FCC official says Google, Facebook had little say on net neutrality

The FCC’s landmark decision on net neutrality has produced all sorts of speculation about the degree to which well-known tech giants shaped the outcome.

Gawker, for instance, claimed that Americans can thank a benevolent Facebook-Google cabal for the open internet rules that were passed last Thursday. The Wall Street Journal, on the other hand, has suggested instead that Google has been conspiring behind the scenes to weaken the rules. So what’s the real story?

“The fact of the matter is that Google and Facebook sat this one out … I don’t what this person is smoking” said FCC lawyer Gigi Sohn in reference to the Gawker story.

Sohn was speaking Tuesday at a Freedom to Connect event in New York City, where journalist Sam Gustin of Vice asked her about the ruling and what comes next. The 3-2 ruling, which reclassified ISP’s as common carriers, came as a surprise to many given that FCC Chairman Tom Wheeler was once skeptical to the measure and because of fierce opposition from the telecom industry.

According to Sohn, Wheeler’s ultimate decision did not come about as a result of pressure from corporations or the White House. Instead, she said Wheeler (who is not a lawyer) came to reassess the situation after learning about various legal nuances, and in response to a series of external developments, including a time last spring when his Netflix service started sputtering.

Sohn did, however, credit the White House and members of Capitol Hill for providing “covering fire” as it became clear that Wheeler’s office intended to go forward with reclassification. She added that the FCC’s final decision did not come about as a result of any single factor (including comedian John Oliver), but rather from broad public support.

As for corporate influence, Sohn appeared on Tuesday to chastise the tech industry for not lending more public support to net neutrality, though she did credit Google for providing a small boost late in the process.

“Google to its credit said Title II [the reclassification law] wouldn’t hurt its investment in Fiber… Facebook has said nothing,” Sohn said.

Ultimately, the guessing game over the tech industry’s role in the net neutrality debate may remain just that — a guess. While it seems probable that an 11th hour call by Google persuaded Wheeler to back away from a two-step reclassification for interconnection (the so-called “middle-mile” where ISP’s and websites connect), for now there’s little to support any grander theories.

In the meantime, there will be plenty more for internet policy types to chew on while they wait for the official copy of the final decision to emerge in the next week or two.

Sohn predicted that “people will try to grind the FCC to a standstill” through budget threats and partisan hearings in the coming months. She added, though, that the issue may become less partisan since many groups who ordinarily support Republicans, who are the main antagonists of the new rules, are in favor of net neutrality.

Finally, as Sohn spoke, her boss Chairman Wheeler was wrapping up an appearance at the World Mobile Conference in Barcelona, where he told the audience that phone carriers’ massive recent spectrum purchases belied the idea that the new rules would dissuade companies from investing in the internet.

Twitter is latest to boost FCC’s net neutrality plan

Twitter came out on Monday in support of FCC chairman Tom Wheeler’s plan to impose net neutrality, which is slated for a critical vote on Thursday, praising it as a way to ensure free communications and an open internet.

“Safeguarding the historic open architecture of the internet and the ability for all users to ‘innovate without permission’ is critical to American economic aspirations and our nation’s global competitiveness. These rules also have important implications for freedom of expression,” said the company in a blog post.

[company]Twitter[/company]’s endorsement of the plan, which would prevent ISPs from speeding up some websites at the expense of others, is significant given the company’s role as a major media company, and its historical advocacy of free speech.

In its blog post, Twitter pointed out a familiar refrain of net neutrality advocates: that emerging companies depend on access to the internet platforms that will carry their products and ideas.

“This openness promotes free and fair competition and fosters ongoing investment and innovation … Without such net neutrality principles in place, some of today’s most successful and widely-known Internet companies might never have come into existence.”

Twitter also endorses Wheeler’s plan to use so-called Title II rules, and treat ISPs as common carriers, in order to enforce net neutrality. Those rules have touched off a massive lobbying campaign by Republicans backed by the cable industry, which is seeking to characterize the measure as executive overreach. Twitter, however, pointed out that the agency is applying the rules in a “light touch” fashion, and avoiding the more burdensome parts of the regulation.

Twitter’s decision to publicly endorse Title II comes after a variety of other companies, including [company]Netflix[/company] and Etsy, have argued the rules are necessary to ensure ISP’s don’t use their control over internet pipes to stifle potential competition.

