UPDATE 4-U.S. FCC commissioners support open Internet rule

Thu Oct 22, 2009 3:22pm EDT

* All 5 commissioners vote to seek public comment on rule

* Two Republican commissioners have some reservations

* Draft rule would allow for 'reasonable' net management

* Public comments accepted until Jan. 14

* Telecom firms worry rule would hamper network management (Adds vote by commissioners, quotes, background)

By John Poirier and Sinead Carew

WASHINGTON/CHICAGO, Oct 22 (Reuters) - U.S. communications regulators voted unanimously Thursday to support an open Internet rule that would prevent telecom network operators from barring or blocking content based on the revenue it generates.

The proposed rule now goes to the public for comment until Jan. 14, after which the Federal Communications Commissions will review the feedback and possibly seek more comment. A final rule is not expected until the spring of next year.

"I am pleased that there is broad agreement inside the commission that we should move forward with a healthy and transparent process on an open Internet," FCC Chairman Julius Genachowski said.

The vote came despite a flurry of lobbying against the net neutrality rule by telecommunications service providers like AT&T Inc (T.N), Verizon Communications Inc (VZ.N) and Qwest Communications International Inc (Q.N), which say it would strip them of the ability to manage their networks effectively and would stifle innovation and competition.

The rule would prevent operators from discriminating against any legal content a third party wants to deliver to consumers on their networks, though it allows for "reasonable" network management to unclog congestion, clear viruses and spam, and block unlawful content like child pornography or the transfer of pirated content.

The full FCC slate of three Democrats, led by Genachowski, and two Republicans voted in favor of issuing a proposed network neutrality rule for public comment.

But the two Republicans, Robert McDowell and Meredith Attwell Baker, did express concern with the content of the rule, saying they do not share the majority's view that the Internet is showing breaks and cracks and that the government is the best tool to fix it. They also questioned whether the FCC has the legal authority to regulate the Internet network.

Nonetheless, the vote was 5-to-0 for proceeding with the rulemaking, and 3-to-2 for approving the notice's language in its entirety, said Jen Howard, an FCC spokesman.

The FCC will accept public comments until Jan. 14; then it will review them and can ask for further comment, with replies due by March 5.

"We commend the FCC for beginning the process," said Senators Byron Dorgan, a North Dakota Democrat, and Olympia Snowe, a Maine Republican, in a joint statement. They proposed a net neutrality bill in the last session of Congress.

NET NEUTRALITY

Advocates of net neutrality such as Google Inc (GOOG.O), Amazon.com Inc (AMZN.O) and public interest groups say Internet service providers must be barred from blocking or slowing traffic according to how much revenue the content generates.

But service providers say the increasing volume of bandwidth-hogging services, such as video sharing, requires active management of their networks.

AT&T President of Operations John Stankey said he is anticipating the rule with as much dread as if he were going to the funeral of a dear friend.

"Regulators should understand that there's plenty of competition in this market," Stankey said at the Supercomm trade show in Chicago.

Verizon Communications warned of unintended consequences from government rulemaking and added it is seeking "common ground" with others in the industry on policies that would apply to all.

"The Internet ecosystem is serving consumers very well, and there is no problem that requires new government regulation," said Tom Tauke, executive vice president of policy and communications.

Late on Wednesday, Verizon Wireless softened its opposition by issuing a joint policy blog statement with Google. They said they believe it is essential that the Internet remain an unrestricted and open platform.

Google and Verizon Wireless, a joint venture of Verizon Communications and Vodafone Group Plc (VOD.L), are partnering to develop an Android-based mobile phone.

"We have cleared the first hurdle in this process, and are on the road towards creating a framework that promotes innovation and consumer choice on the Internet," said the Washington-based Open Internet Coalition, which represents Google, Amazon and eBay Inc (EBAY.O).

With the threat of of a court fight looming, Democrats in Congress are mulling legislative options to promote net neutrality. But Senator John McCain, an Arizona Republican, said he introduced legislation on Thursday aimed at prohibiting the FCC from enacting rules to regulate the Internet. (Additional reporting by Steve Holland; Editing by Tiffany Wu and Gerald E. McCormick, Phil Berlowitz)