The FCC called off closed-door meetings among industry stakeholders that were intended to forge a compromise on net neutrality, citing an impasse in the talks. The announcement came after a flurry of press reports about an impending deal between Verizon (NYSE:VZ) and Google on the thorny issue--but one that would not apply to Verizon's wireless network.
The meetings, which were being convened by Edward Lazarus, the FCC's chief of staff, were intended to broker a deal among companies like AT&T (NYSE:T), Google and Skype over net neutrality rules without the need for an FCC ruling. The FCC has held nine such meetings since June 22, according to disclosure records.
In a statement, Lazarus said the effort "has been productive on several fronts, but has not generated a robust framework to preserve the openness and freedom of the Internet, one that drives innovation, investment, free speech and consumer choice."
According to the Wall Street Journal, a meeting that was scheduled for Thursday was called off abruptly after the participants felt that any Verizon-Google deal might undermine the talks. Verizon and Google have not said anything publicly about a deal, and there were conflicting reports about what such a deal might involve, or when it might be announced. According to Bloomberg, the deal would forbid Verizon from selectively slowing down Internet traffic on its wired lines. According to a New York Times article, the deal would allow Verizon to speed up some Internet content if the content's creators pay more. Both Verizon and Google have disavowed the NYT article.
"Any outcome, any deal that doesn't preserve the freedom and openness of the Internet for consumers and entrepreneurs will be unacceptable," FCC Chairman Julius Genachowski told reporters Thursday.
Nonetheless, the collapse of negotiations puts the FCC in a tricky position. The commission is working to reclassify broadband as a Title II common-carrier service, which is seen as a key legal prerequisite for enacting net neutrality regulations. That proposal, which is opposed by the CTIA and the big telcos, has drawn fire from many in Congress, including many Democratic lawmakers, who want to move forward with net neutrality legislation instead.
"Yesterday's end to negotiations simply made it official," wrote Sanford C. Bernstein analyst Craig Moffett in a note to investors. "It now seems that the FCC is painted into a corner. In a burning building. Made of wood."
AT&T and Verizon issued statements saying that they were disappointed talks had broken down, but that they hoped they could still find a solution that satisfies both sides of the debate. According to the Washington Post, sources said the talks had produced progress on the extent to which net neutrality rules would apply to wireless carriers, and whether service providers could offer certain services at better quality and speeds than others, but that many thorny issues remained.
Public interest groups continued to push the FCC to move ahead with its net neutrality plans. The commission adopted draft rules last fall, but they are in limbo now following a federal court ruling that cast doubt on the FCC's legal authority to regulate broadband. That ruling forced the FCC's hand and led to the reclassification process.
"[The FCC] must act to ensure that consumers are protected, that everyone can have access to broadband and that the commission has the authority to ensure and open and non-discriminatory Internet. It can do that simply by acting on the dockets now pending before the commission," Gig Sohn, the president of Public Knowledge, said in a statement. "We were concerned about the negotiations because they were largely restricted to the biggest industry players. The FCC now can use the comments and public views submitted to it as a basis for its decisions, as the commission should have done all along."
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