(Bloomberg) — The U.S. Federal Communications Commission swept aside rules barring broadband providers from favoring the internet traffic of websites willing to pay for speedier service, sending the future of net neutrality on to a likely court challenge.
The Republican-led commission voted 3-to-2 on Thursday to remove Obama-era prohibitions on blocking web traffic, slowing it or demanding payment for faster passage via their networks. Over objections from its Democrats, the FCC gave up most authority over broadband providers such as AT&T Inc. and Comcast Corp. and handed enforcement to other agencies. The changes won’t take place for at least two months.
“It is time for us to restore internet freedom,” said FCC Chairman Ajit Pai, who was chosen by President Donald Trump to lead the agency, and who dissented when the FCC adopted the rules under Democratic leadership in 2015. “We are restoring the light-touch framework that has governed the internet for most of its existence.”
“This decision puts the Federal Communications Commission on the wrong side of history, the wrong side of the law, and the wrong side of the American public,” said Jessica Rosenworcel, a Democratic member who voted against changing the rules.
The change frees broadband providers to begin charging websites for smooth passage over their networks. Critics said that threatens to pose barriers for smaller companies and startups, which can’t afford fees that established web companies may pay to broadband providers, or won’t have the heft to brush aside demands for payment. Broadband providers said they have no plans for anti-competitive “fast lanes,” since consumers demand unfettered web access.
The FCC’s vote concludes a tumultuous eight-month passage since Pai, proposed gutting the earlier rules. The agency took in nearly 24 million comments, but many of those appeared to be of dubious origin including almost half a million routed through Russia. Dozens of Democratic lawmakers expressed opposition, while Republicans lauded Pai’s plan.
The FCC’s action will “return the internet to a consumer-driven marketplace free of innovation-stifling regulations,” Senate Majority Leader Mitch McConnell, a Kentucky Republican, said in remarks prepared before the agency’s vote.
Democratic Senator Amy Klobuchar, of Minnesota, said the FCC with its vote “will put internet service providers, not consumers, in charge of determining the future of the internet.”
Pai argued that the Obama-era rules brought needless government intrusion to a thriving sector, and discouraged investment in broadband. Supporters said investment has flowed unhindered, and that rules are needed to keep internet service providers from unfairly exploiting their position as gateways to homes and businesses.
The FCC with its 2015 rules claimed powers that could include regulating rates charged by internet service providers. The agency said it wouldn’t immediately do so, but the prospect helped propel broadband providers’ opposition.
The cable and telephone companies also criticized the breadth of what critics called utility-style regulations, including a portion written to allow the FCC to vet data-handling practices it couldn’t yet envision. Companies supporting Pai’s rollback proposal included AT&T, Verizon Communications Inc. and cable providers led by Comcast and Charter Communications Inc.
Web companies such as Alphabet Inc.’s Google, Facebook Inc. and Amazon.com Inc. wanted to keep the previous regulations. “Having clear, legally sustainable rules in place finally established rules of the road and provided legal certainty,” the Internet Association, a trade group for web companies, said in comments to the FCC. “The commission should maintain its existing net neutrality rules and must not weaken their firm legal basis.”
With its vote the FCC rescinded its 2015 decision to treat internet service providers using a portion of the laws designed to regulate utilities. Much of the debate over net neutrality has revolved around this question of classification: whether Washington regulators can wield the kind of intrusive rulemaking that’s also used, for instance, to tell telephone providers when and where they can stop offering service.
The FCC also abandoned the bulk of its oversight role, saying antitrust authorities and the Federal Trade Commission can monitor for anti-competitive practices. Critics say those agencies don’t have expertise and act only after abuses occur, rather than setting rules that guide behavior.
In addition, the authority of the FTC is under question in a case before federal judges in California, where AT&T is contesting a sanction from the FTC for deceiving smartphone consumers who paid for unlimited data only to have their download speeds cut.
Opponents of Pai’s rules are expected to ask U.S. judges to overturn the ruling and restore the old rules. Issues before the judges will include whether the FCC has adequate grounds to reverse a decision taken less than three years earlier. Judges last year upheld the previous rules.
