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Updated Feb. 27, 2015: The net neutrality debate has finally come to a head...
The Federal Communications Commission (FCC) approved new net neutrality rules in a 3-2 vote yesterday, Feb. 26.
From now on, Internet service providers (ISPs) like Comcast Corp. (Nasdaq: CMCSA) and Verizon Communications Inc. (NYSE: VZ) are prohibited from speeding up access to some websites just because those sites are willing to pay for a faster connection.
Instead, the Internet will be treated as a public utility, like telephone services. Customers will be able to browse websites equally - from large corporate sites to your sister's cooking blog - without ISPs throttling load times of those they wish to leverage.
The Feb. 26 decision followed a Feb. 4 Wired op-ed in which FCC Chair Tom Wheeler came out in full support of net neutrality. Wheeler's position came as a surprise to some. He is a former lobbyist for cable and cellphone industries.
"This is the closest the agency's come to a mic drop in a long time," daily newsletter The Skimm quipped after the move.
That's not an overly dramatic assessment.
You see, the FCC's weighty decision marks the most significant rewrite of Internet rules of all time.
Here we dig into exactly what the net neutrality debate is.
The Net Neutrality Debate Took Seed in January 2014
A Jan. 14, 2014, decision by the U.S. Court of Appeals for the District Columbia Circuit set the stage for a hot net neutrality debate over the past year. The court ruled ISPs are free to manage traffic as they see fit, without interference by the FCC.
ISPs didn't hesitate to take advantage.
Giant providers like Comcast and Verizon intentionally slowed their service for U.S. consumers watching Netflix Inc. (Nasdaq: NFLX) content.
Their plan was to leverage money from the video streaming company - and it totally worked. In late February 2014, Netflix paid Comcast an undisclosed sum to take the handcuffs off its data for a number of years.
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That's not all. Since the ruling, the big ISPs - particularly AT&T Inc. (NYSE: T) - have submitted a slew of patents that try to capitalize on the FCC's limitation.
Crucially, the court's decision left wiggle room for the FCC.
You see, the FCC has the power to reclassify ISPs as "common carriers." Common carriers are private companies that sell their service to everyone on the same terms, regardless of location and other differing factors. This power ties back to the fact that Congress originally created the FCC to regulate phone companies, to make sure people had equal access to phone service at reasonable prices. The same idea applies to utilities like water and electric.
Reclassification of ISPs as common carriers is a big deal. That's what has set up so much dissonance among ISPs, Capitol Hill, and the public - and billions of dollars are at stake.