Entrepreneurs embrace net neutrality plan (except Mark Cuban)

Propaganda machines are running full-blast ahead of next week’s landmark vote on net neutrality, so readers should take most “news” about the FCC with a grain of salt. That said, it’s worth noting a new letter in the debate over whether net neutrality will protect entrepreneurs (as supporters claim) or if it will instead damn small business to crushing regulations, as Republican Commissioner Ajit Pai, backed by the telecom industry, is warning.

The letter comes via the advocacy group Engine, and is signed by more than 100 startups and emerging businesses. Many of the names are unfamiliar but some — including Yelp, Etsy, Kickstarter, Tumblr and GitHub – are among America’s favorite new companies.

Their position, in short, is that the FCC’s proposed “Title II” rules, which would forbid ISPs from giving special treatment to some websites over others, is not the regulatory bugbear of Pai’s imagination:

“Any claim that a net neutrality plan based in Title II would somehow burden “small, independent businesses and entrepreneurs with heavy-handed regulations that will push them out of the market” is simply not true,” the letter said. It added, “The threat of ISPs abusing their gatekeeper power to impose tolls and discriminate against competitive companies is the real threat to our future.”

This, of course, is part of a public relations effort but it doesn’t change the fact that all these companies, which are run by sophisticated and successful entrepreneurs, put their names on it.

The entrepreneurs could be lying or maybe they’re deluded. The better bet, though, is that the they genuinely favor rules to prevent the likes of Comcast or Verizon using their power over pipes as a cudgel to demand money or favors.

So are there any bonafide entrepreneurs (as opposed to Pai and the telecom giants) concerned about the regulatory burden of Title II? Well, there’s at least one.

On Wednesday, Dallas Mavericks owner and startup booster Mark Cuban was at it again, railing at a Re/code conference how the FCC will “fuck up everything” with its new rules. (He’s made such rants before).

Normally, it’s worth paying attention to Cuban since he’s bang-on about other issues involving small business, especially patent reform, and has a lot of pull in investment circles.

On this one, though, his concern may be overblown since the FCC has been clear that it’s taking a light touch to Title II and will be using it to prevent internet throttling, while also staying clear of measures like rate regulation or forced access. (One also wonders if Cuban’s F-bombs have anything to do with the fact that he is the chairman of a cable network).

So there you have it. You entrepreneurs out there can join Etsy and all, and run the risk of FCC regulations, or throw your lot in with Cuban and put yourselves at the mercy of the big ISPs.

Here’s the Engine letter, which is short, and has all the companies’ names:

Engine Letter Re FCC

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A year later, is the huge Comcast-Time Warner Cable deal doomed?

One year ago, Comcast, the largest cable provider in the country announced it would buy Time Warner Cable, the nation’s second largest cable provider, in a deal valued at $45 billion. Not since AT&T tried to scoop up T-Mobile had a communications deal rallied consumers and activists to a cause in such a huge way. At the time, the deal was perceived to be a mistake, but something that would likely pass muster with regulatory agencies. However, a year in, things have changed.

When it was announced, we argued that the deal was about achieving broadband dominance, noting that even if Comcast pledged to reduce its pay TV customers by ditching subscribers in select markets to reduce its overall pay TV market share to below 30 percent, judging the deal by television standards was looking into the past. This deal wasn’t about TV, it was about controlling the only pipe that mattered, which in this case was the coaxial cable that brought broadband into the home.

coax cable

With that, Comcast already offers on-demand video, voice, home alarm and automation services and even could one day offer mobile if it wants to get aggressive as its cable colleague Cablevision has done. A year ago, regulators and even the mainstream media seemed fixated on the value of television and what this deal would mean for media companies, cable TV customers and the like. But in a year, that too has changed.

Streaming media has become more popular. Live TV viewing was down by 12.7 percent in January this year compared to the year before. HBO plans to launch a stand alone streaming service this year as does Nickelodeon.

As television follows voice over to broadband, more of the industry recognizes that pay TV — where the combined Comcast and Time Warner cable would hold less than 30 percent of the market share after the deal closes — means little. They are taking a closer look at the broadband market where the combined entity would hold about 35 percent of the market. That number is even higher — as high as 55 percent under a new definition of broadband that the FCC approved in January that defines the service as at least 25 Mbps downstream and 3 Mbps upstream.

