The U.S. Federal Communications Commission's new net neutrality rules could open the door to rate regulation and could drive some small broadband providers out of business, some Senate Republicans said Wednesday.
Some Republican members of the Senate Commerce, Science and Transportation Committee suggested the FCC's new rules, which prohibit broadband providers from selectively blocking or slowing Web content, won't survive an inevitable court challenge. Several senators questioned the FCC process leading up to the decision, saying the public didn't have a chance to read and comment on the final order before it was enacted.
The FCC's action "represents an abuse of its authority," said Senator Ted Cruz, a Texas Republican.
FCC Chairman Tom Wheeler defended the agency's process, saying he followed the standard procedure of putting the proposed order out to fellow commissioners for private discussion before they voted on it Feb. 26. Net neutrality rules have broad support, with Republicans in Congress proposing their own set of rules, he said.
"There really aren't any differences about the need to do something," he said. "We need clear rules. There are different approaches, to be sure."
Republicans, however, repeated concerns that the FCC's approach will lead to new broadband taxes and fees.
The FCC's decision to reclassify broadband as a regulated, common-carrier service subjects broadband providers to requirements that their rates and services are "just and reasonable," Senator John Thune, the committee chairman and a South Dakota Republican, said during a hearing Wednesday. Even if the FCC doesn't intend to regulate broadband rates with the new rules, a broadband customer could file a complaint that subscription fees are unreasonable and trigger an FCC investigation, he said.
The FCC's reclassification of broadband, grounded in rules found in the 1934 Communications Act, makes it an "unpredictable agency as it struggles to operate under legal authority that was designed nearly 100 years ago," Thune said. "Rather than exercising regulatory humility, the three majority commissioners chose to take the most radical, polarizing and partisan path possible."
Wheeler and the two other Democratic commissioners who voted for the rules defended the decision. The new rules specifically forebear from rate regulation, and any complaint about unreasonable broadband rates would face an "incredibly high" bar at the FCC, said Commissioner Mignon Clyburn.
The new rules could increase subscriber fees in several ways, even though U.S. law currently prohibits new broadband access taxes, said Republican Commissioner Ajit Pai. Some states impose special taxes on telecom carriers, and broadband providers may have to pay more to attach wires to telephone poles, he said. The net neutrality order also makes it more likely that broadband providers will be required to contribute to the FCC's Universal Service Fund, he said.
The agency has been considering whether broadband should be part of the USF in a separate proceeding from net neutrality.
The new rules will drive up compliance costs for broadband carriers, with small rural providers hardest hit, Pai and some Republican senators added. "Some of these smaller ISPs, in particular, are going to have to either suck up the costs or go out of business altogether," Pai said.
The rule allows the FCC to police future ISP conduct, raising questions about what business models and services will be allowed, Pai added. "Instead of the Internet working to the benefit of consumers and being developed by technologists, engineers and innovators, it's going to be lawyers, bureaucrats and politicians," he said.
Wednesday's hearing was the second of three in Congress this week to examine the FCC. Thune urged senators to support his proposal that would enact basic net neutrality rules but remove the FCC's reclassification of broadband, but other senators questioned if such a bill can pass.
While committee Republicans criticized the net neutrality rules, most Democratic members voiced strong support for the FCC decision. The FCC's action has assured Web companies that they will have access to customers, said Senator Ed Markey, a Massachusetts Democrat.
"You have created a more predictable investment environment" for Internet companies, Markey said.
Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's email address is grant_gross@idg.com.