Obama asks FCC to reclassify broadband as a vital service

President Barack Obama asked the Federal Communications Commission on Monday to set the "strongest possible rules" to protect net neutrality as the agency writes new Internet traffic regulations.

In a statement, Obama outlined a proposal that he hopes the FCC will implement to keep the Internet open and free. "I believe the FCC should create a new set of rules protecting net neutrality and ensuring that neither the cable company nor the phone company will be able to act as a gatekeeper, restricting what you can do or see online," he wrote.

Read More President Obama backs Title II for net neutrality in big win for activists

Following the president's announcement, shares for several cable companies fell. Comcast was down nearly 6 percent, Time Warner Cable dropped 7 percent and Verizon fell almost 2 percent.

Comcast is the parent company of NBCUniversal.

Read MoreCEOs beware of 'dark hotel' hackers

Obama's proposal urges the FCC to prohibit so-called paid prioritization, deals in which content providers pay Internet companies to ensure smooth delivery of traffic. He also asked the FCC to stop the practice of "throttling," when Internet service providers intentionally slow down some content while speeding up others.

Obama said the FCC should reclassify consumer broadband service to be regulated more like a public utility.

"If carefully designed, these rules should not create any undue burden for ISPs and can have clear, monitored exceptions for reasonable network management and for specialized services such as dedicated, mission-critical networks serving a hospital," Obama wrote.

Read MoreWhat is net neutrality?

Michael Powell, president of the National Cable and Telecommunications Association, said net neutrality policies should be made by Congress instead of the FCC and that the U.S. risks losing "high ground in arguing against greater control of the Internet by foreign governments."

President Obama addressed the threat posed by ISIS extremists, and immigration reform in a wide-ranging interview with NBC's Meet the Press.
Ints Kalnins | Reuters
President Obama addressed the threat posed by ISIS extremists, and immigration reform in a wide-ranging interview with NBC's Meet the Press.

The president also wrote that net neutrality rules should be fully applicable to mobile broadband as well, since people increasingly use mobile devices to access the internet.

FCC Chairman Tom Wheeler said in a statement that he welcomed Obama's suggestions and that he would incorporate them into the more than 4 million other comments the commission had received on the subject. He added that the commission was exploring hybrid approaches that combine the use of both Title II and Section 706 of the Telecommunications Act, which allows the FCC to promote broadband deployment.

"The reclassification and hybrid approaches before us raise substantive legal questions.... We must take the time to get the job done correctly, once and for all, in order to successfully protect consumers and innovators online," Wheeler said.

Read More Ready, set, shop! Alibaba gears up for Singles' Day

However, cable companies do not support the president's net neutrality proposal, warning that it will hinder competition and that the FCC already has enough power without Title II.

Verizon wrote that the company also "supports the open Internet" but believes the FCC "already has sufficient authority under Section 706 to adopt rules that address any practices that threaten harm to consumers or competition."

"Reclassification under Title II ... would be a radical reversal of course that would in and of itself threaten great harm to an open Internet, competition and innovation," said the company.

Time Warner Cable's CEO Rob Marcus agreed that the FCC already has "sufficient tools" to protect Internet openness and that the company disagrees with the president's statement.

AT&T executive Jim Cicconi said in a statement that he believed that net neutrality rules would "be a mistake that will do tremendous harm" and suggested that Internet regulations would be "more properly made by "Congress and not by unelected (FCC) regulators without any public record to support the change in regulation."

Sen. Ted Cruz, Republican of Texas, also weighed in on Twitter, comparing government regulation of the Internet to the controversial health-care law. "'Net Neutrality' is Obamacare for the Internet," Cruz tweeted. "The Internet should not operate at the speed of government."

—Reuters contributed to this report.