In what could be seen as a victory for large internet providers, the Federal Communications Commission on Tuesday proposed to dismantle the so-called net neutrality rules. The rules, put in place under the Obama administration and held up by a federal appeals court last year, prevent internet service providers from offering different levels of internet access to users.

For example, a large broadband provider could allow an over-the-top subscription video service to run faster over its pipes in exchange for higher license fees, which would likely be passed on to customers. Over-the-top services that could not afford to pay those same rates would have to offer their services at lower speeds, which would force them to operate at a competitive disadvantage.

FCC Chairman Ajit Pai, a Republican serving in a Republican administration, sees the change as more business-friendly.

“Under my proposal, the federal government will stop micromanaging the internet,” he said in a statement. “Instead, the FCC would simply require internet service providers to be transparent about their practices so that consumers can buy the service plan that’s best for them.”

But should companies be found to be blocking or throttling internet speeds, that could be found to be anti-competitive, said FCC officials in a Tuesday conference call with reporters, noting that the Federal Trade Commission and the Justice Department would be charged with policing those practices.

Large telecom providers, such as AT&T, have been lobbying hard for the change because telephone and internet services have been rendered commodity products without the ability to charge for tiers of service.

Much of Silicon Valley, however, including internet giants such as Facebook and Google, vigorously oppose the change, because it’s likely to dramatically increase what they have to pay the large ISPs for carrying their services. Last summer, those companies orchestrated an online protest to complain about potential changes such as the ones released Tuesday.

“We are disappointed that the proposal announced today by the FCC fails to maintain the strong net neutrality protections that will ensure the internet remains open for everyone,” said, Erin Egan, vice president, Facebook, in a statement. “We will work with all stakeholders committed to this principle.”

Netflix on Tuesday said it opposed changing the rules, while Comcast, a large ISP in its own right, said “[w]e do not and will not block, throttle, or discriminate against lawful content — and we will be transparent with our customers about these policies.”

On Tuesday, Pai also said the commission plans to consider whether it should retain, eliminate or modify the national broadcast ownership cap of 39 percent. Eliminating the cap would effectively give Sinclair Broadcast Group the greenlight to buy Tribune Broadcasting, which will bring the new group’s total station coverage to about 70 percent of the U.S. That merger still has to clear anti-trust hurdles, but it’s expected to do so.

Earlier this year, the FCC reinstated the so-called UHF discount, which only counted stations that aired on UHF frequencies as covering half of their coverage area. However, with stations now broadcasting over digital, UHF coverage is just as good — if not better — than VHF frequencies, so allowing the discount’s reinstatement just allowed broadcasters to own more TV stations that covered more market area without making any significant changes to law or regulation. Companies such as Ion Television that own nearly all UHF TV stations are covering 78 percent of the country even though it should be allowed to cover only 39 percent of the country under current regulations.

Should the FCC revoke net neutrality and eliminate the national station ownership cap, both decisions are likely to end up in federal court.

Since the FCC is composed of three Republican commissioners, including Pai, to two Democrats, the vote is expected to go Pai’s way.

That doesn’t mean the Democratic members of the commission support ending net neutrality, however.

“Following actions earlier this year to erase consumer privacy protections, the commission now wants to wipe out court-tested rules and a decade’s work in order to favor cable and telephone companies,” said Commissioner Jessica Rosenworcel in a statement. “This is ridiculous and offensive to the millions of Americans who use the internet every day.”

READ MORE: The New York Times, Wired, Politico

[Hero image of FCC Chairman Ajit Pai courtesy of Wired]

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