In a post-transaction world only 37 percent of U.S. households would have access to multiple providers for 25/3 Mbps service, the new FCC definition of broadband, according to merger papers filed with the FCC.

In a post-transaction world only 37 percent of U.S. households would have access to multiple providers for 25/3 Mbps service, the new FCC definition of broadband, according to merger papers filed with the FCC.

BTIG Tech and Media Analyst Rich Greenfield has pointed out that because the FCC has shifted its perspective on broadband being of greater importance than television (because TV is increasingly reliant on broadband) and because the post-merger Comcast would have such a dominant position providing the faster speeds necessary to deliver high quality television services over broadband, the deal is unlikely to pass. He wrote on February 4:

[blockquote person=”” attribution=””]With Comcast’s scale both before and especially after the Time Warner Cable transaction, they become “the only way” for a majority of Americans to receive content/programming that requires a robust broadband connection.

Over time, the fear is that Comcast will favor its own IP-delivered video services versus third parties, similar to how it is able to offer Comcast IP-based video services as a “managed” service that does not count against bandwidth caps, while third-party OTT services that look similar count against bandwidth caps (remember this Hastings/Roberts debate from 2012, link). As we see a rapid rise in niche, OTT subscription services and virtual MVPDs, the natural inclination will be for the incumbent video provider to protect their business (think usage based caps that only apply to outsiders, peering/interconnection fees, etc.).[/blockquote]

Since then the FCC has only become more bold in what is indicative of perhaps the most important change that has occurred in the year since the merger was announced. The FCC has stepped up as a force for consumer advocacy when it comes to broadband competition and access. The agency, which has acted as a rubber stamp at worst and as a priggish scold doing little more than wagging a finger at the industry when it steps too far out of line at best, has changed.

That is the change that has thrown the deal into the most doubt. Last week the FCC Chairman Tom Wheeler proposed reclassifying broadband under Title II of the Communications Act in an about face for the agency that has been five years in the making. By classifying cable, DSL, wireless and other broadband services as transport rather than information , Wheeler subjects them to greater FCC authority and allows the agency to place strong network neutrality rules on providers — rules the ISPs were trying to avoid.

FCC Chairman Tom Wheeler

FCC Chairman Tom Wheeler

And while AT&T and now the National Cable and Telecommunications Association has threatened to sue if the agency passes those new rules, the markets are concerned that this newly brazen FCC has recognized the importance of broadband. And with this recognition that broadband is an essential service that could be better in parts of the U.S., as well as the recognition that the Comcast and Time Warner deal is really about broadband, the markets are concerned that regulators at the FCC and the Department of Justice may stop the deal.

They should. In a year a lot has changed. But here at Gigaom we have seen that change coming for almost a decade. We have argued for faster broadband, more competition, network neutrality and an elimination of broadband data caps. Because we are aware that broadband is platform on which our current innovations spring, and if we hand Comcast control 55 percent of the U.S. broadband market, even with the strong network neutrality rules that the agency has proposed, we are handing the future of half of our nation’s households to a company that has shown a willingness to invest in the future so far as it immediately benefits its bottom line.

Comcast doesn’t believe in disruption from startups. It believes in squashing them using its enormous market power and networks. It understands that it has to continue investing in new products and builds very good ones; its Xfinity home products are well designed and have a nice interface. But it’s not going to push pricing down. It’s not going to disrupt its business models and it’s certainly not going to change the way it treats its customers once it has more power.

A lot has changed in a year, but Comcast hasn’t. Is the federal government finally ready to show that it understands what’s at stake?

Love or hate net neutrality, GOP probe is pointlesss

Let the dog and pony show begin! Republicans in Congress and their cable company allies are smarting over news that the FCC will reclassify internet providers, and have responded with not one, but two investigations that seek to uncover illegal meddling by the White House.

The twin probes, which are being led by Sen. Ron Johnson (R.-Wis) and Rep. Jason Chaffetz (R-Utah), call on FCC Chairman Tom Wheeler to explain how he came to favor net neutrality — a policy that prevents ISPs from giving special treatment to some websites over others when they deliver broadband.

Net neutrality is indeed an important issue, and Republicans are within their rights to implement investigations of it. The problem, however, is that their premise for probing Wheeler appears to be completely baseless.

