Plan could charge some users higher Internet fees - USA Today

People who spend a lot of time watching videos or downloading files from the Internet could pay higher prices as part of a controversial proposal that Federal Communications Commission Chairman Julius Genachowski unveiled Wednesday.He will ask the five-member regulatory agency to vote on Dec. 21 on rules that he says would "preserve the freedom and openness of the Internet." President Obama has said that protecting what's known as net neutrality would be a top goal.

Genachowski said that his proposal would bar "unreasonable" efforts by Internet providers — led by cable and phone companies — to help some services and hurt others. For example, providers couldn't provide smooth and uninterrupted transmissions for communication services that they own, and jittery or delayed transmissions for competitors such as YouTube or Skype.

But Genachowski apparently hopes to win cable and phone company support by endorsing their right to make heavy Internet users pay more. It's been unclear whether the FCC would deem such pricing plans to be discriminatory: For example, consumers might favor unlimited conventional cable TV over a Web video service such as Netflix if broadband prices were tied to how many minutes or megabytes they use.

"The thrust of the proposal has shifted from purely preserving 'openness' to now simultaneously acknowledging the need for broadband rationing," says analyst Craig Moffett of financial services firm Bernstein Research.

Genachowski also made a concession to cable and phone companies by abandoning his effort to reclassify the Internet as a regulated communications service, similar to telephone connections.

Internet providers vigorously objected to that effort, launched in May following a U.S. Court of Appeals ruling. Justices said the FCC lacked authority to set rules for the Internet because the agency has classified it as an unregulated information service.

Republican Commissioner Robert McDowell challenged the FCC's authority to adopt what he called an "ill-advised" and "highly interventionist" plan. House Republicans are "promising to attack the FCC move to write rules," says analyst Rebecca Arbogast at financial services firm Stifel Nicolaus.

Net neutrality supporters were divided. Free Press CEO Josh Silver called the proposal "disappointing." Craigslist founder Craig Newmark said it would "help ensure certainty in markets while also preserving the openness ... of the Internet."

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