President Barack Obama has proposed adopting rules that would treat all Internet traffic equally.
This so-called "net neutrality" plan was not exactly welcomed with open arms by Internet service providers -- which was to be expected. Federal Communications Chairman Tom Wheeler may also oppose the plan preferring "a more nuanced solution," The Wall Street Journal reported. Wheeler, who was a cable industry lobbyist before joining the FCC, said that he wants to incorporate some of what the president wants while also addressing the concerns of the companies that provide Internet including Comcast (NASDAQ:CMCSA), Time Warner Cable (NYSE:TWC), and AT&T (NYSE:T).
"What you want is what everyone wants: an open Internet that doesn't affect your business," a visibly frustrated Wheeler said at a meeting a few hours after the president's announcement, according to the paper. "What I've got to figure out is how to split the baby."
That's an odd statement for an FCC chairman who is ostensibly a Democrat. It seems to suggest that Wheeler has forgotten that he works for the the American people and not the ISPs.
What does President Obama want?
The president seeks to return to the net neutrality policies that were in place until earlier this year when the United States Court of Appeals for the District of Columbia struck down the FCC's 2010 order that imposed network neutrality regulations on wireline broadband services, BGR.com reported. That court decision forced the FCC to adopt new rules that allowed ISPs to, in certain cases, charge companies, including Netflix (NASDAQ:NFLX), to ensure a good experience for their customers.
President Obama wants to reset the clock and bring back true net neutrality. He released a statement laying out his proposal:
An open Internet is essential to the American economy, and increasingly to our very way of life. By lowering the cost of launching a new idea, igniting new political movements, and bringing communities closer together, it has been one of the most significant democratizing influences the world has ever known.
"Net neutrality" has been built into the fabric of the Internet since its creation -- but it is also a principle that we cannot take for granted. We cannot allow Internet service providers (ISPs) to restrict the best access or to pick winners and losers in the online marketplace for services and ideas. That is why today, I am asking the Federal Communications Commission (FCC) to answer the call of almost 4 million public comments, and implement the strongest possible rules to protect net neutrality.
Obama makes his position pretty clear with no room for misinterpretation -- pick the interests of the public over the interests of the ISPs.
Does Wheeler have an argument?
Since the FCC is technically an independent agency, the president cannot simply order Wheeler to approve his plan. It does seem odd that Wheeler is seemingly ignoring the best interests of the American people in favor of being sympathetic to the ISPs he's supposed to be regulating.
Wheeler has not made a public comment on the issue, but multiple media reports suggest that while he may not oppose the president on net neutrality, he fears that Obama's actions are so broad they will trigger congressional action. That's a valid concern with both the House and Senate falling under Republican control in the midterm election, but getting Congress involved may be exactly what the president wants.
If the FCC passes the president's plan and Congress enacts a law to override it, that puts Obama in a position to use his veto power. That can often be an unpopular move seen as overriding the will of the people, but in this case, it will be the president supporting a policy that Americans are overwhelmingly in favor of.
Fully 81% oppose "allowing Internet service providers to charge some websites or streaming video services extra for faster speeds," while only 17% of people are in favor of doing so, according to a national survey by the University of Delaware's Center for Political Communication released Nov. 10.
The president has not had 81% of Americans on his side about anything in a long time, if ever.
Who will win?
Wheeler has been an Obama ally, but he, and the FCC in general, have historically been a little too cozy with the companies they are supposed to regulate. This is truly a case where the ball is in the FCC chair's court. He can enact Obama's policies or choose to modify them and the president will have no recourse because he likely won't have much help from Congress.
Ultimately, Wheeler can sort of have his cake and eat it too if he simply chooses to push the president's plan through while making it clear he thinks that Congress will overturn the rules. That will almost certainly happen and Obama will use his veto, which is unlikely to be overridden.
The president gets a much-needed political win, Wheeler saves some face with his former (and likely future) employers in the cable/ISP industry, and the American people get true net neutrality.
Daniel Kline has no position in any stocks mentioned. The Motley Fool recommends Netflix. The Motley Fool owns shares of Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.