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Saturday, May 8, 2010

New U.S. Push to Regulate Internet Access


WASHINGTON—In a move that will stoke a battle over the future of the Internet, the federal government plans to propose regulating broadband lines under decades-old rules designed for traditional phone networks.

The decision, by Federal Communications Commission Chairman Julius Genachowski, is likely to trigger a vigorous lobbying battle, arraying big phone and cable companies and their allies on Capitol Hill against Silicon Valley giants and consumer advocates.

Breaking a deadlock within his agency, Mr. Genachowski is expected Thursday to outline his plan for regulating broadband lines. He wants to adopt "net neutrality" rules that require Internet providers like Comcast Corp. and AT&T Inc. to treat all traffic equally, and not to slow or block access to websites.

Amy Schatz and Spencer Ante discuss the federal government's plan to propose regulating broadband lines under decades-old rules designed for traditional phone networks. Plus, a live report from the Web 2.0 event and Yahoo's new ad blitz.
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* Digits: Appeals Court Deals Blow to Net Neutrality (04/06/10)

The decision has been eagerly awaited since a federal appeals court ruling last month cast doubt on the FCC's authority over broadband lines, throwing into question Mr. Genachowski's proposal to set new rules for how Internet traffic is managed. The court ruled the FCC had overstepped when it cited Comcast in 2008 for slowing some customers' Internet traffic.

In a nod to such concerns, the FCC said in a statement that Mr. Genachowski wouldn't apply the full brunt of existing phone regulations to Internet lines and that he would set "meaningful boundaries to guard against regulatory overreach."

Some senior Democratic lawmakers provided Mr. Genachowski with political cover for his decision Wednesday, suggesting they wouldn't be opposed to the FCC taking the re-regulation route towards net neutrality protections.

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FCC Chairman Julius Genachowski, whose authority over broadband lines has been questioned by a federal court, plans to use regulation on traditional phone networks to establish rules for Internet providers.

"The Commission should consider all viable options," wrote Sen. Jay Rockefeller (D, W.V.), chairman of the Senate Commerce Committee, and Rep. Henry Waxman (D, Calif.), chairman of the House Energy and Commerce Committee, in a letter.

At stake is how far the FCC can go to dictate the way Internet providers manage traffic on their multibillion-dollar networks. For the past decade or so, the FCC has maintained a mostly hands-off approach to Internet regulation.

Internet giants like Google Inc., Inc. and eBay Inc., which want to offer more Web video and other high-bandwidth services, have called for stronger action by the FCC to assure free access to websites.

Cable and telecommunications executives have warned that using land-line phone rules to govern their management of Internet traffic would lead them to cut billions of capital expenditure for their networks, slash jobs and go to court to fight the rules.

Consumer groups hailed the decision Wednesday, an abrupt change from recent days, when they'd bombarded the FCC chairman with emails and phone calls imploring him to fight phone and cable companies lobbyists.

"On the surface it looks like a win for Internet companies," said Rebecca Arbogast, an analyst with Stifel Nicolaus. "A lot will depend on the details of how this gets implemented."

Mr. Genachowski's proposal will have to go through a modified inquiry and rule-making process that will likely take months of public comment. But Ms. Arbogast said the rule is likely to be passed since it has the support of the two other Democratic commissioners.

President Barack Obama vowed during his campaign to support regulation to promote so-called net neutrality, and received significant campaign contributions from Silicon Valley. Mr. Genachowski, a Harvard Law School buddy of the president, proposed new net neutrality rules as his first major action as FCC chairman.

Telecom executives say privately that limits on their ability to change pricing would make it harder to convince shareholders that the returns from spending billions of dollars on improving a network are worth the cost.

Carriers fear further regulation could handcuff their ability to cope with the growing demand put on their networks by the explosion in Internet and wireless data traffic. In particular, they worry that the FCC will require them to share their networks with rivals at government-regulated rates.

Mike McCurry, former press secretary for President Bill Clinton and co-chair of the Arts + Labs Coalition, an industry group representing technology companies, telecom companies and content providers, said the FCC needs to assert some authority to back up the general net neutrality principles it outlined in 2005.

"The question is how heavy a hand will the regulatory touch be," he said. "We don't know yet, so the devil is in the details. The network operators have to be able to treat some traffic on the Internet different than other traffic—most people agree that web video is different than an email to grandma. You have to discriminate in some fashion."