Congress could write a law to overrule the FCC’s action, but it hasn’t acted as Democrats dismiss Republican invitations to legislate to a permanently weaken the 2015 rules. The Democrats’ “wall of resistance” may weaken in the new year after partisan fervor heightened by Thursday’s vote has a chance to abate, Cowen & Co. analyst Paul Gallant said in a Nov. 21 note. A bill might restore some basic net neutrality protections and also bar the FCC from regulating rates, Gallant said.
The new rules are to take effect 60 days after being published in the Federal Register that chronicles regulatory activity, the FCC said in its draft order for Thursday’s vote.
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(Bloomberg) — Someone was trying to game the U.S. Federal Communications Commission’s electronic public comment system on net-neutrality rules.
But who? Was it supporters or foes of the open internet rules — or was it the Russians?
A study has found more than 7.75 million comments were submitted from email domains attributed to FakeMailGenerator.com, and they had nearly identical wording. The FCC says some of the nearly 23 million comments on Chairman Ajit Pai’s proposal to gut Obama-era rules were filed under the same name more than 90 times each.
And then there were the 444,938 from Russian email addresses, which also raised eyebrows, even though it’s unclear if they were from actual Russian citizens or computer bots originating in the U.S. or elsewhere.
The oddities in the FCC’s inbox have attracted scrutiny from New York’s attorney general and from the U.S. Government Accountability Office, which has opened a probe.
“In an era where foreign governments have indisputably tried to use the internet and social media to influence our elections, federal and state governments should be working together to ensure that malevolent actors cannot subvert our administrative agencies’ decision-making processes,” New York Attorney General Eric Schneiderman said in an open letter to the FCC.
Schneiderman said the FCC had not cooperated with his investigation.
Brian Hart, an FCC spokesman, called Schneiderman’s facts “completely inaccurate.” Hart said in an email that there had been “concerning activity” regarding public comments on both sides of the issue.
“The most suspicious activity has been by those supporting internet regulation,” Hart said. “We do not purge form letters, such as these, from the record as we err on the side of keeping the public record open and do not have the resources to investigate every comment that is filed.”
Many submissions seemed to include false or misleading personal information, with 57 percent of comments analyzed using temporary or duplicate email addresses, the Pew Research Center said in a study published Wednesday.
There’s “clear evidence of organized campaigns to flood the comments with repeated messages,” Pew said in its study that found 94 percent of comments were submitted multiple times — in some cases, hundreds of thousands of times.
Schneiderman, in his letter to the FCC, said he was “investigating who perpetrated a massive scheme to corrupt the FCC’s notice and comment process through the misuse of enormous numbers of real New Yorkers’ and other Americans’ identities.”
The Government Accountability Office is looking into missing emails, automated comments using peoples’ identities without their knowledge and a service interruption suffered in May to the FCC’s comments filing system, said Charles Young, a spokesman for the agency that serves as Congress’s investigative branch. Requests for the probe came from House Democrats and Senator Brian Schatz, a Hawaii Democrat.
Meanwhile, the strange filings are ammunition for critics of Pai’s proposal to kill the current rules and let broadband providers block or slow websites. The proposal faces a Dec. 14 vote at the agency where it’s expected to succeed with votes from the Republican majority Pai leads.
“There’s something not right in the @FCC record,” FCC Commissioner Jessica Rosenworcel, a Democrat, said in a Nov. 22 tweet that cited “bots, bogus comments, stolen names.”
The FCC’s website shows it received almost 23 million comments by late Tuesday on its net neutrality proposal. In August, after 21.8 million had been received, the trade group Broadband for America, backed by AT&T, Comcast Corp., and cable and wireless trade groups, released an analysis conducted by Emprata LLC, a data-analytics consulting firm.
Emprata found almost 7.6 million comments saying “I am in favor of strong net neutrality under Title II of the Telecommunications Act.”
Another set of 1.4 million took the opposite view, saying “I strongly urge the FCC to repeal” the rules.
Given the fact that the rules apply to the U.S., an unusual number of comments — 1.74 million — were attributed to international addresses, with 444,938 from Russia and nearly as many from Germany, Emprata found. All but 25 of the emails from those countries were against repealing the 2015 rules.
