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Federal Communications Commission (FCC) Chairman Tom Wheeler testifies before a Senate Appropriations Financial Services and General Government Subcommittee hearing on the FY2015 budget justification for the FCC, on Capitol Hill in Washington March 27, 2014. (Jonathan Ernst/Reuters)
Federal Communications Commission (FCC) Chairman Tom Wheeler testifies before a Senate Appropriations Financial Services and General Government Subcommittee hearing on the FY2015 budget justification for the FCC, on Capitol Hill in Washington March 27, 2014. (Jonathan Ernst/Reuters)

U.S. proposal opens door to an Internet fast lane Add to ...

The fight over the free flow of traffic across the Internet is about to get ugly.

On Thursday, the U.S. Federal Communications Commission moved ahead with a draft rule that would permit broadband providers to sell faster use of their infrastructure to content companies.

The rule could herald the start of a transformation of the Internet landscape, a terrain that is increasingly prized by telecommunications companies, technology firms and content providers alike. Critics warn the proposal could create a two-speed Internet, where some firms pay for superior delivery of their content.

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The debate has pitted giants like AT&T Inc., Verizon Communications Inc. and Comcast Corp. against open-Internet advocates and companies like Facebook Inc., Google Inc. and Netflix Inc., who argue that the Internet should be classified as a public utility and subject to more stringent regulation.

The controversy is set to intensify over the summer. In the coming months, regulators will accept public comments on the proposed rules and weigh whether to accept them in their current form. Thursday’s hearing attracted a group of vocal protesters and several were ejected for interrupting the proceedings.

The rule represents a critical juncture for advocates of “net neutrality,” which refers to the idea that all legal Internet traffic, regardless of the source, should receive equal treatment.

FCC chairman Brad Wheeler has said that he supports the concept. “There is one Internet. It must be fast, it must be robust, and it must be open,” he said on Thursday. “The prospect of a gatekeeper choosing winners and losers on the Internet is unacceptable.”

However, Mr. Wheeler is also in a bit of a pickle. U.S. courts struck down two recent attempts by the FCC to write rules in this area, saying it had erred in its interpretation of the law. Mr. Wheeler has claimed that the current proposed rule, which would also bar Internet providers from blocking traffic or slowing it down in “commercially unreasonable” ways, is a good starting point.

That is unlikely to mollify critics. The proposed rules were advanced by a vote along party lines by the five FCC commissioners, with the three Democrats in favour and two Republicans against. However, one Democratic commissioner publicly expressed reservations about the process, even as she voted in favour of the proposal. Republicans, meanwhile, have argued that further restrictions on Internet providers are unnecessary.

In recent months, the FCC has received dire warnings about the possible consequences of a misstep, with advocates on both sides of the policy debate cautioning that innovation and investment could be stifled.

Last month, Brad Burnham, a partner at Union Square Ventures, a venture capital firm in the New York and an early investor in companies like Tumblr and Foursquare, met with FCC staff in Washington. Those companies would not have been possible without an open Internet, he wrote in a recent letter to the commission. The proposed rules threaten to put such start-ups at a disadvantage, particularly if their products compete with anything offered by Internet providers themselves, he said.

“I will find it very hard to invest in services like video delivery, security, cloud storage, or payment systems that the carriers are also likely to offer,” Mr. Burnham wrote.

Many proponents of net neutrality want the FCC to reclassify the Internet as a public utility, which would allow the regulator to write more sweeping and strict rules. Such a move would set off a furious response from industry executives and Republicans. In a letter to the FCC earlier this week, the chief executives of the major broadband providers in the U.S. wrote that regulating their businesses as utilities would allow “unprecedented government micromanagement of all aspects of the Internet economy.”

Advocates, meanwhile, are vowing to fight on. “A two-tier Internet is anathema to a truly open Internet,” said Michael Weinberg, vice-president of advocacy group Public Knowledge in a statement on Thursday. “This will be the summer of net neutrality.”

The debate is a complex one. In the eyes of the FCC, the concept of net neutrality applies to the relationship between Internet service providers and their customers – the so-called “last mile.” But firms like Netflix have called for a more expansive definition, which encompasses the back-end connections between it, third parties and service providers (in February, Netflix grudgingly struck a deal to pay Comcast for direct access to its pipes.)

In Canada, net neutrality has been somewhat less difficult for regulators to enforce, in large part because Internet service providers are not treated as a special group. Rather, in the eyes of the law, they are often considered no different from traditional telecommunications carriers. That means they fall under the jurisdiction of Canada’s Telecommunications Act, which contains provisions that severely limit the extent to which carriers can create a multi-tiered telecom system.

However the Canadian regulatory framework does little to advance overall net neutrality, largely due to the fact that a massive amount of the world’s Internet traffic still passes through U.S. infrastructure. As such, should net neutrality rules crumble in the U.S., Canadians likely will not be immune to the effects. Any increase in operating costs could be passed through to Canadian consumers.

With files from Omar El Akkad

Follow on Twitter: @jslaternyc

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