The new proposal, says FCC Chairman Tom Wheeler, would prevent broadband providers from blocking any legal Web content, but leaves the door open for those providers to negotiate deals with content providers (like Netflix or YouTube) to deliver faster Internet traffic, as long as it is considered “commercially reasonable”—a phrase that does not yet have a precise definition.
That part of the proposal leaves open the possibility that broadband providers could charge consumers more to access certain Internet services.
So, what are the key points in the new proposal?
1) The new rules are not really new. They are designed to fortify guidelines laid out in 2010, guidelines which were struck down by the D.C. Circuit, leaving a hole in the legislation (and much general confusion).
2) Thursday’s proposal does not mark closure of the debate. The public and companies will have a chance to weigh in on the rules at a later date (after May 15 when the commission has voted).
3) The FCC aims to protect consumers by governing what service is “commercially reasonable” for broadband providers to provide to both consumers and to their partners (like Netflix).
4) Any broadband companies flouting the “commercially reasonable” guidelines or abusing their power will come under FCC scrutiny and be tested for commercial reasonableness.
5) How will the commission define “commercial reasonableness”? On a conference call, an FCC Official said it will look at factors like the impact on future competition, the impact on free speech, general industry practices, and whether broadband providers are acting in good faith.
6) Even though many see this as opening the doors for the broadband providers to abuse their power, the FCC is trying to position it as encouraging investment in broadband services and innovation. It also believes greater transparency in the law will lead to a fairer playing field which will be good for consumers
7) The FCC anticipates that this will not lead to an increase in prices for consumers, but rather the opposite. It hopes that consumers will benefit from greater broadband investment and competition to provide services which will drive down the cost of services.
So how do content providers feel about the proposal? Most companies, likeGoogle, wouldn’t comment to CNBC, but Netflix said, “The proposed approach is the fastest lane to punish consumers and Internet innovators.”
—Reported by CNBC’s Harriet Taylor; written by CNBC’s Matt Hunter.