While the Trump administration's Department of Justice sues to block AT&T Inc.'s (T) - Get Report purchase of Time Warner Inc. (TWX) , the Federal Communications Commission is giving the telecom a Thanksgiving treat by rolling back restrictions the Obama administration placed on broadband service providers.
FCC Commissioner Ajit Pai circulated a draft of his proposal to scale back net neutrality rules within the Commission on Tuesday. "For almost twenty years, the Internet thrived under the light-touch regulatory approach established by President Clinton and a Republican Congress," Pai said in a statement, indicating that he will release the rules to the public on Wednesday.
The FCC's regulation-lite attitude stands in stark contrast to the DOJ's lawsuit, which assumes AT&T will violate consumer protections. Net neutrality advocates call the rules a giveaway to the broadband providers, and decried Pai's release Wednesday as a pre-Thanksgiving news dump that jeopardizes Internet freedom.
Pai has noted that Alphabet Inc. (GOOGL) - Get Report , Amazon.com Inc. (AMZN) - Get Report , Apple Inc. (AAPL), Facebook Inc. (FB) and Netflix Inc. (NFLX) built their fortunes during the lighter regulation. While ISPs such as AT&T and Comcast Corp. (CMCSA) say they support principles of net neutrality such as prohibitions on throttling content, they have hailed his rewrite of regulations that they claim are outdated.
The new FCC proposal would eliminate former Commissioner Tom Wheeler's "bright line" rules that prohibited blocking, throttling or prioritizing some traffic.
In some instances, setting up fast lanes can make sense. Remote healthcare applications and self driving cars will require high-speed connections with exceptional reliability, and would require exceptionally fast and secure broadband connections.
However, the new rules for blocking, throttling or other types of fast lanes are less clear.
The FCC requires that ISPs disclose any such policies. The FCC and the Federal Trade Commission would review whether policies are anti-consumer or anti-competitive, which is a much hazier standard that Wheeler's bright-line rules.
Moreover, Pai's rules would prevent states from enacting their own net neutrality provisions.
Democratic FCC Commissioner Mignon Clyburn issued a statement attacking the new proposal from Pai and other Republican colleagues on the Commission. "Their Destroying Internet Freedom Order would dismantle net neutrality as we know it by giving the green light to our nation's largest broadband providers to engage in anti-consumer practices, including blocking, slowing down traffic, and paid prioritization of online applications and services," she said, adding the hashtag #ThanksgivingFail.
Pai's laissez faire approach stands in contrast to the Department of Justice's view of the AT&T-Time Warner merger.
The FCC would rescind restrictions on block and so forth, and wait for the ISPs to violate competition or consumer-protection rules. Justice assumes that AT&T will be anti-competitive and anti-consumer, and is acting to block the deal.
"[W]ere this merger allowed to proceed, the newly combined firm likely would-just as AT&T/DirecTV has already predicted-use its control of Time Warner's popular programming as a weapon to harm competition," Justice charges in its complaint.
"AT&T/DirecTV would hinder its rivals by forcing them to pay hundreds of millions of dollars more per year for Time Warner's networks, and it would use its increased power to slow the industry's transition to new and exciting video distribution models that provide greater choice for consumers," the government continues. "The proposed merger would result in fewer innovative offerings and higher bills for American families."
The ISPs and net neutrality advocates have to digest some unappetizing news over the long weekend. The Commissioners will vote on the proposal on Dec. 14.
Alphabet, Apple, Amazon, Comcast, Facebook and AT&T are holdings in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio . Want to be alerted before Cramer buys or sells (AAPL) - Get Report , (AMZN) - Get Report , (CMCSA) - Get Report , (FB) - Get Report , (GOOGL) - Get Report or (T) - Get Report ? Learn more now.
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