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U.S. regulator adopts Internet traffic rules

Federal Communications Commission Chairman Julius Genachowski

Chip Somodevilla/2010 Getty Images

The Federal Communications Commission is setting out to regulate the Internet, but the ambitious move guarantees the agency months and perhaps years of intense political resistance, corporate backlash and consumer frustration.

The FCC, the United States' telecommunications regulator, has stepped into the controversial debate over "net neutrality," a principle generally associated with an open and unrestricted Internet.

On Tuesday, the agency, chaired by Julius Genachowski, adopted a set of principles that will form the bedrock of U.S. Internet policy. The announcement attempts to carve a middle-of-the-road path through a minefield of powerful political and corporate interests, made more complicated by the rapidly changing nature of both the network technologies in question and consumers' habits. For example, more consumers are watching online video that threatens revenue to TV services owned by the same companies providing Internet access.

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Under the new rules Internet Service Providers are not allowed to block lawful content on their wired networks. They can, however, slow down or speed up certain types of traffic - a tactic critics have slammed as an Internet "fast lane" of better service for those who can afford it, essentially ending the open access philosophy of the Internet. The FCC board narrowly approved the new policy, which will almost certainly be challenged in court and altered by Republicans in Congress.

The new rules, however, are subject to the application of a vague "unreasonable discrimination" clause, which essentially puts discretion in the hands of the FCC; and also to an allowance for traffic "management," within which telecom providers could theoretically slow down certain services to ensure networks run smoothly. The wireless Internet, a growing area that includes increasingly popular smart phones, will remain much less regulated, as it currently is in Canada.

Reaction to the policy changes, which are already the norm north of the border, have created a political furor: Democrats and grassroots Internet activists both feel the rules don't go far enough to ensuring equitable access to the Internet in an era where powerful, for-profit companies control key network infrastructure and are trying to monetize multi-billion dollar investments; their Republican rivals, meanwhile, fear creeping, nanny state regulation will stifle innovation among some of corporate America's largest players, companies such as Google Inc., Verizon Communications Inc. and Comcast Corp.

The fierce response is unsurprising given the stakes involved: The idea that the Internet could split along income lines violates the egalitarian ethos behind the Internet. At the same time, the Internet is big business - a vast web of complicated financial relationships between carriers like Verizon and a myriad of companies, such as search engine giant Google and online video-streaming service Netflix, which want a regulatory and legal process that protects Internet use as it benefits the company's shareholders.

"It's subject to 'reasonable' network management," says John Lawford, a public policy lawyer who argues frequently before the Canadian telecom regulator. "Everyone's going to fight about what that is, from now until the end of time."

This has been demonstrated by past tactics struck down by the FCC, such as North Carolina phone company Madison River banning Vonage's voice over Internet protocol (VoIP) phone service over its network in 2005. Customers of Comcast also accused the company of interfering with traffic generated by file-sharing service Bit Torrent, which Comcast customers were using to download video that could have posed a competitive threat to Comcast's cable TV service.

Canada has already adopted a similar regulatory framework, one in which Internet providers are not supposed to tamper with Internet content traffic, except for network management purposes.

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