The FCC Chief Just Told the Cable Execs to 'Put Away Their Party Hats'

The head of the Federal Communications Commission is warning cable industry leaders not to abuse their power over Internet access—lest they find themselves on the receiving end of tougher federal regulation of the Internet.

Speaking at the National Cable and Telecommunications Association's annual Cable Show on Wednesday, FCC Chairman Tom Wheeler reminded the industry that he has the power to reclassify broadband as a utility, which would grant his commission much stronger leverage to regulate the industry.

"If someone acts to divide the Internet between 'haves' and 'have nots,' we will use every power at our disposal to stop it," said Wheeler, a former NCTA president and wireless lobbyist.

Wheeler said his options include "Title II," a move that would reclassify broadband as a "telecommunications service"—the same classification currently applied to telephone utilities.

Liberal advocacy groups have urged the FCC to take that step, saying it's necessary to protect the open Internet, but the commission has so far resisted that call.

Wheeler proposed net-neutrality rules last week that would allow Internet service providers to charge websites for access to special "fast lanes." But the FCC chief warned the audience of cable and broadband executives not to get too excited.

"Reports that we are gutting the open-Internet rules are incorrect," Wheeler said. "I am here to say: Wait a minute. Put away the party hats. The open-Internet rules will be tough, enforceable and, with the concurrence of my colleagues, in place with dispatch."

The rules would still ban Internet service providers from blocking or degrading any websites.

But consumer protection groups and liberal lawmakers fear so-called "fast lanes" would give rich websites, like Netflix or Facebook, an unfair advantage over small websites, potentially preventing "the next Facebook" from reaching its potential.

Wheeler is trying to rework the net-neutrality rules after a federal court struck down the old regulations in January. Although he has limited legal options under the current authority, reclassifying broadband as a "telecommunications service" would give him expansive powers—including to ban ISPs from speeding up any websites.

Wheeler emphasized that his priority is to get new net-neutrality rules in place as quickly as possible, but said he will do what's necessary to protect an open Internet.

"Now, as chairman of the FCC, I do not intend to allow innovation to be strangled by the manipulation of the most important network of our time, the Internet," Wheeler said.

But while liberals are pushing for tougher rules, reclassification would prompt a massive backlash from Republicans and business groups.

Reclassifying the Internet as a public utility is a worst-case scenario for the cable industry. On Tuesday at the Cable Show, NCTA President and former FCC Chairman Michael Powell urged the agency not to make the Internet a utility.

Powell compared the state of the Internet to the state of utilities, like electricity, which he said experienced 307 major blackouts in 2011.

"Can you imagine if the Internet blacked out 300 times a year?" Powell asked. "No, because it doesn't. Because the Internet is not regulated as a public utility, it grows and thrives, watered by private capital and a light regulatory touch."