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Fallout From the FCC's “Net Neutrality” Proposal: What's Next?

"Net neutrality" is one of those buzzwords everyone loves to hate, and it represents an idea just as controversial: the question of how to regulate the Internet.

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Today FCC Chairman Julius Genachowski unveiled his proposal to regulate the Internet — a proposal the FCC will vote on December 21st.

These long-awaited regulations are less extreme, more of a compromise than than a previous proposal to reclassify broadband as a "Title 2" Telecom Service, which would give the FCC more regulatory power. And Genachowski also stressed that these aren't mean to be instead of any Senate legislation, but to complement them.

So what are these guidelines, and what do they mean for consumers, Internet Service Providers, and Content distributors?

Consumers:

Consumers who use more Internet, could pay their ISP more; Genachowski made it clear that he is comfortable with "usage-based pricing." Tiered models aren't unprecedented - AT&T offers two tiers for iPad Internet access — but they're rare when it comes to serving broadband to the home. Consumers will get a lot more transparency — the FCC would mandate that ISPs tell consumers how their networks are managed. And consumers wouldn't have to worry about legal sites being blocked because they use up too much bandwidth — the FCC is stressing "the right to send and receive lawful content."

Internet Service Providers:

Internet service providers like Comcast and Verizon seem to be breaking a big sigh of relief that the FCC is no longer pushing to reclassify broadband under the tighter "Title 2" regulations, which would give the FCC far more regulatory power. Comcast issued a statement in support of Genachowski's "limited approach," saying "we believe Chairman Genachowski's proposal strikes a workable balance between the needs of the marketplace and the certainty that carefully-crafted and limited rules can provide to ensure that Internet freedom and openness."

Verizon also issued a statement of support, but notably, it questioned the FCC's authority to weigh in on Internet regulation. In a statement Verizon says "This issue should be addressed by Congress... If the FCC decides to act on the net neutrality issue, we urge the commissioners to recognize the limitations of the current statute."

Content Streamers:Google's YouTube, Netflix, Hulu.

The FCC has sent around dozens of statements of support, from the likes of venture capitalist John Doerr, Craigslist founder Craig Newmark, Microsoft, and the Internet Innovation Alliance. Google and Netflix haven't weighed in. These companies that stream video over the web have always backed 'Net Neutrality' and they certainly want their video streams to get equal treatment as the transmission of less costly data. The question is, will they have to absorb some of the costs if ISP's start charging more to consumers who use more bandwidth?

What next?

This battle is far from over: we can expect plenty of resistance, and perhaps even legal challenges to the FCC's jurisdiction over the Internet. The focus will be on what legislation Congress passes. Today's rules are quite similar to the compromise Representative Henry Waxman struck this fall. Watch that space for rules that are less likely to be challenged.

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