On one side are technologists, preaching that open access to unlimited Internet bandwidth is the bedrock of innovation for a 21st-century economy — and is under threat.
On the other are telecommunications giants that say they are equally committed to an unrestricted Internet but face the challenge of squeezing more and more streamed movies and cable show binges through networks they constantly must beef up.
In the middle, regulators are refereeing a debate that could come to yet another tipping point this month. On May 15, the Federal Communications Commission is set to propose new rules requiring Internet service providers to disclose how they manage and prioritize Web traffic while allowing them to strike "commercially reasonable" deals to juggle demand for bandwidth.
FCC Chairman Tom Wheeler tried to allay fears last week that the rules could lead to a so-called pay-to-play "fast lane" of speedy Internet for Web giants that can afford it, but some still fear the forthcoming regulations leave room for unequal treatment of Web traffic. Entrepreneurs for whom the Internet is a vital marketplace say that could end the freedom that offers anyone with a good idea the ability to create the next YouTube or Netflix.
"The nature of innovation is about creating things no one has expected and creating things we can't necessarily predict," said Alexis Ohanian, the Columbia native who co-founded the online message board reddit. "It's not just a company now that would be hampered. It's all the ones that haven't been created."
Because the Internet developed outside traditional telecommunications regulations, it grew with few boundaries in the 1990s and through the turn of the century. But as the lines between cable, phone and Internet service blurred and the amount of data skyrocketed, a regulatory gray area grew.
Decisions by the FCC and the Supreme Court in the early 2000s left cable-based Internet access unregulated, and phone-based DSL service joined it in 2005. But the FCC has moved since to assert authority over broadband Internet providers and set rules for what is known as Net neutrality, the concept that all Internet traffic should be given equal priority on networks.
But in January, the U.S. Court of Appeals for the District of Columbia Circuit struck down FCC "Open Internet" rules that broadly prohibited discrimination against Web traffic. The court said the FCC improperly treated Internet service providers as regulated public utilities providing telecommunications services, like telephone companies, while they actually were classified as information service providers.
Consumer advocates have called on the FCC to reclassify Internet providers as more heavily regulated telecommunications services, an idea that has faced resistance from the broadband industry and Republican lawmakers who urged the FCC to tread lightly.
Now the FCC has indicated it is rewriting the rules using different legal standards to support its authority, applying them only to deals between businesses on connections in the last leg of the network that reaches the consumer. The regulations have not been publicly detailed but are set to be formally proposed in the middle of the month and offered up for public comment after that.
But some critics worry that the commission's efforts won't resolve the issue.
While Wheeler dismissed the notion that the rules would allow Internet providers to create a "fast lane" of Web traffic, the rules are expected to permit some agreements between the network operators and content providers. Netflix recently struck deals with Comcast and Verizon to pay fees to ensure its videos are streamed smoothly.
"It's a very slippery slope," said Robert Wray, a Baltimore technology entrepreneur, of the idea that "commercially reasonable" deals will be allowed. "That's a very squeaky term you can find lots of ways to get around."
Many see the FCC action as an end to the Internet's "neutral" founding and the beginning of a future in which costs for higher priority on networks, and faster Internet speeds, will be passed along to businesses and consumers. And that puts innovation at risk, they argue.
"It really helps entrenched power become even more entrenched," said Scott Paley, managing partner of Baltimore digital marketing agency Abstract Edge. "It puts a lot of friction on the ability for a disrupting player to come in."
Rules like the ones being proposed might have hindered the growth of companies that have grown from startups to become household names, Wray said.
"How hard would it have been for Netflix to get funding … if investors knew these types of regulatory demands were in place?" he asked.
Broadband industry officials say fears of an Internet fast lane are unfounded. The industry, however, has begun to employ alternatives such as metered Internet usage, in which users pay based on how much data they use.
Verizon officials declined to comment because of a continuing lawsuit between the company and the FCC over its 2010 Net neutrality rules. Comcast officials declined to comment because the FCC has not revealed the details of its forthcoming rules.
But both companies pointed to statements on their websites supporting an open Internet.
Verizon is "committed to offering services that allow our customers to take full advantage of all of the lawful content and services that the Internet has to offer," according to its website.
On its site, Comcast emphasized that the Philadelphia-based company is bound by the FCC's 2010 rules, despite their reversal, as part of an agreement attached to its February deal to acquire Time Warner Cable.
"We supported the FCC's Open Internet rules because they struck the appropriate balance between consumer protection and reasonable network management rights for ISPs," wrote David L. Cohen, Comcast's executive vice president, in a post on the company's website in March. "We are now the only ISP in the country that is bound by them."
In a blog post Tuesday, Wheeler said the FCC would "shut down" broadband providers' efforts to degrade their service to create a new fast lane and would not tolerate degrading of service to push customers or content companies to a higher-priced tier.
As the public awaits more details, technology advocates are rallying supporters for the latest fight for Internet freedom. A petition to the White House has garnered more than 100,000 signatures asking for Internet providers to be considered "common carriers," a regulatory classification supporters say would allow the preservation of Net neutrality.
Not all entrepreneurs are tuned in to the issue, which can get buried in political and regulatory complexity, and whose consequences are unclear.
"Yeah, I'm an Internet guy, so maybe I should go get fired up," said Yair Flicker, president of Baltimore-based web and mobile application developer SmartLogic Solutions. "It's not going to impact me one way or the other just because of the small scale of the Internet our clients use."
Ohanian, whom Forbes dubbed "Mayor of the Internet" after he led a push against anti-piracy legislation that critics said would have stifled online free speech, is raising money through a campaign on CrowdTilt.com to place a pro-Net neutrality billboard near FCC headquarters in Washington. He said he hopes the push will spur more people to call and write to Congress and the FCC.
"The oligarchy of ISPs has a lot of lobbying dollars," Ohanian said. "The American people don't have a good lobbyist, but we have ourselves."
Reuters contributed to this article.
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