The report presented no evidence that the comments were linked to the Russian government.U.S. intelligence agencies concluded that Russian President Vladimir Putin ordered a hacking campaign during the 2016 presidential election that sought to hurt Democrat Hillary Clinton.
“We did not investigate potential actors,” Paul Salasznyk, Emprata’s chief executive officer, said in an email. From the data, there is no way to determine the origin of those comments, or whether they were routed from different computers, he said.
A “vast majority” of all comments originated from form letters with exact or similar phrasing, according to Emprata. Personalized comments, or those that appeared only once in the docket, favored retaining the rules by a margin of 1.5 million versus 23,000 for repeal, according to the study.
Tim Karr, spokesman for the policy group Free Press that supports the 2015 rules, said, “There’s substantial evidence there was considerable tampering with the process.”
“The appearance of some impropriety gives Ajit Pai an excuse to reject the comments process,” Karr said.
Pai’s plan is based on the facts and the law, not the number of comments, the agency said in a statement.
“The commenting process is not an opinion poll — and for good reason,” it said.
Some stakeholders agree that the commentary system might not be the best judge of public sentiment given that it appears prone to misuse.
“We shouldn’t be making policy like we’re voting for ‘Dancing with the Stars,’” said Jonathan Spalter, president of the trade group US Telecom that has members including AT&T Inc. and Verizon Communications Inc.
The droves of computer-generated short-form comments favoring and opposing the rules repeal didn’t address vital legal issues, Randolph May, a former FCC associate general counsel and president of the Maryland-based Free State Foundation, which advocates for limited government, said in a blog post Nov. 27.
“Let’s get real — and be frank,” May said. He called arguments over the docket a “diversionary tactic” by those who lack confidence in their substantive arguments.
(Bloomberg) — Federal Communications Commission Chairman Ajit Pai’s plan to gut Obama-era net neutrality rules calls for handing off the job of policing broadband service to an agency with different powers and a different mandate.
Giving the Federal Trade Commission oversight for the web can make sense from Pai’s perspective: It’s a consumer-protection agency that already has taken action against high-speed internet providers.
But, there’s a key difference: The FCC sets rules designed to prevent bad behavior, while the FTC acts after wrongdoing has occurred. That distinction has become a flash point in the debate over Pai’s proposal, which would change the way the government regulates the internet with far-reaching implications for a host of industries.
Opponents say that reactive nature means the trade commission is too slow to oversee the rapidly evolving digital economy.
“It’s not adequate,” said Gigi Sohn, who helped write the current net neutrality rules as an FCC aide in 2015. “If you wait for a case to be through, you can be out of business.”
Others say Pai is bringing a powerful watchdog into the fray.
“There’s no doubt they can bring cases,” said Roslyn Layton, a visiting scholar with the American Enterprise Institute policy group in Washington. “The FTC has the right people” including economists “used to looking at all kinds of new arrangements” to enforce fair competition, Layton said.
Pai on Nov. 21 proposed killing the FCC’s 2015 net neutrality rules and allowing broadband providers such as AT&T Inc. and Comcast Corp. to block websites or charge more for faster speeds on their networks, as long as the companies disclose their practices. His proposal faces a Dec. 14 vote at the agency, and is likely to pass because Pai leads a three-member Republican majority.
The 188-page proposed order lays out disclosure requirements for broadband providers. The FTC could act to make sure the companies adhere to their promises, for instance by saying that failing to follow through as promised amounts to an unfair trade practice.
“Transparency amplifies the power of antitrust law and the FTC Act to deter and where needed remedy behavior that harms consumers,” according to the FCC’s proposed order.
“The FTC has great expertise in this issue” and has acted against companies that throttle data flows, Pai told Bloomberg Radio on Nov. 21. “They’ll be able to perform their consumer protection and pro-competition function.”
Both the FCC and FTC are run by bipartisan commissions made up of five commissioners, although the FTC is currently short three members. The president names one of the commissioners on each panel to serve as chairman while no more than three can be from the same political party. The FCC has a staff of 1,500 compared to the FTC’s 1,100 employees; both have budgets of about $300 million a year.
