For Google, new FCC rules may bring unfamiliar government oversight

By Reuters

Feb 06, 2015 05:07 AM EST

One of Google Inc's major business operations could fall under the day-to-day jurisdiction of the U.S. Federal Communications Commission for the first time, potentially subjecting the fast-moving Internet company to regulations it has often criticized.

Aiming to set "net neutrality" rules that guide how Internet service providers manage traffic on their networks, the FCC will vote Feb. 26 on whether to impose tighter regulations by classifying them more like traditional telephone companies.

That would put Google's high-speed Internet service, Google Fiber, under direct regulatory oversight - a significant change for the world's biggest Internet search company, which has built its $66 billion-a-year business for the most part in the unregulated and fast-changing web market.

To be sure, Google, which is among the top-10 biggest spenders on lobbying in Washington, is familiar with regulatory compliance, but one potential area of friction could be the GoogleFiber neighborhood sign-up process.

Google has rolled out Fiber, which offers super-fast 1 gigabit-per-second speeds and a TV service, in Kansas City and plans to expand to other cities including Austin, Atlanta and Nashville, competing with companies such as AT&T Inc and Comcast Corp.

Google undertakes the costly process of tearing up streets and installing equipment only after enough residents in specific neighborhoods, or "fiberhoods," sign up. That allowsGoogle to be economically efficient, but the practice might run afoul of common carrier regulations intended to guarantee equal access to basic utilities, some analysts say.

Under the proposed rules, revealed on Wednesday, Internet providers would be exempt from the most onerous common carrier provisions such as price regulations, but experts said the FCC could still go after companies, including Google, for not offering the same level of service across the country.

"That is the traditional role the commission has played, in ensuring that all Americans have access to telecommunication services," said Harold Feld, senior vice president at Public Knowledge policy group.

Google had supported strong net neutrality rules, though it has not directly backed reclassification of Internet providers. In a December FCC filing, Google noted it could actually benefit from such an approach by getting easier access to poles and other infrastructure owned by incumbent broadband providers.

In a statement, Google said that new rules the FCC is weighing have not affected its decision to invest in Fiber.

U.S. regulators currently oversee some other elements of Google's vast business, such asGoogle Voice, its privacy practices and wireless experiments.

Some experts say any oversight of Google Fiber, which many analysts do not believe currently generates material revenue for the company, would be unlikely to significantly cramp Google's style.

"They should probably be pretty well-versed in how to deal with regulatory agencies at this point," said Needham & Co analyst Kerry Rice.

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