WASHINGTON (Reuters) - The top U.S. communications regulator on Wednesday proposed to tighten regulations on Internet service providers by treating them more like public utilities, an approach endorsed by President Barack Obama.
Federal Communications Commission Chairman Tom Wheeler, in an op-ed on Wired.com, said he sought the "strongest open Internet protections ever proposed by the FCC" that would apply, for the first time, to both wireless and wired Internet services providers.
The proposed rules to preserve net neutrality, the principle that all web traffic should be treated equally, would ban Internet providers from blocking or slowing down websites or charging companies for swifter delivery of their content in deals known as paid prioritization.
But Wheeler also sought to address some Internet service providers' concerns, proposing no price regulations, tariffs or requirements to give competitors access to their networks.
That and the largely expected nature of the proposal prompted investors to bid up cable and telecom stocks, including Comcast Corp, Verizon Communications Inc, AT&T Inc and Time Warner Cable.
Wheeler's latest proposal would reclassify Internet service providers as more heavily regulated "telecommunications services" under Title II of the communications law, instead of the current, more lightly regulated "information services."
Wheeler on Thursday will share his latest plan with other FCC commissioners. The five-member FCC will vote whether to enact new rules on Feb. 26.
Such a change would represent a victory to smaller web companies and net neutrality activists who have argued that lack of such regulation would give unfair advantage to larger websites that can afford to pay for faster content delivery.
That push has fueled widespread backlash from Internet providers, which argue that while they support net neutrality, such regulatory reclassification would impede investments and innovation.
The broadband industry is expected to fight the rules in court, and Republicans in Congress are working on legislation to set net neutrality rules while restricting the FCC's authority. Without Democrats' support, any such legislation is expected to face Obama's veto.
Under the proposed rules, the FCC for the first time would fully apply anti-blocking and anti-discrimination rules to mobile carriers alongside wired ISPs, such as cable companies.
The FCC authority would also expand to previously unregulated deals that content companies, such as Netflix Inc, strike with Internet services providers on the back-end of the network, known as interconnection agreements. [ID:nL1N0V736D] The FCC would review them on a case-by-case basis.
The FCC has been working on new net neutrality rules since a previous version was struck down in court in January 2014 in a case brought by Verizon.
Wheeler initially proposed to allow "commercially reasonable" paid prioritization deals, which upset net neutrality advocates and helped draw more than 4 million comments from the public. Obama later sided with critics, calling in November for the "strongest possible" net neutrality rules. [ID:nL2N0T00UR]
"We're certainly encouraged to see that the FCC is heading in the same direction of safeguarding net neutrality with the strongest possible protections," White House spokesman Josh Earnest said in a press briefing on Wednesday.
The debate over net neutrality has also put a sharp focus on the pending $45 billion merger of two of the largest cable companies, Comcast and Time Warner Cable. It is currently being reviewed by the FCC and Department of Justice.
FCC officials on Wednesday said net neutrality rules "had nothing to do with any proposed transactions." But UBS analysts said in a note that they would give the FCC "more than enough authority to police any negative consequences" of the merger and so lowered the regulatory review hurdle.
Reporting by Alina Selyukh; Additional reporting by Roberta Rampton in Washington, Liana B. Baker and Sinead Carew in New York and Malathi Nayak in San Francisco; Editing by Christian Plumb and Dan Grebler