But the commissions have very different mandates and areas of expertise. The FCC, founded in 1934, has traditionally regulated industries such as cable television, telephone and broadcast companies. The FTC was created in 1914 and says it works “to protect consumers by preventing anti-competitive, deceptive, and unfair business practices” across a wide range of industries. Its recent actions have ranged from investigating multibillion dollar deals like Amazon.com Inc.’s takeover of Whole Foods Market to false advertising of dietary supplements.
The FTC says it has brought over 500 cases as the leading U.S. agency enforcing privacy and data security, helping to safeguard health, credit and financial information. It’s currently investigating Equifax Inc.’s data security practices following the massive cyber attack against the credit-reporting company. It has “strong technical expertise” in areas including social media, online advertising and internet searches, the agency said in comments to the FCC.
“The FTC stands ready to protect broadband subscribers from anti-competitive, unfair, or deceptive acts and practices just as we protect consumers in the rest of the internet ecosystem,” Maureen Ohlhausen, a Republican who is acting chairman of the FTC, said in an emailed message after Pai released his proposal.
In a 2015 agreement with the agency, for example, America Movil SAB’s TracFone Wireless unit agreed to pay $40 million to settle claims that it deceived consumers when it sold unlimited data plans and then slowed speeds after customers used fixed amounts.
The FTC sued AT&T over the same issue. An appeals court panel ruled last year that the FTC lacked authority to go after the company because the FCC’s net neutrality rules at the time eliminated the FTC’s jurisdiction. The FTC has appealed to the full court. The FCC has said a loss for the FTC in that case could “immunize” AT&T from FTC oversight of the company’s broadband services.
The FTC is divided along partisan lines over Pai’s plan.
Democratic FTC Commissioner Terrell McSweeny told Congress Nov. 1 that the FTC has expertise in antitrust matters and consumer protection, but “very real and significant limits” in policing online competition.
“It does not possess specialized subject-matter expertise in telecommunications, data network management practices, or in detecting instances of data discrimination,” McSweeny said. “That expertise is housed at the FCC.”
The FTC doesn’t have jurisdiction over common carriers — a designation assigned to broadband providers by the FCC’s 2015 rules, and one that would be lifted by Pai. Major providers still have common-carrier functions, such as voice telephone calls, and whether the FTC could regulate their broadband practices remains a topic of litigation, McSweeny said.
No ‘Wild West’
Broadband providers have said they have no intention of blocking lawful content or slowing rival sites. They will be pressured to keep their word by a combination of forces, including the FTC and competition among providers, Brendan Carr, a Republican FCC commissioner, said on a Nov. 22 broadcast on the C-SPAN cable network.
“We are not proposing to go to sort of a Wild West regime where broadband providers are free to run roughshod over consumers — far from it,” Carr said. “I’m confident the FTC can handle this.”
The FTC’s McSweeny, in comments to the FCC, said a trade commission investigation would happen only after competitive harm already has occurred.
It can be costly and difficult to resolve a problem — or even detect one, McSweeny said. “For example, how would a typical consumer be able to determine whether a slow or grainy download was caused by malfeasance or something routine and benign?”
Pai in a Nov. 22 interview on Fox News said the FTC may be just the agency to judge whether it’s harmful for a broadband provider to charge more for faster passage over its network.
“In some cases, you can imagine that kind of arrangement being pro-competitive, being good for startups and consumers. And in other cases it might not be so worthwhile,” Pai said. “And that’s exactly why the Federal Trade Commission is the better agency to investigate it.”
(Bloomberg) — Verizon Communications Inc. paid $4.5 billion for Yahoo! Inc.’s web businesses. Then it took a $500 million hit for post-acquisition costs. It’s poised to pay up again, thanks to a high-profile deal struck by Marissa Mayer when she ran the internet company.
Executives at the telecom giant are negotiating a bill they will likely owe Mozilla Corp., owner of the Firefox browser, after an expensive web search deal fell apart. Verizon could end up paying hundreds of millions of dollars, depending on how the agreement is interpreted, according to people familiar with the deal and online chat logs shared with Bloomberg. The bill could also come in lower, the people said.