UBS analyst John Hodulik said the cable companies and carriers were likely to fight this in court "for years" and could accelerate their plans to wind down investment in their broadband networks.

"You could have regulators involved in every facet of providing Internet over time. How wholesale and prices are set, how networks are interconnected and requirements that they lease out portions of their network," he said.
—Niraj Sheth, Spencer E. Ante, Sara Silver and Nat Worden contributed to this article.

Thursday, January 21, 2010

Supreme Court Strikes Down Corp.Campaign Spending Bans

Corporations have re-acquired their First Amendment rights to free speech.The Supreme Court ruled this morning that corporations may spend as freely as they like to support or oppose political candidates, and struck down a big part of the McCain-Feingold limits on business spending on federal campaigns. Amazingly the reason for the ruling had nothing to do with a campaign ad, but it was a movie critical of Hilary Clinton, that accused her of breaking campaign law.

By a 5-4 vote, the court overturned a 20-year-old ruling that said companies can be prohibited from using money from their general treasuries to produce and run their own campaign ads. The decision, which almost certainly will also allow labor unions to participate more freely in campaigns, threatens similar limits imposed by 24 states. (note the full ruling of the SCOTUS is embedded below)

It leaves in place a prohibition on direct contributions to candidates from corporations and unions, but companies are allowed to create and run their own advocacy commercials as much as they would like.

Critics of the stricter limits have argued that they amount to an unconstitutional restraint of free speech, and the court majority agreed. "The censorship we now confront is vast in its reach," Justice Anthony Kennedy said in his majority opinion, joined by his four more conservative colleagues.

Strongly disagreeing, [Liberal] Justice John Paul Stevens said in his dissent, "The court's ruling threatens to undermine the integrity of elected institutions around the nation."

Justices Ruth Bader Ginsburg, Stephen Breyer and Sonia Sotomayor joined Stevens' dissent, parts of which he read aloud in the courtroom.

This marks Justice Sotomayor's first SCOTUS case and her first attempt to legislate against the constitution from the highest court of the land.

The justices also struck down part of the landmark McCain-Feingold campaign finance bill that barred union- and corporate-paid issue ads in the closing days of election campaigns.

Advocates of strong campaign finance regulations have predicted that a court ruling against the limits would lead to a flood of corporate and union money in federal campaigns as early as this year's midterm congressional elections.

"It's the Super Bowl of bad decisions," said Common Cause president Bob Edgar, a former congressman from Pennsylvania.

The decision removes limits on independent expenditures that are not coordinated with candidates' campaigns.

The case does not affect political action committees, which mushroomed after post-Watergate laws set the first limits on contributions by individuals to candidates. Corporations, unions and others may create PACs to contribute directly to candidates, but they must be funded with voluntary contributions from employees, members and other individuals, not by corporate or union treasuries.

Chief Justice John Roberts and Justices Samuel Alito, Antonin Scalia and Clarence Thomas joined Kennedy to form the majority in the main part of the case.

Roberts, in a separate opinion, said that upholding the limits would have restrained "the vibrant public discourse that is at the foundation of our democracy."

The Point is the only people that should be limiting the freedom of speech of corporations is the shareholders who pay their bills and the customers who can take their business elsewhere.

The case began when a conservative group, Citizens United, made a 90-minute movie that was very critical of Hillary Rodham Clinton as she sought the Democratic presidential nomination. Citizens United wanted to air ads for the anti-Clinton movie and distribute it through video-on-demand services on local cable systems during the 2008 Democratic primary campaign.

But federal courts said the movie looked and sounded like a long campaign ad, and therefore should be regulated like one.

The movie was advertised on the Internet, sold on DVD and shown in a few theaters. Campaign regulations do not apply to DVDs, theaters or the Internet.

The court first heard arguments in March, then asked for another round of arguments about whether corporations and unions should be treated differently from individuals when it comes to campaign spending.

The justices convened in a special argument session in September, Sotomayor's first. The conservative justices gave every indication then that they were prepared to take the steps they did on Thursday.

The justices, with only Thomas in dissent, did uphold McCain-Feingold requirements that anyone spending money on political ads must disclose the names of contributors.