FCC's net neutrality plan alarms critics, but it's nothing new

FCC regulation of wireless industry didn't hurt business, and its net neutrality plan would take same approach

As AT&T and Verizon prepare to file lawsuits challenging regulation of the Internet as a public utility, here are the three main things the companies don't want you to know:

• There's nothing new about what the Federal Communications Commission is proposing.

• The exact regulatory approach has been used with wireless.

• The change didn't hurt business at all.

In 1993, there were about 16 million cellphone users nationwide. That same year, the FCC started regulating mobile voice service as a public utility, employing what commissioners said would be a "light touch" — the same approach that the agency now is proposing for broadband Internet service.

An inconvenient truth for critics of the FCC's Internet plan is that there are currently more than 335 million mobile devices in use. And the wireless industry boasts that 97% of Americans can choose from at least three service providers.

The regulatory switch, in other words, did nothing to hamper innovation, investment or growth.

"For more than 20 years, wireless phone companies have not only survived but thrived under similar FCC rules for voice communication," said Emily Rusch, executive director of the California Public Interest Research Group. "The FCC's new proposal on broadband protects an open Internet for all consumers."

FCC Chairman Tom Wheeler has proposed reclassifying broadband Internet service as a telecommunications service, rather than an information service, under Title II of the Telecommunications Act.

The upshot of that change would be that the Internet would be considered a public utility, giving regulators a stronger hand in making sure that user privacy is protected and that all content is treated equally by network operators, the basic concept of what is known as network neutrality.

Wheeler made clear that the FCC's goal isn't to ride roughshod over cable and phone companies. He pledged not to interfere with broadband prices or meddle in other basic business decisions.

The commission is expected to vote on the proposal at its Feb. 26 meeting.

But the behemoths of the telecom world already are painting the move in apocalyptic terms and are pledging to tie things up in court for as long as possible.

Hank Hultquist, AT&T's vice president of federal regulatory affairs, said the FCC has embarked on "a road to nowhere." He warned that commissioners "are only deceiving themselves" if they believe regulating the Internet as a utility would hold up in court.

Verizon said in a recent statement that the FCC's change would result in "strong legal challenges" and inflict "great harm" on the Internet.

As if that didn't sufficiently ratchet up the hyperbole to Chicken Little levels, Ajit Pai, one of the five-member commission's two Republican members, said last week that Wheeler's proposal constitutes a "secret plan to regulate the Internet" that "opens the door to billions of dollars in new taxes."

Sen. Ted Cruz (R-Texas) called the proposal "Obamacare for the Internet."

Heavy breathing aside, here's what's really at stake: The telecom industry and its political allies think that a handful of huge companies should pick the winners and losers of the Internet, and they'll do everything possible to maintain the status quo.

Ironically, the industry can blame Verizon for where we are now. In 2010, Verizon sued the FCC after the commission took a first stab at ensuring net neutrality. Verizon argued that the agency had overstepped its bounds.

An appeals court ruled last year in Verizon's favor. But it also said that if the FCC wanted net neutrality, it had all the authority it needed by just reclassifying the Internet as a utility. Boom.

Contrary to what critics of the commission say, this isn't some power grab by crazed bureaucrats. The FCC worries — correctly — that too much market power has been consolidated in the hands of too few industry players.

Comcast, for example, is the country's largest cable company and is now in the process of trying to buy its nearest rival, Time Warner Cable. Comcast also owns Universal Studios, NBC and 15 cable networks, not to mention co-owning Hulu, one of the top streaming-video services.

What's to stop Comcast from, say, making sure Hulu is streamed more reliably into homes than Netflix or Amazon Prime? Or from charging Netflix and Amazon extra to match Hulu's speed and reliability? Would online versions of Comcast's channels enjoy an unfair advantage over the channels of other content companies?

Those are precisely the questions the FCC hopes to answer by imposing a firm net neutrality rule, yet setting "light touch" boundaries for the commission's jurisdiction, just as it did for wireless services.

"The phone and cable companies want to dictate terms to content providers," said Mark Toney, executive director of the Utility Reform Network, a San Francisco advocacy group. "They want to call all the shots. They know they lose that control under reclassification."

Keep that in mind over coming days as the likes of Comcast, AT&T and Verizon unleash a PR blitz to convince you that the Internet as you know it is coming to an end.

It isn't. Not even close.

The only question here is whether you trust the phone and cable industries to act in the best interests of consumers, or whether you think a little adult supervision is required to make sure the Internet remains a level playing field for all content providers.

The FCC has cooked up a regulatory solution that meets Internet users' needs without restricting network companies' legitimate operating requirements.

The wireless industry swore back in 1993 that regulating mobile voice service as a utility would be a death blow for innovation and investment.

That totally cool smartphone in your pocket shows how wrong they were.

David Lazarus' column runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5 and followed on Twitter @Davidlaz. Send your tips or feedback to david.lazarus@latimes.com.

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