Last week, Mozilla said its latest Firefox browser will rely on Google’s search engine as the default in the U.S. and three other countries. That broke a five-year contract Mozilla signed with Yahoo in 2014.
For search engines, like Yahoo and Alphabet Inc.’s Google, default placement in a browser provides a reliable pipeline of queries and ad revenue. Yahoo agreed to pay Mozilla about $375 million a year for five years for those rights in 2014. That contract had a clause, agreed to by Mayer, that let Mozilla walk away and still get paid if Yahoo was acquired and Mozilla could show the change of control damaged its brand and search experience, according to a person familiar with the situation. Verizon bought Yahoo earlier this year, bringing this part of the agreement into play.
After Mozilla replaced Yahoo with Google last week, a spokesman for Verizon’s new advertising division Oath said the company was “surprised” by Mozilla’s decision and was “in discussions” about the agreement. The two companies are hashing out terms of the deal, according to recent messages from former Mozilla executives on an alumni chat group that were shared with Bloomberg.
“Verizon is still negotiating getting out of the deal, and hasn’t yet,” one of the former Mozilla executives wrote to the group last week. “There are substantial costs to them no matter what.”
It’s likely Mozilla is still getting paid by Verizon while proceeding with an expanded partnership with Google, “and will be getting some revenue overlap,” the former executive added. “I’m basing this on conversations with senior leaders in the last month. Not on speculation.” Bloomberg contacted the former Mozilla executive, who declined to comment further.
For Verizon, the talks will center on how big those costs are. It could hit $750 million, in theory, if Verizon is on the hook for the remaining two years of the Yahoo deal. The telecom company may have to pay a lot less though, based on another aspect of Mayer’s deal that was reported by The New York Times in 2016. That publication described another clause: If Mozilla got a new search deal, Yahoo would have to cover the difference between what it paid Mozilla and what its new partner doled out. For example, if the new contract was worth, say, $275 million a year, then Yahoo would have to pay $100 million a year.
“We exercised our contractual right to terminate our agreement with Yahoo! based on a number of factors including doing what’s best for our brand, our effort to provide quality web search, and the broader content experience for our users,” Denelle Dixon, Mozilla’s chief business and legal officer, said in a statement. “We are confident in the future of Mozilla and have structured our commercial relationships to position us for continued growth and success.”
Mayer didn’t respond to a request for comment, and Google declined to say how much it’s paying Mozilla for the new deal announced earlier in November. Verizon’s Oath didn’t respond to requests for more details beyond its statement last week.
In 2014, Mayer won Mozilla over, in part, with an offer to pay about $100 million more than Mozilla got from its previous deal with Google. Part of Mozilla’s openness to the deal came after Google spurned it, according to a former Mozilla executive. Mozilla’s share of the browser market had started to slip and Google used that as leverage. That year, when Mozilla and Google were renegotiating their contract, the search giant proposed halving its annual fee, this person said. The former executive asked not to be identified discussing private matters.
Given Firefox’s small share of the U.S. browser market, it’s unlikely that Google is paying as much as $375 million a year.
“It’s largely a given that a Google deal would not bring as much revenue compared to the Yahoo deal,” another former Mozilla executive wrote last week on the group chat viewed by Bloomberg. “It is also safe to assume that this is a negotiated back out with Yahoo/Verizon, where the latter conceivably might still pay a chunk or two to Mozilla.”
(Bloomberg) — People who cheered the Federal Communications Commission’s move to reject Obama-era net neutrality rules Tuesday say the government already has all the power it needs to regulate internet service without another set of regulations.
And that power lies in the courts, as evidenced by the Justice Department lawsuit to block AT&T Inc.’s purchase of Time Warner Inc., announced just a day earlier. Antitrust law can keep the internet free, they say.
“There’s no reason for anyone to panic,” said Randolph May of the Maryland-based Free State Foundation, which advocates for limited government. “The Department of Justice and the Federal Trade Commission will be able to more than adequately perform that oversight function. The case that has been filed is a good example.”
