SEC Says Telecoms Must Allow Shareholders To Vote On Net Neutrality

by Wendy Davis, Feb 15, 2012, 6:09 PM

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Last year, net neutrality advocates proposed that shareholders of Verizon, AT&T and Sprint vote to endorse neutrality principles at their annual meetings.

The proposals -- by institutional investors as well as individuals like "Mike D." of the Beastie Boys -- call for the telecoms to commit to follow neutrality principles when operating their wireless networks. Specifically, the proposals say that telecoms should promise that they won't degrade or prioritize content based on which company owns it, or who will receive the material.

Those requirements are broader than the Federal Communications Commission's neutrality rules, which prohibit wireless providers from blocking or degrading content and competing apps, but appear to allow wireless companies to enter into paid prioritization deals. (The FCC imposed more stringent conditions on wireline companies.)

The telecoms obviously weren't thrilled by the prospect of a shareholder vote on this issue. They argued to the Securities & Exchange Commission that investors have no right to micromanage ordinary business operations, such as how the network handles traffic.

The SEC disagreed. In letters made public this week, the agency said that the "sustained public debate" about net neutrality, as well as the "increasing recognition that the issue raises significant policy considerations," mean that the question involves more than just operational decisions.

The telecoms can still challenge the SEC's decision in court. But if they don't, shareholders will have the opportunity to vote for the first time on whether they want the telecoms to adhere to neutrality principles.

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