FCC attempts to enforce it were challenged successfully in the courts by Comcast and Verizon.

Silicon Valley is broadly in favour of an open internet, or the principle of “net neutrality”, which matters particularly to video streamers such as Netflix and internet phone groups such as Skype, which are heavy bandwidth users and fear being “throttled” by broadband providers.

The Internet Association, a lobby group whose members include Google, Amazon, eBay and Netflix, welcomed the FCC move but added: “The details and implementation of the proposal matter, and we look forward to seeing the text of the order to ensure that a free and open Internet is fully protected.”

Broadband providers had worried that the FCC, by using powers under a part of telecommunications law known as Title II, would gain the authority to do much more than ensure the equal treatment of all internet traffic.

Seeking to reassure them, Mr Wheeler wrote: “There will be no rate regulation, no tariffs, no last-mile unbundling.”

Shares in telecoms companies jumped in New York trading in response to those words, but Craig Moffett, an analyst at Moffett Nathanson, said that investors did not yet understand the ramifications of Mr Wheeler’s proposals.

Wired broadband providers such as Comcast, Charter and Time Warner Cable added between 2.8 per cent and 4.3 per cent, while the “big two” wireless groups, Verizon and AT&T, added 0.6 per cent and 0.7 per cent respectively.

Mr Moffett said: “They are responding to the rhetoric about no price regulation and allowing companies to make a return. But there was never any prospect the FCC would say anything about price — the risk of price regulation comes down the road.”

“The market should not mistake this for anything other than a confirmation of the worst case scenario,” he added.

The FCC’s five board members will vote on the proposal on February 26, when it is expected to be approved with three Democrats supporting against the opposition of two Republicans. The move is then likely to face legal challenges.

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