Critics aren’t convinced and have promised to mount an aggressive campaign against FCC Chairman Ajit Pai’s decision to seek the elimination of the net neutrality rules.
“Antitrust cannot replace the value of open internet rules,” said Gene Kimmelman, the president and CEO of the policy group Public Knowledge. “It’s a much more limited tool and it applies only in a situation where there’s plenty of time to review behavior to discover if it’s discriminatory.”
And, without clear rules on how antitrust rules apply, there’s nothing to prevent the control of the internet by a small group of powerful companies, said Kimmelman, a former antitrust regulator with the Justice Department.
Internet service providers such as AT&T, Comcast and Verizon didn’t like the way the FCC imposed its open-internet rules, concerned that the broad power the agency adopted to regulate broadband service could be used to justify future regulation, including how much the companies charge for access, according to Matthew Schettenhelm, a litigation analyst with Bloomberg Intelligence.
Those companies lobbied for a move away from the rules established by a Democratic-run FCC and found a champion in Republican Pai, who said his draft order would restore freedom and eliminate “heavy-handed” regulations from the internet, requiring service providers to only be “transparent” about their practices.
Pai also said he would turn over enforcement of these policies to the Federal Trade Commission to “police ISPs, protect consumers, and promote competition, just as it did before 2015.”
On Wednesday, Pai acknowledged in an interview with Fox News that the free market may allow companies to charge extra for fast Internet. “In some cases, you can imagine that kind of arrangement being pro-competitive, being good for start-ups and consumers. And in other cases it might not be so worthwhile. And that’s exactly why the Federal Trade Commission is the better agency to investigate it,” he said. “They have a long tradition of investigating anti-competitive conduct.”
The FTC is the nation’s primary consumer-protection watchdog, bringing cases against firms over deceptive practices and privacy violations. It shares a mandate to enforce antitrust laws with the Justice Department.
Acting Federal Trade Commission Chairman Maureen K. Ohlhausen said in testimony before Congress earlier this month that her agency is up to the task. “Antitrust enforcement, by protecting the competitive process, can promote net neutrality — if that is what consumers want,” she said.
Democratic Commissioner Terrell McSweeny disagreed.
The agency “does not possess specialized subject matter expertise in telecommunications,” McSweeny told Congress. “That expertise is housed at the FCC. These are very real and significant limits to the effectiveness of the FTC’s tools.”
Herbert Hovenkamp, a professor at the University of Pennsylvania Law School and an expert on antitrust law, said that current laws would not prevent most of the things considered antithetical to net neutrality, including charging two different rates for difference classes of customers.
“When somebody says antitrust is going to pick up the slack they’re probably talking about future antitrust rules that have not been developed yet,” Hovenkamp said. “What the FCC is doing is handing it from a more qualified agency to a less qualified agency.”
“The antitrust division is not well-suited for terms and conditions that require ongoing supervision,” he added.
Evan Engstrom, executive director of the San Francisco-based startup advocacy group Engine, called Pai’s proposal “far out there” in its favoritism of internet service providers, or ISPs.
“You are handing over free rein to the ISPs to allow them to discriminate at will,” he said. “If an ISP wants to accept payment from a larger company to box out a competitor, they can do that.”
Engstrom said if the FCC passes the rules as expected, he and other open internet supporters will likely to continue the fight in Congress and the courts. “There’s a lot left to be done before we give up,” he said.
(Bloomberg) —Federal Communications Commission Chairman Ajit Pai will take a big step toward his goal of voiding Obama-era net neutrality regulations Tuesday when he submits his plan to the rest of the commission for a vote.
But the expected adoption of the plan by his fellow Republicans on the commission next month won’t end a debate that’s roiled the tech world for years. Aggrieved parties will try to save the regulations in federal court, where judges will decide whether the agency is within its rights to reverse a regulation it adopted little more than two years ago.
“There will be lawsuits — that’s a given,” said James Gattuso, a senior research fellow at the Heritage Foundation in Washington.
The expected vote on Dec. 14 will reignite a debate that’s extended for more than a decade as Washington grapples with how the internet has disrupted the phone and cable businesses.
