WASHINGTON, D.C. — The Federal Communications Commission voted Thursday to implement new net neutrality rules designed to make sure Internet service providers treat all legal content equally.
The historic vote on the proposal, pitched by FCC Chairman Tom Wheeler, elicited hearty cheers from a wide array of technology companies and consumer groups while setting the table for lawsuits from Internet service providers. The controversial proceedings that led up to the vote generated heated lobbying in Washington and public clamor on social media, all in efforts to steer the future direction of the rules that guide Internet traffic.
“The Internet is too important to allow broadband providers to make the rules,” said Wheeler to applause from the standing room-only crowd gathered before the FCC panel.
“So today after a decade of debate in an open, robust year-long process, we finally have legally sustainable rules to ensure that the Internet stays fast, fair and open,” he said.
Q: What is net neutrality?
A: Net neutrality, or open Internet, is the principle that Internet service providers should give consumers access to all legal content and applications on an equal basis, without favoring or blocking some sources. It also prohibits Internet service providers (ISPs) from charging content providers for speedier delivery of their content on “fast lanes” or deliberately slowing the content from content providers that may compete with ISPs.
Q: How will new net neutrality rules affect me?
A: The regulations passed by the FCC Thursday aim to ensure that Internet content — be it streaming video, audio or other content — will be treated equally by Internet service providers. Another goal of the initiatives: To give start-ups and entrepreneurs access to broadband networks without undue influence from the ISPs.
Q: So what’s going to happen when I’m streaming House of Cards in the future?
A: In theory, the only thing that should change is that there are actual regulations on the books that prohibit ISPs’ discrimination of content and content providers. An ISP will be prohibited from slowing the delivery of a TV show simply because it’s streamed by a video company that competes with a subsidiary of the ISP.
That doesn’t mean everyone gets the same level of Internet service — remember, customers already pay for different speeds. And the price of broadband could rise over the years as speeds increase and technology advances. What the FCC’s rules should do is prevent an ISP from favoring content, blocking content, or other conduct that would harm consumers.
Q: What’s the difference between an ISP and a content provider?
A: An Internet service provider is a company that provides you with access to the Internet. Some popular ISPs in the U.S. include AT&T, Verizon, Comcast, Cox and Time Warner Cable. Content providers are companies like Netflix and Amazon that create and/or distribute videos and programs. Sometimes an ISP is also a content provider. For instance, Comcast owns NBCUniversal and delivers TV shows and movies through its Xfinity Internet service.
Shares of cable companies and other broadband providers dipped lower Thursday after federal regulators OK’d plans that would prohibit them from charging more for Internet fast lanes.
Shares of Comcast fell 1.12% to $58.96 a share on Thursday, while shares of Time Warner Cable dropped 1.65% to $152.07 a share in midday trading.
The two companies, which plan to merge by the end of this year, control 40% of the nation’s wired broadband market.
Shares of wireless Internet providers, meanwhile, rose slightly on the news, despite their opposition to the Federal Communications Commission’s plans to seek Internet regulation that would crack down on what broadband providers can charge content providers.
Shares of AT&T rose 0.9% to $34.53 a share, while shares of Verizon Communications ticked up 0.03% to $49.36 a share.
The proposed rules, passed by three out of five FCC commissioners, seek to treat Internet pipes as a public utility, thus allowing the FCC to regulate their fees.
The crackdown comes as companies like Verizon have been paving legal ground to charge twice for their pipes — first to consumers who pay for their services and secondly to content providers such as Netflix in order to send the content in a speedy and timely manner.
Shares of Netflix, whose CEO Reed Hastings staunchly opposed the two-sided payment system, jumped 0.7% to $481.94 a share on Thursday.
Netflix would have been hit hardest if broadband providers that sell to end-consumers were also allowed to charge content providers since videos take up a lot of broadband space and Netflix has been accused of clogging up the pipes.
Shares of Level Three Communications dropped 1.1% to $53.28 a share, while shares of Cogent Communications fell $1.74% to $35.92 a share. They are companies that provide pipes on the back-end of the network, connecting content providers like Netflix to the front-end of the network, which is controlled by Comcast, TWC and other consumer-facing providers.
Back-end providers like Cogent often sided with Netflix in the fight over Internet fast lanes, in part because they feared Comcast and other front-end providers would seek to keep them out of the market by making deals directly with the content providers. But the FCC’s could also impose stricter rules on what they charge to get content from the providers to the front-end of the network.