The FCC Caved on Net Neutrality. But It Didn't Really Have a Choice.

Tougher rules for Internet access would be on shaky legal ground.

Consumer-advocacy groups and liberal lawmakers are going ballistic over news that the Federal Communications Commission plans to advance watered-down network-neutrality rules.

The new regulations would allow Internet service providers to charge websites for special "fast lanes" in at least some cases. So, for example, Comcast could demand that Netflix or YouTube pay special fees to deliver high-quality video to their users. Websites that decline (or are unable) to pay the fees would be relegated to slower lanes.

Free Press President Craig Aaron accused the FCC of "political cowardice and extreme shortsightedness," and he said the proposal is an "insult to those who care about preserving the open Internet." Michael Weinberg, a vice president at Public Knowledge, claimed the FCC is "inviting ISPs to pick winners and losers online."

The announcement also prompted a swift backlash from liberals on Capitol Hill.

"Under this terribly misguided proposal, the Internet as we have come to know it would cease to exist, and the average American would be the big loser," Sen. Bernie Sanders of Vermont said. "We must not let private corporations turn bigger and bigger profits by putting a price tag on the free flow of ideas."

But the truth is that the FCC is boxed into a corner without many good options. Commission officials argue the stronger rules that advocates want probably wouldn't survive in court.

The FCC first adopted net-neutrality rules in 2010. Those rules — formally called the Open Internet Order — barred Internet providers from blocking websites or from any "unreasonable" discrimination against Internet traffic. The idea was to prevent ISPs from becoming "gatekeepers" that could stifle access to information.

This past January, the D.C. Circuit Court of Appeals struck down the rules, saying they too closely resembled what are known as "common carriage" regulations.

Traditional phone lines, railroads, airlines, and other services are considered common carriers and must offer service to everyone. The FCC hasn't classified broadband Internet providers as common carriers, and requiring them to serve all websites indiscriminately is essentially a common-carriage regulation, the court ruled.

Although the D.C. Circuit threw out the rules, it upheld broad FCC authority to regulate broadband Internet under Section 706 of the Telecommunications Act, which says the agency has the power to encourage the deployment of broadband networks.

So in February, FCC Chairman Tom Wheeler announced he would try to rework the rules under the authority that the court outlined. But he couldn't just reinstate the old order. Requiring Internet providers to offer equal service to all websites would likely run into the same common-carriage problem.

Wheeler outlined his new net-neutrality rules Thursday, and the agency is scheduled to vote May 15 on whether to move forward with the proposal.

Under the new rules, the ban on blocking websites would remain in place. But instead of the old antidiscrimination rule, the FCC would allow Internet providers to offer varying speeds for websites as long as the arrangements are "commercially reasonable."

The FCC has done little to explain what "commercially reasonable" means, but officials singled out a few factors that would inform their review of future Internet deals. Officials said they plan to crack down on any arrangements that are anticompetitive, bad for consumers, or infringe on free speech. Providers would also not be allowed to favor traffic from an "affiliated entity" — so Comcast couldn't boost content from NBC (which it owns).

Providers would have to offer a baseline level of service to all websites under the proposal.

On a conference call with reporters Thursday, an FCC official argued that the new language isn't that different from the old rules. Even the 2010 order only banned "unreasonable" discrimination, the official pointed out.

While the details of the new proposal still need to be etched out, it's a clear step back from the 2010 regulations. When the commission adopted the 2010 order, then-Chairman Julius Genachowski explicitly stated that it would ban Internet "fast lanes."

"We are making clear that we are not approving so-called 'pay for priority' arrangements involving fast lanes for some companies but not others," Genachowski said at the time, warning that such deals "skew the marketplace by favoring one idea or application or service over another."

The FCC is clearly opening the door to some pay-for-priority Internet deals. But commission officials say the D.C. Circuit ruling tied their hands; they have to allow some negotiations between websites and Internet providers for faster speeds. A blanket prohibition on "fast lanes" would be a common carrier rule and would just get struck down again, they argue.

Consumer groups have a simple solution for the FCC's dilemma: reclassify broadband providers as common carriers.

"The FCC took their best shot, and it turns out we were right," Harold Feld, the senior vice president for Public Knowledge, said. "You can't get to where you want to go under [Section] 706, so you need to [reclassify]."

That move would likely allow the FCC to just reinstate the old rules and ban websites from paying for faster service. But reclassification has much bigger implications than just net neutrality.

The FCC would be applying a massive regulatory regime currently used for phone companies on broadband providers. It's debatable whether it's a politically viable option. Congressional Republicans and business groups would launch an all-out war, warning the FCC could kill the Internet economy.

Reclassification could derail the other items on Wheeler's agenda, such as an auction of airwave licenses, a network technology transition, and the president's proposal to improve Internet access in schools. Consumer groups argue that protecting an open Internet is worth the fight.

"If you really care about this, just bite the bullet," Feld said. "They're not going to abolish the FCC over this, and they can't impeach you."

Wheeler continues to say that reclassification is "on the table," but consumer groups wonder what he's waiting for.