US cable groups win ground on net neutrality rules

By Stephanie Kirchgaessner in Washington, Richard Waters in San Francisco and Andrew Edgecliffe-Johnson in New York

Published: December 1 2010 16:08 | Last updated: December 2 2010 00:54

The US cable and mobile communications industries have won important concessions from regulators over proposed "net neutrality" rules, as part of a broader retreat by Barack Obama's administration from the tougher rules it had argued were needed to protect the openness of the internet.

The plan, endorsed by Julius Genachowski, chairman of the Federal Communications Commission, would remove uncertainty about the ability of cable companies to charge internet users and content providers for the amount of network capacity they use, which some analysts call "broadband rationing".

It would also allow mobile operators more freedom than regulators had originally proposed to favour some types of traffic on their networks over others, although it would prevent them from blocking services outright.

The relaxation of the FCC's proposals follows political opposition to stricter regulation that some feared would result in price controls, as well as a protracted battle with network companies who claimed it would discourage investment.

Mr Genachowski said a -proposal he announced at midnight on Tuesday to institute new regulations that would -protect internet companies such as Google from being blocked had already received support from leading technology and internet companies, as well as broadband and consumer groups.

Although the exact details of the plan have yet to be unveiled, analysts said the FCC had made two big concessions to US cable companies; freeing them from the threat of being regulated more closely in the way that telecommunications concerns are, and approval for the tiering practices that are already in place.

While the cable companies would not be able to discriminate against certain types of traffic on their networks, such as video, they might be able to charge companies like Walt Disney or -Netflix extra in return for guaranteeing quality, said Rebecca Arbogast, an analyst at Stifel Nicolaus.

"This was a key concern for the cable industry," she said. "I think it is a good win for them."

The plans gained cautious backing from cable and communications companies. Verizon applauded Mr Genachowski's change in direction, while warning that his plan might be subject to legal challenge.

Mr Genachowski's proposals will be put to the FCC's board of commissioners at a meeting on December 21. He is expected to win the support of two other Democratic commissioners at the five-member FCC even though both supported the adoption of more onerous restrictions on cable companies and other high speed internet providers.

Copyright The Financial Times Limited 2010.


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