WASHINGTON (Reuters) - The U.S. Federal Communications Commission chief is close to settling on a hybrid legal strategy for new Internet traffic rules that would treat part of the web network as a public utility, the Wall Street Journal reported in Friday's newspaper.
FCC officials earlier this month listed a hybrid approach as one of various options they were considering for new "net neutrality" rules. It would split broadband into a retail service, connecting Internet service providers with consumers, and a back-end one, linking content companies' servers with ISPs' facilities.
FCC Chairman Tom Wheeler is now laying the groundwork for rules that would regulate the retail section more lightly under the agency's existing authority but apply stricter rules to the back end by classifying it more like a public utility, the Wall Street Journal reported. It cited people familiar with Wheeler's thinking.
The plan, which would have to win over at least two other FCC commissioners to be adopted, is unlikely to satisfy either the ISPs or the public interest community.
Stricter back-end regulation through reclassification of broadband more like an old telephone network is something long sought by some consumer advocates but strongly opposed by the ISPs, which would probably fight such a decision in court.
However, the Journal report said Wheeler remained skeptical of a flat-out ban on deals in which content companies' would pay ISPs to ensure smooth and fast delivery of their traffic.
Consumer advocates have opposed such "paid prioritization" arrangements. The FCC received a record 3.9 million comments after Wheeler proposed net neutrality rules that would allow some "commercially reasonable" paid prioritization.
"Such an untested, too-clever-by-half approach is bad law and a bad idea," Free Press Chief Executive Officer Craig Aaron said in a statement.
"No matter how you dress it up, any rules that don’t clearly restore the agency's authority and prevent specialized fast lanes and paid prioritization aren’t real Net Neutrality."
California Representative Doris Matsui, a Democrat, also reiterated on Friday that any net neutrality proposal allowing paid prioritization was "a non-starter."
A U.S. appeals court in January struck down the previous net neutrality rules, which allowed "commercially reasonable" discrimination of traffic but indicated the FCC would disapprove of potential pay-for-priority deals.
Similar hybrid approaches were presented to the FCC earlier this year by Mozilla Foundation and the Center for Democracy and Technology, among others.
Wheeler has said all reclassification options, including Mozilla's and CDT's proposals, were "under serious consideration," FCC spokeswoman Kim Hart said in a statement.
MoffettNathanson LLC analyst Craig Moffett said the market was likely to welcome a "grand bargain" approach.
"It neatly sidesteps the worst-case scenarios, and while interconnection regulation is certainly not good news for operators, neither is it a calamity," he said.
"Perhaps the most important question left to be answered is how the two sides of the aisle respond to today's very consciously floated trial balloon."
(Reporting by Alina Selyukh)