As widely expected, the FCC voted 3-2 across party lines Thursday to codify strident regulation on Internet service providers, regulating them as a public utility for the first time.
Under the new rules, cable companies like Comcast (NASDAQ: CMCSA), Time Warner Cable (NYSE: TWC) and Cox Communications that also operate broadband networks will be prohibited from slowing down traffic from sources like Netflix (NASDAQ: NFLX). They'll also be stopped from establishing individual "fast lane" deals with these companies to speed up their traffic.
As expected, the cable industry's top lobbying group, the National Cable Telecommunications Association, reacted swiftly--and negatively--to the announcement of the vote.
"This extraordinary action has been justified by the desire to preserve net neutrality, but the FCC order goes well beyond that reasonable objective," the NCTA statement reads. "The FCC has taken the overwhelming support for an open Internet and pried open the door to heavy-handed government regulation in a space celebrated for its free enterprise. The commission has breathed new life into the decayed telephone regulatory model and applied it to the most dynamic, free-wheeling and innovative platform in history."
Added another dissenting statement from mid-sized cable company Mediacom: "Under the leadership of Presidents Clinton and Bush, the federal government allowed the Internet to flourish largely free of regulation. Unfortunately, two decades of intelligent and successful policy decisions are on the verge of being tossed aside by the Obama Administration. Today, the FCC reversed course on years of unprecedented technological advancements by deciding to regulate the Internet under Title II of the Communications Act of 1934."
Reacting to the inevitability of the new rules' passage during their respective fourth-quarter earnings calls, captains of cable industry have generally dismissed assertions that the mandates will be significantly impactful to their business, especially with FCC Chairman Tom Wheeler insisting that regulation will stop short of influencing broadband pricing.
"As far as net neutrality goes, like any other business the idea of more regulation is never great for us but, to be honest, we don't see, at least from what [FCC Chairman Tom Wheeler] has been discussing, [the rules] as having any real effect on our business. And so therefore we are sort of neutral," said Cablevision chief executive James Dolan on Wednesday.
"The issue with Title II, as it's currently described, it doesn't look like it changes anything," Charter Communications CEO Tom Rutledge also told investors several weeks earlier.
However, while they're unclear that the rules are necessarily impactful to their business, top cable executives beyond Dolan are hardly "neutral" or ambivalent in their feelings about the rules' passage.
"Our concern is that it increases power of regulatory body in unnecessary way," Rutledge added. "We've had a very good experience putting private capital to work in developing high speed Internet service. It seems to me to be an excessive approach, so we're opposed to it."
Speaking Monday, Comcast chief executive Brian Roberts said it was "premature to speculate" on the impact of the vote to the cable industry. "We don't believe Title II is he right answer," he added. "But if it happens, we'll have to adjust to the specific details."
For more:
- read this Washington Post story
- read this Yahoo News story
- visit this Cablevision investor relations page
- visit this Comcast investor relations page
Complete coverage: Net neutrality for wireless and wireline carriers
Related links:
Comcast, TWC and Charter downgraded to neutral on analyst concerns over Title II, cord cutting
Charter's Rutledge: Title II a 'heavy handed regulatory solution for problem that doesn't exist'
Comcast misses Q4 forecasts, gains only 6K video subs