Tougher Internet rules to hit cable, telecoms companies

[February 26, 2015]  By Alina Selyukh

WASHINGTON (Reuters) - U.S. regulators are poised to impose the toughest rules yet on Internet service providers, aiming to ensure fair treatment of all web traffic through their networks.

The Federal Communications Commission is expected Thursday to approve Chairman Tom Wheeler's proposed "net neutrality" rules, regulating broadband providers more heavily than in the past and restricting their power to control download speeds on the web, for instance by potentially giving preference to companies that can afford to pay more.

The vote, expected along party lines with Democrats in favor, comes after a year of jostling between cable and telecom companies and net neutrality advocates, which included web startups. It culminated in the FCC receiving a record 4 million comments and a call from President Barack Obama to adopt the strongest rules possible.

The vote also starts a countdown to lawsuits expected from the industry, which contends regulations will burden their investments and stifle innovation, potentially hurting consumers.

The FCC sought new net neutrality rules after a federal court rejected their previous version in January 2014. The ruling confirmed the agency's authority over broadband but said it had improperly regulated Internet providers as if they were similar to a public utility. That contradicted their official classification as "information services" providers, which are meant to be more lightly regulated.

The agency's new policy would reclassify broadband as more heavily regulated "telecommunications services," more like traditional telephone service.

The shift gives the FCC more authority to police various types of deals between providers such as Comcast Corp and content companies such as Netflix Inc to ensure they are just and reasonable for consumers and competitors.

Internet providers will be banned from blocking or slowing any traffic and from striking deals with content companies, known as paid prioritization, for smoother delivery of traffic to consumers.

The FCC is also expected to expand its authority over so-called interconnection deals, in which content companies such as Netflix Inc pay broadband providers to connect with their networks. The FCC would review complaints on a case-by-case basis.

Wheeler's original proposal pursued a legal path suggested by the court. It stopped short of reclassifying broadband and so had to allow paid prioritization, prompting a public outcry and later Obama's message.

With the latest draft, Wheeler sought to address some Internet providers' concerns, proposing no price regulations, tariffs or requirements to give competitors access to their networks.

(Reporting by Alina Selyukh; Editing by Christian Plumb and Ken Wills)

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