Obama Plays Internet Traffic Cop

President Obama is calling for new rules on keeping an even playing field on internet, coming out against deals that let content providers like Netflix pay up to get faster access for their customers.

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The internet is an ugly place right now for broadband providers.

Shares of Comcast, Time Warner Cable and others were slammed after President Obama took the unusual step of trying to set policy for an independent government agency – and came out strongly against broadband’s ability to charge more for faster service. The president detailed his position in a video statement.

[Barack Obama, U.S. President]:
“Internet providers have a legal obligation not to block or limit your access to a website. Cable companies can’t decide which online stores you can shop at or which streaming services you can use. And they can’t let any company pay for priority over its competitors.”

It comes down to an issue called net neutrality – the idea that all internet traffic should be treated equally by providers – which are mainly cable companies. The Federal Communications Commission, or FCC, is currently deciding whether some sites that may want their content to move more smoothly – Netflix is often used as an example – can pay more for what is essentially a faster lane.

Obama is saying “no” and that the companies should in fact be regulated – much like utilities.

Reuters Correspondent Alina Selyukh:

[Alina Selyukh, Reuters Correspondent]:
“This is a really big deal for the cable companies and investors because this really bodes poorly for the light touch regulatory approach that they were hoping for as the FCC sets these new net neutrality rules. It really raises the stakes for the FCC to set strickter rules and stricter rules inevitably mean hgiher legal costs and potential kind of complicated matters trying to resolve with the government.”

Companies issued sharp rebuttals to the President’s position. Comcast – whose stock was the most actively traded stock in the US markets – said :

“This would be a radical reversal that would harm investment and innovation, as today’s immediate stock market reaction demonstrates. And such a radical reversal of consistent contrary precedent should be taken up by the Congress. ”

Some raised concerns about the FCC’s ability to maintain its independence after the President’s suggested guidance:

[Alina Selyukh, Reuters Correspondent]:
“This kind of detailed approach that he outlined today is very very rare for the President and some experts are saying that it actaully has everything to do with the sort of emboldened approach that he is expected to take now that both chambers of the congress are in Republican hands.”

The move spurred Republicans to respond on social media- Ted Cruz tweeting – calling Net Neutrality ObamaCare for the internet.

The FCC has received nearly 4 million comments since new rules were proposed in May and the bulk of those favor the President’s position on net neutrality.

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lock / December 9, 2014 /

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