Rules set for vote, firestorm won't die

US regulators are gearing up for a vote on a plan which -- depending on your viewpoint -- would "restore internet freedom" or, alternatively, result in "the death of the internet" as we know it.

The Federal Communications Commission will consider a rollback of its 2015 order aimed at enforcing "net neutrality," or the notion of treating all data and content providers equally.

FCC chairman Ajit Pai last month unveiled the plan, the latest twist in a dispute over more than a decade, with both sides claiming to promote a "free and open" internet.

The plan, widely expected to be approved on a 3-2 party-line vote Thursday, would reverse the rules adopted two years earlier which ban broadband providers from blocking or throttling rivals, or using "fast" and "slow" lanes for different services.

Pai, named chairman by President Donald Trump, said the 2015 rules "depress investment and innovation."

Critics of the existing rules say they rely on 1930s-era rules for telephone companies, which could in theory lead to price regulation and other burdens.

But net neutrality backers argue that the rollback will enable internet service providers (ISPs) to shut out rivals that compete with their services or those of partners. They point out that some ISPs in the past have tried to force users to their own search engines, or block online calling services such as Skype or Vonage, or require a premium for Apple (NasdaqGS: AAPL - news) 's FaceTime video calling.

The Pai proposal "will lead to a dramatic transformation of how the internet works," said Sarah Morris, who heads the New America Foundation's Open Policy Institute.

"Internet service providers as gatekeepers have a lot of incentives to engage in shenanigans. The threats to our ability to navigate the internet and go to every corner of it are at risk" if the Pai plan is adopted, she told a conference on Tuesday.

- Pillow in the face? -

New York Times columnist Farhad Manjoo wrote that "the freewheeling internet has been dying a slow death" and that the FCC actions "would be the final pillow in its face."

Senior (Other OTC: SNIRF - news) executive vice president Bob Quinn of AT&T (Sao Paolo: ATTB34.SA - news) , one of the large broadband firms which has lobbied and sued to block earlier FCC regulatory efforts, said apocalyptic predictions are wrong.

"AT&T intends to operate its network the same way AT&T operates its network today: in an open and transparent manner," Quinn said in a blog post last month.

Michael Powell, head of the trade group for major broadband firms NCTA - The Internet & Television Association, said member companies have agreed to respect principles to "satisfy their customers' desire to visit any lawful website or run any lawful application."

But some are not mollified by these assurances, arguing that broadband is largely controlled by a handful of firms -- including AT&T, Verizon (NYSE: VZ - news) and Comcast (Swiss: CMCSA.SW - news) -- with little competition or consumer choice in many markets.

"Why would they spend millions of dollars lobbying if they are going to treat everybody equally and not extract monopoly rents?" asked Ed Black, president of the Computer & Communications Industry Association, which represents major tech firms.

"If they are allowed to build superfast lanes, they would cease to invest in the other lanes. It means everybody else is going to be left on the equivalent of dirt roads."

The question of "paid prioritization," whether broadband firms can charge more for improved access, has been among the most hotly debated.

Critics say broadband firms would be able to extort higher fees and limit access for new startups if the proposal is adopted.

But University of California economist Michael Katz argues this is a basic business principal at work.

"The logic of net neutrality would also argue for banning e-commerce sites from purchasing faster delivery from Fedex (Swiss: FDX-USD.SW - news) or UPS, or from offering free shipping," Katz said in a research paper.

The net neutrality battle has been the subject of a series of court challenges over the past decade, and more litigation is likely unless Congress establishes clear guidelines.

- Google, Netflix (Xetra: 552484 - news) , Russian bots -

Large tech firms like Google, Facebook (NasdaqGS: FB - news) and Netflix oppose the FCC draft rules, arguing that ISPs could effectively cut off or limit user access to some services.