Republicans and Internet service providers have fought the FCC’s rules, while Democrats and internet companies support them. The regulations bar broadband companies such as AT&T Inc. and Comcast Corp. from interfering with web traffic sent by Google, Facebook Inc. and others.
A court last year upheld the FCC’s 2015 decision to place broadband service providers under utility-style regulation. The FCC used that strong legal authority to bar the companies from slowing or blocking web traffic or charging for faster passage across their networks. Two earlier attempts to regulate web traffic were tossed by U.S. judges.
“Our current net neutrality rules are the product of a decade’s worth of work and three trips to the court. They are court-tested and wildly popular,” FCC Commissioner Jessica Rosenworcel, part of the agency’s Democratic minority, said in an email. “To wipe them out now is foolhardy and short-sighted.”
Pai’s Republican majority is almost certain to go along with the proposal to kill the rules that ban internet service providers from blocking or slowing web traffic, or demanding payment for speedier service.
Pai will seek to vacate the rules adopted in 2015, retaining only a portion that requires broadband providers to explain details of the service they are offering, said a person briefed on the matter, who asked not to be identified because the proposal isn’t yet public.
The move will hand a victory to such companies as AT&T and Comcast, which opposed the regulations from the start, arguing the rules discourage investment while exposing companies to a threat of heavier regulation including pricing mandates.
Legally, the agency can reverse its rules if it has a good reason.
“You can change your mind so long as you justify it and explain why the policy has changed,” said Christopher Yoo, a law professor at the University of Pennsylvania.
Broadband providers have said they support an open internet, and emphasized their opposition to the 2015 rules’ reliance on strong authority that leaves the companies under utility-style common carrier regulations. They say the rules give the FCC too much sway over their operations.
One aspect of the rules that may come before a court is whether they have dampened investment by broadband providers.
“If the court’s looking for something empirical that has changed, that may be the twig they hold onto,” said Gattuso, of the Heritage Foundation.
Pai, appointed chairman by President Donald Trump, has shared broadband providers’ criticism of the agency’s claim of utility-style authority, and said the rules led to a decline in investment by broadband companies.
“The more heavily you regulate something, the less of it you’re likely to get,” Pai said in an April speech. He said broadband investment declined by 5.6 percent, or $3.6 billion, between 2014 and 2016, and called the decline “extremely unusual.”
AT&T Chief Executive Officer Randall Stephenson in a January earnings call sounded a similar note, saying that “placing utility style regulation on our mobility and internet businesses, there is no way anybody could argue that that is not suppressive to investment.”
Rule supporters have pushed back. Wireless industry investments peaked in 2013, as carriers completed the bulk of deployments for the current generation of mobile connections known as 4G, according to the policy group Free Press, which supports the Obama-era rules.
Gigi Sohn, who helped write the current rules as an FCC aide, said the case will turn on whether consumers view their broadband internet access as some type of bundled service, replete with email and spam filters, or as “as a big dumb pipe.”
If it’s a dumb pipe, internet access is clearly a telecommunications service and the 2015 rules should stand, said Sohn.
Pai “is going to have to show that two-and-a-half years later people changed their mind, and that now they want want more — that they’re looking for some bundle of services,” Sohn said in an interview. “That’s going to be tough for him to show.”
“The big broadband providers will be free to double their prices,” she said in an emailed statement. With the change, they will be able to “extract extra tolls on fast lanes for online businesses.”
Tina Pelkey, an FCC spokeswoman, declined to comment.
The current regulations forbid broadband providers from blocking or slowing web traffic, or from charging higher fees in return for quicker passage over their networks.
Trump’s White House has opposed the rules. In July, as Pai’s critics protested, a White House spokesman said the administration “supports the FCC’s efforts to roll back burdensome, monopoly-era regulations.”
(Bloomberg) — The U.S. Federal Communications Commission next month is planning a vote to kill Obama-era rules demanding fair treatment of web traffic and may decide to vacate the regulations altogether, according to people familiar with the plans.
The move would reignite a years-long debate that has seen Republicans and broadband providers seeking to eliminate the rules, while Democrats and technology companies support them. The regulations passed in 2015 bar broadband providers such as AT&T Inc. and Comcast Corp. from interfering with web traffic sent by Google, Facebook Inc. and others.