According to Senator Johnson, the purpose of the investigation is to determine if Wheeler’s decision resulted from “undue outside pressures, particularly from the White House.” The message is that President Obama has someone flouted the rule of law, and run roughshod over an independent agency.

But there’s little evidence to justify such a charge. While Johnson cites public remarks by the President and a report in the Wall Street Journal about the White House’s interest in the net neutrality file, that’s hardly a smoking gun.

More importantly, the Republicans have yet to explain how exactly they think the White House behaved illegally. Johnson’s public letter says the executive branch’s behavior has been “inappropriate from a constitutional standpoint” and “improper from an Administrative Procedures Act perspective,” but fails to point to specific laws or regulations.

Unfortunately for net neutrality critics, “inappropriate” and “improper” seem pretty thin gruel, even as a political charge. And they almost certainly fall far short of material for a lawsuit.

While Presidents typically steer clear of saying what independent agencies should or should not do, President Obama is hardly the first to speak up on an FCC issue. Indeed, every chief executive in the last 30 years has stuck their oar in the water at one time or another, according to Harold Feld, a senior lawyer with the advocacy group Public Knowledge.

“By strong convention, the President is supposed to respect the independence of the agency, and Presidents generally save their ammo on this for things they really care about. There are good reasons for this general rule,” wrote Feld by email. “But there are also good reasons for the President to speak up from time to time — particularly on matters of national importance such as the fate of broadband (Obama), reducing the influence of money on politics (Clinton) and the fate of media ownership rules (Reagan, Bush I, and Bush II).”

Feld, who has created a graphic of Presidential pronouncements about FCC issues, added that there is no law that prevents the President from sharing his views about the agency or from talking to its Chairman. Meanwhile, none of the previous Presidents’ remarks on FCC issues have resulted in a court action — meaning it’s near certain that Obama’s won’t either.

So what’s going on? In the view of Berin Szoka of TechFreedom, a group critical of Wheeler’s proposal, the legal case is “subtle” but turns on two issues: whether the White House “threatened” Wheeler as the head of an independent agency, and whether the executive violated an anti-lobbying law by having FCC staff lobby Congress. Or something.

The better explanation is that the twin Congressional investigations are no more than a political stunt to muddy the waters in the net neutrality debate. That’s a shame. No matter what you think of the substance of Wheeler’s proposal — you can read about a Republican FCC Commissioners’ latest objections here and here — the American public deserves better on this matter than Congress’s “investigations.”

It’s on! FCC plans strong net neutrality for mobile and broadband

The Federal Communications Commission plans to reclassify broadband internet providers so they can’t favor some websites over others, which is the outcome that has been urged by net neutrality advocates, and which would amount to a victory for the open internet.

FCC Chairman Tom Wheeler has yet to release a formal copy of the new rules, which must be circulated to other Commissioners three weeks before a scheduled vote on February 26, but the details have been leaked to the Wall Street Journal. They include a call for so-called Title II reclassification, which would mean a ban on internet “fast lanes”:

A key element of the rule would be a ban on broadband providers blocking, slowing down or speeding up specific websites in exchange for payment, a practice known as paid prioritization, these people say.

Wheeler’s plan to reclassify internet providers is likely to upset ISPs like Verizon, which do not want to be treated like common carriers, but the move had come to seem likely after President Obama last year jolted the net neutrality debate by calling publicly for Title II.

The move will also encompass mobile broadband, which was not covered by former net neutrality rules that were struck down in a major court decision in early 2014, and gave rise to the new proposal.

Another important aspect of the forthcoming rules addresses so-called paid peering arrangements. These involve broadband providers demanding that content providers like Netflix pay to connect their networks directly the ISPs’ networks to ensure their traffic streams are not degraded on the way to consumers — a practice Netflix and others have likened to extortion.

Wheeler’s proposal will reportedly also place peering, which is now unregulated, under Title II:

The proposal would also give the FCC the authority to regulate deals on the back-end portion of the Internet, where broadband providers such as Comcast Corp. and Verizon Communications Inc. pick up traffic from big content companies such as Netflix Inc. and network middlemen like Level 3 Communications Inc. The FCC would decide whether to allow these so-called paid peering deals based on whether it finds them just and reasonable, the standard under Title II.

