(Updates with additional detail.)
By Fawn Johnson
Of DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- The Federal Communications Commission on Thursday approved a much-anticipated open Internet proposal despite concerns of commission Republicans and big cable and phone companies that the rules aren't necessary.
Supporters of the proposal, including Internet giants like Google Inc. (GOOG), say the rules are needed to ensure entrepreneurs' Web products aren't hampered by providers that supply the on-ramps to the Internet.
The proposed FCC rules would prevent Internet companies such as Verizon Communications Inc. (VZ), Comcast Corp. (CMCSA, CMCSK), and AT&T Inc. (T) from selectively blocking or slowing certain Web content and would require providers to disclose how they manage their networks.
The FCC now will seek public comment, with the goal of finalizing the proposal sometime next year. The rules almost certainly will be challenged in court.
The two Republican FCC commissioners--Robert McDowell and Meredith Attwell Baker--dissented from much of the substance of the rules. "Do we even have the statutory authority to do any of this?" asked McDowell. "Without a finding of a concentration of market power, and abuse of such power, additional regulation is likely not warranted."
McDowell and Baker both concurred with the idea that the FCC should examine open Internet rules, largely because FCC Chairman Julius Genachowski negotiated extensively with them in recent weeks.
"I'm not convinced rules are necessary or useful," Baker said, adding that it is reasonable "to take a step back and ask probing questions about the Internet."
AT&T, Verizon, and Comcast worry that the new rules apply only to service providers like them and not Internet firms like Google and Amazon.com (AMZN).
Advocates like Google say broader rules would amount to unprecedented regulation of the now-free Internet.
The rules are tailored toward Internet service providers. They say Internet access providers can't deprive users of competition "among network providers, application providers, service providers, and content providers."
Genachowski said the draft rules are designed to protect consumers' right to access lawful content, applications, and services. "Government should not be in the business of running or regulating the Internet," he said.
The rules seek comment on the pros and cons of broader rules. "We need to recognize that the gatekeepers of today may not be the gatekeepers of tomorrow," said FCC Commissioner Michael Copps.
The proposal would impose new regulations on wireless companies including Sprint Nextel Corp. (S) and T-Mobile USA, a unit of Deutsche Telekom AG (DT, DTE.XE). Wireless firms to date haven't been subjected to the same kind of open Internet scrutiny as companies that provide hard-wired cable or copper Internet connections.
Wireless companies are particularly concerned that the rules will make it more difficult for them to manage the limited bandwidth they have to offer mobile Internet services. The rules acknowledge the unique problems facing cell phone and mobile Internet companies, asking how regulators should evaluate their network management.
Genachowski has championed a top priority for the wireless industry--access to more airwaves, underscoring the expanding need sparked by the growing use of iPhones and BlackBerrys.
Still, the "net neutrality" rules for wireless companies come with some sting. They likely will bring an end to exclusive deals between manufacturers and cell phone companies, like the agreement Apple Inc. (AAPL) has with AT&T to be the sole carrier for Apple's popular iPhone.
-By Fawn Johnson, Dow Jones Newswires; 202-862-9263; fawn.johnson@dowjones.com