Gimmie YouTube! What Net neutrality means for you

fcc.top.jpgFCC Chairman Julius Genachowski and two other FCC commissioners voted in favor of new Net neutrality rules on Tuesday. By David Goldman, staff writer


NEW YORK (CNNMoney.com) -- You won't be paying a surcharge to watch YouTube. Your favorite news website won't run any slower than a competitor's. And you don't have to worry about Netflix getting blocked.

The Federal Communications Commission on Tuesday voted three-to-two to adopt so-called "Net neutrality" rules, giving the agency regulatory power to protect the free flow of information over the Internet.

Broadly speaking, Net neutrality means that all content on the Internet must be treated equally. That means that Internet providers like Comcast (CMCSA, Fortune 500) and Time Warner Cable (TWC, Fortune 500) can't deliver Amazon.com (AMZN, Fortune 500) faster than eBay (EBAY, Fortune 500), and can't simply block access to sites like Netflix (NFLX) and Hulu.

In other words: Net neutrality means maintaining the status quo of how people use the Internet today.

So if the FCC wants nothing to change, why does it think the Internet needs stricter regulation?

Because the Internet is changing. The rapid growth of online video from YouTube, Netflix and Skype is sucking up bandwidth, making it difficult for Internet providers to give speedy service to all of their customers.

Most Internet providers haven't taken any action yet. But in one prominent instance, they did: Comcast blocked usage of some peer-to-peer (P2P) networks in 2007. Customers typically use those networks to transmit very large files, like full-length, high-definition movies.

In 2008, FCC ordered Comcast to stop, but Comcast sued the FCC for doing so. In April 2010, a U.S. court of appeals said the FCC lacked the authority to take action against Comcast.

By then, it was a moot point: Facing a public backlash, Comcast moved on its own to end its P2P blockade, and it paid $16 million to settle a customer lawsuit over the practice.

But the court ruling spooked the FCC, which wants the ability to prevent actions like Comcast's from ever happening again.

So on Tuesday, the FCC essentially decided to give itself that authority, imposing rules that bar Internet providers from blocking or "unreasonably discriminating" against Web content, services or applications.

The FCC's new rules have gained support from players on both sides of the issue, including the Information Technology Industry Council, which represents content companies like Google (GOOG, Fortune 500) and Amazon, as well as Comcast and CTIA, the wireless industry's lobbying group. Neither side got exactly what they want, but both feel it's a framework they can live with.

That doesn't mean the Net neutrality debate is over.

Congress has the right to limit the scope of the FCC's authority, and many congressional Republicans have said they will seek to do so. Fierce Net neutrality advocates also were upset about the FCC's decision, saying the government could have gone further by reclassifying broadband as a "Title II" utility like landline telephone service -- a much more heavily regulated industry.

The FCC could also find itself in court again if an Internet provider wanted to challenge it. The agency has spent months cobbling together a legal workaround to the Comcast decision, but it's unclear whether it actually has the authority to enforce the rules it has drafted.

"The FCC is making an overall pronouncement about its authority, but undoubtedly, there's going to be litigation against it," said Rebecca Tushnet, a professor at Gerogetown University who specializes in digital media. "One of the grounds of attack against the FCC will be that it can't do this without congressional approval."

Meanwhile, the new Net neutrality rules carry some immediate consequences. Here's a breakdown:

Real-world implications: The FCC made it unlawful for Internet providers to prevent you from accessing any legal content online. That means that Comcast's blocking of peer-to-per networks would have violated the FCC's rules, had they been instituted several years earlier.

Theoretical cases: Under the new rules, wireline broadband providers are forbidden from "unreasonable discrimination" against content.

That means Time Warner Cable can't take payments from Google to make YouTube come over the network faster than Hulu. Comcast, which is in the process of buying NBC, is also forbidden from favoring its own content over others'.

Though there are no examples of that occurring yet, Net neutrality advocates fear that it would have happened had the FCC not acted.

What it doesn't cover: The new rules still allow broadband providers to make customers who are heavy downloaders to pay more than light users. Broadband providers can also charge users more for faster service -- something many are already doing today.

The FCC's language does not make it entirely clear if Internet providers would be allowed to provide faster service for some content and slower service for others, providing they didn't discriminate across similar content. For instance, it's not clear if Comcast can speed up all news sites and slow down all video sites.

The most glaring hole is that wireless providers are exempt from the "unreasonable discrimination" clause.

The FCC said it is taking "measured steps" in regulating the mobile industry, because that field is experiencing "very rapid innovation and change," and consumers have more choices for wireless service than they do for fixed broadband service.

So that's where the next battleground will be. Tuesday's ruling was a milestone, but it's just one skirmish in a long industry war over how you access the Internet -- and how much you'll pay to do it.  To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 17,098.45 18.88 0.11%
Nasdaq 4,580.27 22.58 0.50%
S&P 500 2,003.37 6.63 0.33%
Treasuries 2.34 0.01 0.39%
Data as of 8:24pm ET
Company Price Change % Change
Bank of America Corp... 16.09 0.08 0.50%
Apple Inc 102.50 0.25 0.24%
Intel Corp 34.92 0.27 0.78%
Facebook Inc 74.82 0.96 1.31%
General Electric Co 25.98 -0.03 -0.12%
Data as of Aug 29

Sections

Celebrities' nude photos continue to get leaked on the Internet because of bad passwords and scams. More

Gas prices are falling to nearly $3 a gallon in some parts of South Carolina, and that will soon be common in much of the country. More

Celebrities' nude photos continue to get leaked on the Internet because of bad passwords and scams. More

The Coolest Cooler is the most successful Kickstarter campaign in the site's history, raising $13.3 million from over 62,000 backers. More

Five CNNMoney readers share stories about saving that you can learn from: What they would do differently if they had another chance. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.