Obama Endorses Net Neutrality

According to Deadline, President Obama supported the reclassification of broadband service in the Telecommunications Act on Monday morning, from an information service to a telecommunications service. This has implications for the entertainment industry primarily in the television sphere. The reclassification would allow the FCC to regulate Internet in the same way that it currently regulates telephone and broadcast services, which most likely would lead to net neutrality. As an information service, broadband does not have to abide by common carrier rules. Thus, currently, ISPs have the ability to favor certain content providers and provide faster service for these entities. A reclassification and ultimate net neutrality would prohibit this favoritism. This prevent ISPs from charging a premium to services like Netflix and Hulu to receive faster transmission–hypothetically receiving the same service as all other content. In fact with the President’s announcement, stock prices of major cable and telecom companies dropped.

However, opponents of net neutrality state that such regulation will slow Internet innovation, create higher prices from consumers, and possibly allow the government to intervene excessively into the functioning of the Internet. While the FCC has implemented net neutrality rules in the past (that were eventually struck down by an appeals court), it is not clear what effect the President’s statement will have on the FCC’s rulemaking.