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 Obama's detailed statement on the issue of "net neutrality," a
platform in his 2008 presidential campaign, was a rare intervention
by the White House into the policy setting of an independent agency.
Shares of major Internet service providers Comcast Corp <CMCSA.O>
and Time Warner Cable Inc <TWC.N> fell sharply after Obama said ISPs
should be reclassified to face stricter regulations and banned from
striking paid "fast lane" deals with content companies.
The president also said the Federal Communications Commission's new
rules should apply equally to mobile and wired ISPs, with a
recognition of special challenges that come with managing wireless
networks.
"Simply put: No service should be stuck in a 'slow lane' because it
does not pay a fee," Obama, currently in Asia, said in a statement
released by the White House. "That kind of gate keeping would
undermine the level playing field essential to the Internet’s
growth."
Nearly 4 million comments flooded the FCC this year after Chairman
Tom Wheeler proposed new Internet traffic rules in May that would
prohibit the ISPs from blocking any content but allowed content
companies to strike "commercially reasonable" deals to ensure their
websites and applications load smoothly and swiftly.
 Although Wheeler had pledged to police any such paid-prioritization
deals that would harm consumers, public interest groups worried that
his proposed rules would create "fast lanes" for the companies that
pay up and relegate others to "slow lanes."
ISPs say they have not and will not strike paid prioritization deals
but have balked at the prospect of being regulated more like public
utilities.
"Reclassification ..., which for the first time would apply
1930s-era utility regulation to the Internet, would be a radical
reversal of course," Verizon Communications Inc <VZ.N> said in a
statement.
Verizon in January won a federal court case challenging the FCC's
previous set of net neutrality rules, which allowed "commercially
reasonable" discrimination of traffic but indicated the FCC would
disapprove of pay-for-priority deals.
The court supported the commission's authority to regulate broadband
access but said the agency was applying stricter rules to ISPs that
did not jibe with the way the FCC classified them, which is as an
information service.
Consumer advocates have for years pressed the FCC to reclassify
broadband as a telecommunications service as a way to have more
oversight authority, but ISPs have pledged they would fight the
matter in court.
Verizon on Monday said a "gratuitous" move to reclassify would
probably not stand up in court, while AT&T said it would expect to
participate in a legal challenge.
'OBAMACARE FOR THE INTERNET'
Wheeler, Obama's friend and former major fundraiser, on Monday
reiterated that he, too, opposed Internet fast lanes or harmful
prioritization deals but said that approaches including
reclassification of ISPs to regulate them more strictly raised
substantive legal questions.
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"We must take the time to get the job done correctly, once and for
all, in order to successfully protect consumers and innovators
online," Wheeler said.
Obama and other White House officials acknowledged that the FCC, as
an independent agency, would ultimately shape the regulations. But
Republicans lawmakers quickly seized on Obama's encroachment, days
after their party won control of both houses of Congress in a
midterm election largely viewed as a repudiation of the president's
policies.
"Net neutrality is Obamacare for the Internet," said Senator Ted
Cruz of Texas. "It puts the government in charge of determining
Internet pricing, terms of service, and what types of products and
services can be delivered."
Though lobbyists say legislative efforts to overturn new rules would
face a White House veto, cable and wireless companies were expected
to turn to Republican allies in Congress for stricter oversight of
the FCC.
"The president’s call ... would turn the Internet into a
government-regulated utility and stifle our nation's dynamic and
robust Internet sector with rules written nearly 80 years ago for
plain old telephone service," said Senator John Thune, a Republican
expected to lead the Senate Commerce Committee.
Wheeler had originally pushed to reinstate net neutrality rules
before the end of the year, but experts on Monday said the latest
developments probably pushed the process into 2015.
Time Warner Cable shares fell as much as 7.2 percent, and closed
down almost 5 percent, while Comcast dropped as much as 6.1 percent
and closed own 4 percent. Comcast, whose bid to buy Time Warner
Cable is under regulatory review, was by far the most actively
traded stock on U.S. markets.
(Reporting by Alina Selyukh; Additional reporting by Marina Lopes
and Roberta Rampton; Editing by Karey Van Hall, Doina Chiacu, Lisa
Von Ahn and Ken Wills)
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