AT&T, Com­cast must treat web traf­fic equally

The Pak Banker - - Company & Boss News -

NEW YORK: U.S. reg­u­la­tors banned In­ter­net ser­vice providers led by AT&T Inc. and Com­cast Corp. from block­ing or slow­ing Web con­tent sent to homes and busi­nesses, while al­low­ing mo­bile phone com­pa­nies to put lim­its on traf­fic.

The Fed­eral Com­mu­ni­ca­tions Com­mis­sion ap­proved the so-called net­neu­tral­ity rules by a vote of three to two to­day. Sup­port­ers ar­gued that In­ter­net providers, which also own some of the con­tent they de­liver on­line, may in­ter­fere with videos and ser­vices owned by oth­ers such as Google Inc.

The agency also af­firmed that providers may charge sub­scribers based on how much data they con­sume. The pric­ing is­sue has be­come more im­por­tant as com­pa­nies in­clud­ing Net­flix Inc. stream movies and other data-hun­gry con­tent over the Web.

"To­day's de­ci­sion will help pre­serve the free and open na­ture of the In­ter­net while en­cour­ag­ing in­no­va­tion, pro­tect­ing con­sumer choice and de­fend­ing free speech," Pres­i­dent Barack Obama said in a state­ment re­leased to­day by the White House.

The rules cre­ate "a strong and sen­si­ble frame­work" that "pro­tects In­ter­net free­dom and open­ness," FCC Chair­man Julius Ge­na­chowski, a Demo­crat ap­pointed by Obama, said be­fore the vote. "We're adopt­ing a frame­work that will in­crease cer­tainty for busi­nesses, in­vestors and en­trepreneurs."

Com­mis­sioner Mered­ith Atwell Baker, one of two Repub­li­cans to vote against the reg­u­la­tions, called the rules an over­reach.

"There is no fac­tual ba­sis to sup­port govern­ment in­ter­ven­tion," she said. "The ma­jor­ity's ap­proach will in­hibit the abil­ity of net­works to freely evolve and ex­per­i­ment."

Sen­a­tor Mitch McCon­nell of Ken­tucky, the Se­nate's Repub­li­can leader, called the vote "a first step in con­trol­ling how Amer­i­cans use the In­ter­net."

Rep­re­sen­ta­tive Fred Up­ton, a Michi­gan Repub­li­can who is to be­come chair­man of the En­ergy and Com­merce Com­mit­tee when Congress con­venes next year, said he would work "to strike down the FCC's brazen ef­fort to reg­u­late the In­ter­net."

Ge­na­chowski pro­posed the net-neu­tral­ity rules in Septem­ber 2009, and de­bate has ex­panded to in­volve Congress, courts and com­pa­nies. Net neu­tral­ity is the idea that cable and tele­phone com- pa­nies must treat all Web con­tent equally by not in­ter­fer­ing with the in­for­ma­tion their sub­scribers ac­cess on the Web.

Google, Ama­zon.com Inc. and Dish Net­work Corp. have said FCC rules are needed so that the telecom­mu­ni­ca­tions com­pa­nies that de­liver their con­tent, such as elec­tronic maps and on­line tele­vi­sion shows, don't fa­vor the In­ter­net ser­vice providers' own on­line prod­ucts or those of part­ners that pay for higher speeds. Com­cast, for ex­am­ple, will own movies if its pur­chase of NBC Uni­ver­sal is ap­proved by govern­ment of­fi­cials.

Google rose $8.01 to $603.07 as of 4 p.m. New York time in Nas­daq Stock Mar­ket trad­ing. Ama­zon gained $1.46 to $184.75.

In­ter­net car­ri­ers Com­cast, Ver­i­zon Com­mu­ni­ca­tions Inc., Ver­i­zon Wire­less and Time Warner Cable Inc. said rules may make it dif­fi­cult to man­age the grow­ing traf­fic on their net­works, and would limit in­vest­ment in new In­ter­net ca­pac­ity.

Com­cast in­creased 32 cents to $22.25 in Nas­daq Stock Mar­ket trad­ing. Ver­i­zon climbed 20 cents to $34.94, while AT&T dropped 6 cents to $29.07 in New York Stock Ex­change com­pos­ite trad­ing.

Ver­i­zon is "deeply con- cerned" with the FCC vote, which "ap­pears to as­sert broad author­ity for sweep­ing new reg­u­la­tion," Tom Tauke, the com­pany's ex­ec­u­tive vice pres­i­dent of pub­lic af­fairs, pol­icy and com­mu­ni­ca­tions, said in an e-mailed state­ment.

Com­cast Ex­ec­u­tive Vice Pres­i­dent David L. Co­hen said in a state­ment that the rules "ap­pear in­tended to strike a work­able bal­ance be­tween the needs of the mar­ket­place for cer­tainty and ev­ery­one's de­sire that In­ter­net open­ness be pre­served."

The com­pro­mise passed by the agency ap­pears to pro­vide cer­tainty needed for job cre­ation, "though a fi­nal view must await a care­ful read­ing of the FCC's or­der," Jim Cic­coni, AT&T se­nior ex­ec­u­tive vice pres­i­dent, said in an e-mailed state­ment.

Stephen Woz­niak, the co­founder of Ap­ple Inc. who trav­eled to Washington from his home near San Fran­cisco to at­tend to­day's FCC vote, told re­porters af­ter the meet­ing that the FCC should have passed more re­stric­tive rules.

For ex­am­ple, In­ter­net­ser­vice providers may block on­line con­sumers from re­ceiv­ing movies streamed by Net­flix, forc­ing users to watch movies owned by the telecom­mu­ni­ca­tions and tele­phone com­pa­nies, Woz­niak said. "Ev­ery nor­mal per­son in the United States knows this," he said.

The rules leave in­tact a sys­tem that lets car­ri­ers charge more when users con­sume large amounts of data, which will help In­ter­net-ser­vice providers to up­grade and main­tain net­works, said Re­becca Ar­bo­gast, an an­a­lyst at Stifel Ni­co­laus & Co. in Washington. Sub­scribers who con­sume con­tent that re­quires large amounts of data to de­liver, such as movies and on­line gam­ing, may bear part of the bur­den of in­creased ac­cess fees, said Craig Mof­fett, a New York-based an­a­lyst at San­ford C. Bern­stein & Co.

"The FCC does not have the le­gal author­ity to is­sue these rules," Robert McDow­ell, the other Repub­li­can com­mis­sioner at the FCC, said dur­ing the meet­ing to­day. "This new ef­fort will fail in court."

The rules drew crit­i­cism from Repub­li­cans in Congress. Texas Sen­a­tor Kay Bai­ley Hutchi­son, the top Repub­li­can on the Se­nate Com­merce Com­mit­tee, said in an e-mailed state­ment she would ask Congress to re­voke the rules, call­ing them "an un­prece­dented power-grab by the un­elected mem­bers" of FCC. -Bloomberg

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