U.S. as Traffic Cop in Web Fight The U.S. government plans to propose broad new rules Monday that would force Internet providers to treat all Web traffic equally, seeking to give consumers greater freedom to use their computers or cellphones to enjoy videos, music and other legal services that hog bandwidth.
The move would make good on a campaign promise to Silicon Valley supporters like Google Inc. from President Barack Obama, but will trigger a battle with phone and cable companies like AT&T Inc. and Comcast Corp., which don't want the government telling them how to run their networks.
The proposed rules could change how operators manage their networks and profit from them, and the everyday online experience of individual users. Treating Web traffic equally means carriers couldn't block or slow access to legal services or sites that are a drain on their networks or offered by rivals.
The rules will escalate a fight over how much control the government should have over Internet commerce. The Obama administration is taking the side of Google, Amazon.com Inc. and an array of smaller businesses that want to profit from offering consumers streaming video, graphics-rich games, movie and music downloads and other services.
Julius Genachowski, head of the Federal Communications Commission, is also expected to propose in a speech Monday, for the first time, that rules against blocking or slowing Web traffic would apply to wireless-phone companies, according to people familiar with the plan.
Wireless carriers, which have been among the fiercest opponents of such regulation, continue to restrict what kind of data travels over the airwaves they control. For example, earlier this year, AT&T restricted an Internet-phone service from Skype so iPhone users couldn't place calls on AT&T's cellular network. At the time, AT&T cited network congestion concerns.
"We believe that this kind of regulation is unnecessary in the competitive wireless space as it would prevent carriers from managing their networks -- such as curtailing viruses and other harmful content -- to the benefit of their consumers," said Chris Guttman-McCabe, vice president of regulatory affairs for CTIA, the wireless industry's trade group.
If the FCC does force U.S. wireless carriers to open their networks to data-heavy applications like streaming video, it could push them beyond the limited capacity they have. Already, in areas like New York and San Francisco, a high concentration of iPhones has caused many AT&T customers to complain about degrading service.
In such a scenario, wireless carriers may have to rethink how much they charge for data plans or even cap how much bandwidth individuals get, said Julie Ask, a wireless analyst at Jupiter Research.
The FCC's proposal will take into account the bandwidth limitations faced by wireless carriers, according to people familiar with the plan, and would ask how such rules should apply to current networks.
The rules could encourage big Internet companies to launch new data-intensive services by establishing that their traffic can't be slowed or blocked. In the business market, companies that make Internet-phone services or video-conferencing software may invest more heavily in those services, some analysts say.
The rules are likely to be a big boon to smaller tech companies, like Silicon Valley start-ups and small makers of mobile software for Apple Inc.'s iPhone and other devices, that wouldn't be able to afford paying Internet providers for special access.
"Any company or piece of software that becomes popular, generating a lot of traffic, would tend to benefit," said Jonathan Zittrain, the co-founder of the Berkman Center for Internet & Society at Harvard University.
The FCC has four "net neutrality" principles, which call on Internet providers to avoid restricting or delaying access to legal Internet sites and services. Carriers are permitted to block access to illegal services and sites.
Mr. Genachowski is expected to propose the agency clarify its current principles and turn them into formal rules. He will also tack on a new one, which would require carriers practice "reasonable" network management. The agency will ask for guidance on how to define "reasonable."
Most Internet providers have resisted "net neutrality" rules in the past, saying they have a right to control traffic on networks they own and it's not a good idea for the government to micro-manage Internet traffic.
Phone companies including AT&T have argued that they can live with the FCC's existing principles, but they've argued there's no reason to put more formal rules put into place.
Representatives from AT&T, Verizon Wireless, Comcast and Sprint Nextel Corp. declined to comment ahead of the FCC's anticipated announcement.
The proposals come as the FCC faces a federal appeals court case over its authority to regulate Web traffic. Comcast is fighting an FCC decision last year to ding it for violating the agency's "net neutrality" principles when it slowed traffic for some subscribers who were downloading big files. Comcast said it didn't violate any rules because the FCC had never formally adopted any, but it did change how it manages its network.
Republicans are likely to oppose the FCC's new proposal -- both at the FCC and in Congress -- arguing that the FCC is trying to fix problems that don't exist and that the agency should take a more hands-off approach to the fast-changing industry.
"With only a few isolated instances of complaints alleging net neutrality-like abuses ever having been filed, it is a mistake," said Randolph May, president of Free State Foundation, a free-market oriented think tank.
The concept of network neutrality originated with the nation's longtime telephone monopoly. AT&T and its successors were prohibited from giving any phone call preference in how quickly it was connected. Since the Internet was born on phone wires, the concept survived into the Internet age largely by default.
That notion was challenged toward the end of the 1990s, as cable companies began offering Internet service. Cable companies argued since they were content companies not phone companies, the principle of network neutrality didn't apply to them.
Phone companies responded by getting into the content business as well, with television service. As a result, both the cable companies and phone companies had incentives to create conditions on the Internet -- either through pricing or slowing or speeding up certain sites -- to favor their own content.
In 2005, the FCC deregulated the Internet business, by ruling that Internet providers were communications companies and not phone companies and, importantly, were therefore no longer subject to the old phone rules such as network neutrality.
The FCC instead created its four "guiding principles" for protecting network neutrality. They were vague enough to embolden those looking for ways around it. Major phone companies like AT&T subsequently said they were considering creating "fast lanes" on the Internet, available at a higher price -- plans they put on hold amid an outcry.
Now, by codifying the principle, the FCC is seeking to limit erosion of network neutrality.
Mr. Genachowski is expected to set plans to open a formal rule-making process on the issue at the FCC's October meeting. The rules would have to be approved by a majority of the FCC's five-person board; whose three Democrats support net neutrality.View Larger MapSources: Wall Street Journal, FCC, Google Maps
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