FCC chairman weighing options on 'Net neutrality

Financial innovation was a buzz phrase not so long ago as faith in deregulation helped clear the way for too much risk-taking by large financial companies. The downside of deregulation became clear mostly in hindsight, when we realized how it had fueled a housing bubble and helped crash the economy.

Could we also be risking harm from putting too much faith in a deregulated telecommunications sector - in particular, from Washington's failure to set clear standards to keep the Internet from being dominated by a handful of powerful cable and phone companies?

That's the fear of many open-Internet advocates as the Federal Communications Commission weighs its latest options in the circuitous battle over network neutrality - the principle that network owners should treat all data equally as it flows through their systems.

On Wednesday, FCC chairman Tom Wheeler left his Washington office to visit "Occupy FCC" protesters camped outside to make their point. To "Save the Internet," as their banners proclaimed, they want Wheeler to alter a proposal he planned to announce Thursday that is expected to allow network owners to charge some companies for an Internet "fast lane," implicitly shunting other, nonpaying or less-paying traffic to slower routes.

After an appeals court rejected the FCC's last attempt at neutrality rules, which sought to bar such practices via a light-touch approach known as Title I - a section of federal law that applies to "information services" - many advocates have been urging Wheeler to shift gears.

In particular, groups such as Public Knowledge want the FCC to impose Title II regulation, which applies to "telecommunications services." Doing so would treat broadband networks as common carriers - the same way phone companies were treated in the high-speed Internet's early years.

Since former FCC chairman Michael Powell pushed for looser regulation for phone and cable broadband in the early 2000s, net neutrality has become a rallying cry for many from across the political spectrum. It has also been embraced by many of the Internet era's biggest names - giants such as Google, Amazon, and Facebook that are rich enough to pay the network owners' tolls but that, to their credit, have backed a principle making it easier for upstarts to threaten their turf.

The network owners' stance has, at best, been more ambiguous. Though they say they still favor an "open Internet," more than two dozen network CEOs warned Wheeler that using Title II to enforce net neutrality "would impose great costs, allowing unprecedented government micromanagers of all aspects of the Internet economy."

Among their fears: that using Title II would mean a return to the kinds of rules adopted in the 1990s, when phone companies were required to lease wholesale access to their copper-wire networks so competitors could use them to offer DSL service.

Harold Feld, senior vice president of Public Knowledge, says such fears are overblown. "That ship has sailed - there's just not a constituency for it," he told me.

Feld says reclassifying broadband as a telecom service is a crucial first step toward requiring neutrality. "It was a mistake for the FCC to ever say otherwise," he says.

Some of his prominent allies, including Columbia University law professor Tim Wu, suggest Wheeler could do the same without a formal reclassification - at least for now.

To Wu, who first developed the net-neutrality concept, the key issue is the standard, not how the agency gets there. He notes that Internet innovation thrived when Title II applied, as well as more recently. "I don't think it makes a difference."

But Wu doesn't want Wheeler to allow a fast lane, which he likens to proposals for "paid prioritization" that first concerned him years ago.

Sure, the network owners would like to make higher profits, he says. "But there's no reason to think we need to tax the most innovative part of the U.S. economy to give them more money."