FCC Chairman Ajit Pai, chosen by President Donald Trump, in April proposed gutting the rules and asked for public reaction. The agency has taken in more than 22 million comments on the matter.
Pai plans to seek a vote in December, said two people who asked not to be identified because the matter hasn’t been made public. As the head of a Republican majority, he is likely to win a vote on whatever he proposes.
One of the people said Pai may call for vacating the rules except for portions that mandate internet service providers inform customers about their practices — one of the more severe options that would please broadband providers. They argue the FCC’s rules aren’t needed and discourage investment, in part because they subject companies to complex and unpredictable regulations.
Democrats and technology companies say the rules are needed to make sure telecommunications providers don’t favor business partners or harm rivals.
The agency declined to comment on the timing of a vote. “We don’t have anything to report at this point,” said Tina Pelkey, a spokeswoman for the commission.
Pai in April proposed that the FCC end the designation of broadband companies as common carriers. That would remove the legal authority that underpins the net neutrality rules.
Pai could also choose not to find authority in the FCC’s powers to promote broadband. That would leave the rules without an apparent legal footing, leading in turn to a conclusion the agency lacks authority even to issue revised, less-stringent regulations.
The April proposal also asked the agency to consider lifting bans on blocking web traffic or on building “fast lanes” that favor those willing to pay more for faster service.
News of the December vote drew immediate reactions.
“Abandoning bipartisan net neutrality principles threatens to kill the streaming revolution and will hurt businesses, large and small, who are migrating to the cloud at record speeds,” said Chip Pickering, chief executive officer of the Incompas trade group with members including online shopping giant Amazon.com Inc. and video streamer Netflix Inc.
“Chairman Pai’s affection for AT&T and Comcast holds great political risk for President Trump and the entire Republican Party,” Pickering said in an emailed statement. “No one wants to see the internet turned into cable and have to pay more for streaming services they love.”
Commissioner Mignon Clyburn, part of the FCC’s Democratic minority, said the agency is headed down a “destructive path” that doesn’t help consumers.
“What consumers want is access to a free and open internet without fear of being throttled or assessed a toll by their broadband service provider,” Clyburn said in an emailed statement.
The current regulations forbid broadband providers from blocking or slowing web traffic, or from charging higher fees in return for quicker passage over their networks.
Supporters of the rules say they are needed to keep network owners from unfairly squelching rivals and discouraging web startups. Critics say the rules discourage investment while exposing companies to a threat of heavier regulation including pricing mandates, and that marketplace competition will discipline broadband providers.
The regulation survived a court challenge from broadband providers last year.
Trump’s White House has opposed the rules. In July, as Pai’s critics protested, a White House spokesman said the administration “supports the FCC’s efforts to roll back burdensome, monopoly-era regulations.”
(Bloomberg) — Interoute Communications Ltd, a pan-European fiber carrier and cloud-services operator controlled by the Sandoz Family Foundation, has hired financial advisers to evaluate a sale, according to people with knowledge of the matter.
Interoute is working with Credit Suisse and Evercore Inc. to explore a deal dubbed “Project Nitro,” said the people, asking not to be identified because the talks are private. The London-based company could be valued in a range of seven to 10 times earnings before interest, tax, depreciation and amortization, or as much as 1.65 billion euros ($1.95 billion), the people said.
The company owns and operates one of the largest independent European grids with 72,400 fiber-route kilometers spanning 29 countries, according to a document viewed by Bloomberg News.
Representatives for Interoute, Credit Suisse and Evercore declined to comment.
Interoute, whose clients include BT Group Plc, Vodafone Group Plc and AT&T Inc., reported 2016 revenue of 727 million euros and Ebitda of 147 million euros. The company had Ebitda of 165 million euros for the 12 months ending in the second quarter.
The Sandoz Family Foundation owns 70 percent of Interoute, while Aleph Capital and Crestview Partners together own 30 percent. In 2015 Interoute completed the acquisition of U.K. phone carrier Easynet Ltd, its largest purchase to date, adding revenue of about 240 million euros.