The Federal Communications Committee voted Thursday to regulate the Internet under Title II of the 1934 Communications Act, which currently applies to telephone service.
The ruling will enable the FCC to enact new rules that would prevent Internet service providers (ISPs) from manipulating how quickly or slowly sites are transmitted along their networks, a huge win for proponents of net neutrality.
President Obama issued a statement praising the decision, which he said "will protect innovation and create a level playing field for the next generation of entrepreneurs."
"I think the FCC is doing the right thing," Barbara Cherry, a professor of telecommunications at Indiana University, a former FCC official and a former AT&T government affairs attorney. "It's long overdue and it needs to be done."
The ruling classifies the Internet as a common carrier along with phone service, railroads and the postal service, and enforces legal obligations to operate "without unreasonable discrimination, at reasonable rates and with adequate care, often referred to as reliability," Cherry explained.
Major ISPs have been vocally against restrictions on how they manage and monetize their services and some have strongly intimated that they will appeal the ruling in the courts.
"We have never argued there should be no regulation in this area, simply that there should be smart regulation. What doesn't make sense, and has never made sense, is to take a regulatory framework developed for Ma Bell in the 1930s and make her great grandchildren, with technologies and options undreamed of eighty years ago, live under it," said AT&T's senior executive vice president of external and legislative affairs, Jim Cicconi.
Thursday's decision reverses earlier rulings that called the Internet an information service, which is not regulated like common carriers are.
"Why are some companies so against it?" Cherry asked. "I can tell you why, because I used to work for them. It was a real coup in 2002 and 2005 when they got classification as information services. The deregulation gave them the freedom to essentially choose to whom, when, where and what service they're going to bother to provide."
"This led to and can lead to incentives for unreasonable forms of discrimination. They want to make money every which way they can. That's why they've resisted so heavily getting this Title II classification back."
She offered a personal example of this from her own life: She used to have DSL Internet from AT&T and cable from Comcast. She moved less than a mile away and wanted the same services in her new home. "By this time, DSL was no longer a common service. They refused to sell it to me. AT&T said, 'You have to buy cable service bundle.' They refused to sell it to me standalone. With common carrier service you can't do that."
Speaking with CBS News Wednesday, NewYorker.com editor Nicholas Thompson addressed how the ruling can affect the relationship between service providers and online companies whose data they carry over their networks. He described the Internet as pipes through which all data flow:
"So if I'm Comcast and I control those pipes I can't say, 'You know what? I want CBS to go slowly this month because they did a bad segment on me, or I want them to go fast because they did a good segment,'" he explained. "Or I want Netflix to go quickly because they paid me a lot of money but I want this startup to go slowly."
"Comcast would love that power because then it can make a lot more money," he added.
It could also affect consumers' wallets. If, say, Netflix has to pony up money to make sure its video streaming looks seamless on your computer or smart TV, there's a good chance those surcharges could end up increasing your monthly bill.
But Internet companies -- especially smaller ones that can't afford to pay more to get access to a provider's "fast lane" -- would rather the federal government ensure that "the pipes" give every site equal opportunity to get through.
Many people believe that not only is this the fairest way to keep the Internet free and open, it's also the only way to maintain an environment that promotes innovation.
"If you let [Internet providers] control this you're going to destroy the Internet," Thompson told CBS News. "You're going to destroy startups. It's going to be much harder to create an Internet company. This is what American innovation thrives on. This is the part of our economy that is doing really well and if you give the [telecommunications companies] this control it will cut that off."
The flip side of the argument is that cutting off a potential revenue stream for Comcast, Time Warner and other ISPs will strangle their budgets and hamper innovation.
"The FCC today chose to change the way the commercial Internet has operated since its creation. Changing a platform that has been so successful should be done, if at all, only after careful policy analysis, full transparency, and by the legislature, which is constitutionally charged with determining policy," Verizon senior vice president Michael Glover said.
"The decision is not radical in the sense that to do this legally is radical," Cherry opined. "It's undoing a prior radical decision. It's momentous in terms of politically what it took to get here and the fact that a decision is coming out that is truly in the public interest as opposed to being in the interest of a relatively small number of companies that have a lot of resources to bring to bear."
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