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Net Neutrality Bill to Limit FCC's Power

The proposed net neutrality bill would limit the FCC's rulemaking authority over broadband pricing.

NEW YORK (

TheStreet

) -- The net neutrality bill could be much more lenient on broadcast and cable companies than anticipated.

The bill would limit the Federal Communications Commission's (FCC) rulemaking authority, according to

a draft of the bill

.

The proposed legislation would require the FCC to handle enforcement on a case-by-case basis as well as 'transparency' from wired broadband providers in disclosing information such as price, performance and network management.

Most importantly for broadcast companies, the bill would prohibit the FCC from reclassifying broadband under Title II of the Communications Act. Broadband is currently considered a Title I, or information service.

The bill would make sure wireless providers couldn't block lawful Web sites or "unjustly or unreasonably discriminate in transmitting lawful traffic over a consumer's wireline broadband Internet access service."

In an April report, Bernstein analyst Craig Moffett described applying a Title II service classification to broadband as the "nuclear option." Doing so, he said, could result in "a raft of regulatory obligations from the days of monopoly telecommunications regulation, potentially including price regulation."

In a report released by Moffett on Tuesday, he noted that the Pay TV industry recently saw its first subscriber loss, likely due to the slowing economy and reduced consumer spending. Incomes have fallen, leaving less money to be spent on entertainment. So while the proposed bill could allow cable media companies such as

Comcast

(CMCSA) - Get Comcast Corporation Class A Report

,

Cablevision

(CVC)

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and

Time Warner

(TWC)

to hold onto their pricing power, raising prices too much could result in further subscribers lost.

Led by House Energy and Commerce chairman Henry Waxman, the bill would be in place until Dec. 31, 2011, at which point the FCC would meet with the House and Senate commerce committees to readdress the issue.

Broadband providers that violate the law could be forced to pay up to $2 million by the FCC.

-- Written by Theresa McCabe in Boston.

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