Today’s leak is sure to touch off a lobbying and public relations tempest ahead of the scheduled February 26 vote. The pushback will come from the cable industry, which has been pushing Republicans in Congress to pass a broadband law that would reduce the FCC’s authority to oversee the internet.

Monday’s leak to the Wall Street Journal is believed to have come from one of the two Republican Commissioners on the FCC. A source close to the agency say Commissioners were recently briefed on the Chairman’s plans.

If the FCC ultimately votes in favor of a proposal that applies Title II classification to both consumer broadband and paid peering, it would be a sea-change from last spring, when Wheeler appeared to be in favor of paid fast lanes.

How net neutrality rules can fix Verizon’s supercookie problem

The FCC is on the cusp of proposing new rules for the internet, and it may have a chance to kill two birds with one stone: along with preserving so-called “net neutrality,” the rules could serve to stop the use of “supercookies” that phone carriers like Verizon are using to track their wireless subscribers.

In case you’re unfamiliar, supercookies are akin to regular internet cookies, which advertisers use to create a record of users’ browser activities. The difference is that the supercookies are tied to a users’ mobile device at a network level, and create a permanent customer profile that can’t be deleted. The profiling process not only tracks web browsing, but also app activities, and it can’t be thwarted by using a browser’s “private” or “incognito” mode.

Carriers like Verizon use the supercookies to assemble marketing segments such as “low-income Spanish-speaking moms in the Bronx” (for instance), and offer them to advertisers. While this profiling feature can be a boon to marketers, it has also alarmed privacy advocates, who say supercookies are invasive and point out they are being abused by outside ad companies.

After an outcry, phone giant AT&T said in November that it would stop using supercookies. Its rival Verizon, however, has so far rebuffed calls to cease using the tool, known in the industry as unique ID headers, to tag and track users.

Verizon, which declined to comment for this story, has presumably calculated that the value of the marketing data from supercookies outweighs whatever privacy headaches they create. Most consumers, meanwhile, don’t know or care about cookies in the first place, so it’s unlikely that Verizon will suffer any sort of customer exodus.

Enter Title II

Verizon’s support for supercookies could one day lead to class-action lawsuits, as some have suggested. But in the meantime, the FCC may soon be in position to address the privacy implications of what the company is doing.

The opportunity comes about as a result of the current net neutrality debate, which is widely expected to result in the FCC reclassifying internet providers as so-called “Title II” companies.

The Title II designation is the only legal avenue the agency can use to stop broadband companies from favoring some websites over others, but it also contains important authority for the FCC to protect privacy.

“The critical provision is Section 222, which concerns customers’ proprietary network information,” said Harold Feld, a lawyer and telecom expert with the group, Public Knowledge, in a recent phone interview.

Section 222 is one of a list of rules that Title II imposes on phone companies and other “common carriers,” and serves to restrict companies from using customer communications data for marketing purposes.

According to Feld, however, it’s not certain that the FCC would include Section 222 as part of any reclassification process. Chairman Tom Wheeler has suggested that any action under Title II would include so-called forbearance measures, which could excuse the companies from many of the new obligations.

Feld suggested that if the FCC does choose to implement Title II without Section 222, it could fall back on the more general provision known as Section 201, which requires carriers among other things to act in the “public interest.”

The outcome of the final net neutrality debate, slated for a likely FCC vote on February 26, is far from certain. But the emergence of the supercookie issue could provide another argument for net neutrality supporters to urge the FCC to go-ahead with reclassification.

GOP calls for open internet, but more in symbol than substance

“Open internet” has become one of those political catch-phrases like “freedom” or “innovation” that enjoys universal support but is rapidly losing any real meaning. Consider, for instance, the new broadband bill trotted out on Friday by Republicans with a press release that promises “open and unfettered access to the Internet.”

The bill itself, which comes as the FCC prepares to vote February 26 on new rules for the internet, contains language intended to address consumers’ fears that telecom giants like AT&T want to remake the web so as to favor the delivery of some websites over others.

The preamble, in particular, contains strong words that will ring familiar to net neutrality advocates (my emphasis):

ensure Internet openness, to prohibit blocking lawful content and non-harmful devices, to prohibit throttling data, to prohibit paid prioritization, to require transparency of network management practices

And the text of the bill, proposed by Sen. John Thune (R-SD) and Rep. Fred Upton (R-MI), drives the point home by saying that internet providers “may not throttle lawful traffic by selectively slowing, speeding, degrading, or enhancing Internet traffic.”

