Why FCC Net-Neutrality Reversal Could Later Be Reversed Again

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The Republican-led Federal Communications Commission may overreach in dismantling Obama administration net-neutrality rules, thereby fueling a future counter-reversal by a Democratic majority agency, says a longtime cable TV industry analyst.

[ibd-display-video id=2892160 width=50 float=left autostart=true] Craig Moffett, analyst at MoffettNathanson, says FCC Chairman Ajit Pai jettisoned some pre-Obama existing internet rules, such as equal treatment of web content, that could go beyond the pale.

"To judge by the public commentary, even the (service providers) themselves seem to suspect that this seeming good fortune will prove transitory. A more limited reversal might have stood a better chance of standing for a while," Moffett said in a note to clients.

"One obvious problem with anything out of the FCC on what has become such a hyperpartisan topic is that it can so easily be reversed by the next (Democratic) FCC," he added.

Most observers had expected Pai would eliminate so-called "Title 2" regulations brought by the FCC under President Obama that put internet service providers in the same camp as public utilities. Few expected Pai to reach beyond Obama-era enforcement.

The FCC will vote on Pai's proposal at its Dec. 14 meeting. Pai says the changes will encourage more broadband investment by service providers.

Net-neutrality rules have been a political hot potato for over a decade. They've focused on consumer access to websites, the speed of web connections, and whether internet service providers can charge content firms or business partners for superior network performance.

Back-and-forth regulatory shifts may not be what investors or broadband service providers need, says Moffett.

"One can't imagine that there are any broadband providers who would be eager to test the limits of what is now allowable under this regulatory regime, given the enormous risk of popular and/or regulatory or legislative backlash," he said.

Comcast ( CMCSA ), in a statement on Tuesday, noted: "Independent of any FCC action, Comcast's commitment to our customers remains the same: We do not and will not block, throttle, or discriminate against lawful content."

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Under Pai's proposal, service providers may be able to charge content providers or business partners fees for "prioritized" services. Some regulatory authority on consumer protection would shift to the Federal Trade Commission.

Pai says new "transparency" rules requiring policy disclosures by service providers will protect consumers.

Moffett says it is unlikely Congress will step in to deal with net-neutrality issues on a bipartisan basis.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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