After years of debate, the Federal Communications Commission adopted the first-ever regulations to forbid owners of high-speed lines and airwaves from favoring their services over competitors.
The rules are aimed at preserving open access to the Internet and allowing consumers the continued, unfettered use of such online services as Netflix and Hulu video and Skype and Vonage phone.
The FCC's action, in a 3-2 vote Tuesday along party lines, comes as consumers are increasingly using broadband Internet connections for both wired and wireless devices to watch TV shows, movies and video snippets — and even doing away with more costly pay television packages offered by phone and cable companies.
But the regulations aren't as heavy-handed as long feared by those providers, such as AT&T Inc. and Time Warner Cable Inc. To a great extent, the vote gave them some relief after years of heated argument over the need to regulate their control of Internet access.
"For far too long, the question of net neutrality has hamstrung the FCC and prevented needed action on far more urgent, and real, problems," said Jim Cicconi, an AT&T senior executive vice president. The vote "we trust, will put this issue behind us."
The FCC acted out of fear that some isolated instances of telecommunications companies restricting access to phone and other services from competitors would become more frequent. And that could change the Internet for the worse, said FCC Chairman Julius Genachowski.
"What we were trying to head off is changes that would close the Internet, stifle the incredible innovation and investment that we've seen," Genachowski said.
The rules prohibit phone and cable companies companies that provide high-speed Internet service from blocking access by their customers to any legal content, applications or services.
For wired services, the FCC added an additional rule prohibiting Internet providers from "unreasonable discrimination" in how they treat access to content and services. The rules are tougher on wired service because there are fewer providers and because the more competitive wireless market is in an earlier stage of development, though evolving quickly.
But opponents of the new regulations said the FCC was making a radical and illegal revision to federal policy.
Although the rules weren't as tough as the industry had feared, some telecom companies still are expected to challenge them in court. And key congressional Republicans said they would try to pass legislation overturning the regulations or prohibiting the FCC from using federal money to enforce them.
"Congress has not granted them this right to regulate the Internet," said Rep. Lee Terry (R-Neb.). He and other Republicans on the House Energy and Commerce Committee promised to summon all five FCC commissioners for hearings on the regulations as soon as possible.
The Internet has evolved into an economic dynamo because it has been free of restrictive government regulation, free-market advocates and other critics said. The new rules could stifle investment in expanding Internet access, open the door to even more government involvement and damage the Internet economy, they argued.
Verizon Communications Inc., said it was "deeply concerned" by the FCC's move into Internet regulation, which it doubted was legally solid.
The move "will yield continued uncertainty for industry, innovators and investors," said Tom Tauke, a Verizon executive vice president. "In the long run, that is harmful to consumers and the nation."
Some consumer and digital rights advocates were upset that there won't be even stronger government protections to prevent Internet service providers from squashing competitors. They're particularly upset that the new rules are less restrictive on wireless Internet access, an increasingly popular way to go online.
"The FCC order is a step forward, but not as large a step as it could have been," said Gigi Sohn, president of Public Knowledge, a digital rights advocacy group. "Consumers deserve better."
Democrats, online activists and large Internet companies such as Google Inc. have pressed for tough rules to guarantee continued open access to the Internet. President Obama was an early supporter of net neutrality, making it part of his 2008 campaign platform.
He praised the FCC's action Tuesday as helping "preserve the free and open nature of the Internet while encouraging innovation, protecting consumer choice and defending free speech."
The new regulations were a compromise proposal that Genachowski spent months crafting. Still, the FCC split along party lines in approving the new regulations before a standing-room-only crowd at its Washington headquarters.
Among those in the room was Apple Inc. co-founder Steve Wozniak, who said he flew in from California because preserving an open Internet was so important to him.
"I wish they could go further," he said. "I wish they could guarantee broadband to every American."
Although they pressed for tougher regulations, Democratic Commissioners Michael J. Copps and Mignon Clyburn joined Genachowski in approving the new rules. Copps echoed the criticism that wired and wireless Internet access would be treated differently.
"After all, the Internet is the Internet, no matter how you access it," Copps said.
But he said he concurred with Genachowski's proposal to move net neutrality forward before political pressures against it increase with Republicans taking control of the House in January.
The FCC's two Republicans voted against the plan. They said it was an unwarranted government intrusion into a fully functioning Internet economy that oversteps the agency's legal authority, following a court decision this year that struck down a less formal FCC principle that high-speed Internet providers should keep their networks open.
"The FCC is not Congress. We cannot make laws," said Commissioner Robert M. McDowell. "Some are saying that instead of acting as a cop on the beat, the FCC looks more like a regulatory vigilante."
Commissioner Meredith Atwell Baker was more direct, saying "Respectfully, I really, really, really dissent."