Alas, what the bill gives, it also takes away. For instance, it gives internet providers broad latitude to offer “specialized services,” a term that, as Public Knowledge notes, could quickly come to stand for “fast lanes” by another name.

Meanwhile, the bill also strips the FCC of key oversight powers, and is silent about whether its proposed anti-throttling rules should apply to a deeper layer of the internet, where Verizon and ISPs have been demanding companies like Netflix pay a toll or else see their streams get degraded.

For net neutrality advocates, all of this suggests that the Republican approach presents considerably more risk than the one that FCC Chairman Tom Wheeler is expected to propose at the February meeting. (His plan is expected to invoke a law known as Title II in order to treat broadband like a utility, akin to electricity or phone service, but also using the FCC’s so-called “forbearance” powers to spare ISPs from most of Title II’s regulatory obligations.)

For practical purposes, though, the Republican bill is most likely a symbolic gesture given that President Obama has made clear his preference for the Title II approach, and will almost certainly veto the bill if it passes.

But whatever the outcome, the Republican bill is significant as it reflects how notions of “open internet” and “throttling,” which were long familiar only to geeks and policy wonks, have now become part of mainstream political discourse in the U.S.

In surprise FCC filing, Sprint endorses net neutrality

Supporters of net neutrality got a boost from an unlikely source on Friday as telecom giant Sprint stated in a letter to the FCC that it would support so-called “Title II” regulation, which is the only legal tool that the agency can use to ensure internet providers can’t favor some websites over others.

The filing is significant because, until now, the telecom industry has been largely opposed to the use of Title II. Here is the key passage from the letter (my emphasis):

So long as the FCC continues to allow wireless carriers to manage our networks and differentiate our products, Sprint will continue to invest in data networks regardless of whether they are regulated by Title II, Section 706, or some other light touch regulatory regime.

This position stands in stark contrast to what other carriers, including [company]Verizon[/company] and [company]AT&T[/company], have espoused. In particular, the carriers have warned that Title II would provide a major disincentive to invest in upgrades to their internet offerings.

Sprint’s letter, which can be read in full below, comes before an important FCC meeting on February 26 at which the agency is expected to vote on new rules for the internet. The process became necessary after a major court decision one year ago that struck down a prior version of the FCC’s net neutrality rules.

While wireless data providers like [company]Sprint[/company] were not covered by the earlier net neutrality rules, FCC Chairman Tom Wheeler has hinted strongly that they will be included in whatever new regime the agency imposes.

The letter from Sprint also represents an ongoing shift in momentum in favor of Title II, which appeared to be a long shot at the outset of the process.

Last spring, FCC Chairman floated a plan that would have allowed internet providers to offer special “fast lanes” to preferred websites, but soon reversed course. Meanwhile, companies like Netflix and comedian John Oliver also helped to increase consumers’ support for net neutrality.

Letter – Bye to FCC

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FCC launches its own probe into AT&T’s throttling practices

The Federal Communications Commission is investigating whether AT&T misled its customers over its throttling policies, which restrict network speeds on unlimited data customers after they’ve hit a certain threshold each month. The Federal Trade Commission also filed a lawsuit against AT&T over the practice in October, but of the two agencies, it seems Ma Bell would prefer that the FCC do the investigating.

[company]AT&T[/company] disclosed the FCC probe in a motion to the dismiss the FTC’s lawsuit (first spotted by Ars Technica). AT&T argued that it’s not subject to the FTC’s jurisdiction because of its “common carrier” status as a regulated phone service provider. That jurisdiction lies with the FCC, which has launched its own investigation, AT&T claimed.

“The FTC seeks to litigate the very same issues in an inappropriate parallel proceeding,” AT&T said in the motion to dismiss file this week.

But how safe AT&T would be under the FCC’s eye remains to be seen. FCC Chairman Tom Wheeler has come down hard on the carriers over their throttling practices. And AT&T may be taking a risk by arguing its common carrier status. Currently, mobile broadband isn’t considered a common carrier service the same way regular telephone networks are considered utilities, but the Obama administration wants data services to be reclassified to make the internet neutral ground for all web services. Wheeler has said he will bring a net neutrality proposal to a vote on February 26.