U.S. FCC chair to cable industry: 'More competition would be better'

(Reuters) - The top U.S. communications watchdog urged the cable industry on Wednesday to "overcome the temptation" to use its growing dominance as Internet providers to protect its traditional business, while cable CEOs pushed back against new regulations. Speaking at the industry's trade show in Chicago, Federal Communications Commission Chairman Tom Wheeler drew a lukewarm reception as he pressed the companies to boost competition and embrace the Internet's power to shake up their business model. "You don't have a lot of competition, especially at the higher speeds that are increasingly important to the consumer of online video. ... More competition would be better," Wheeler said at the Internet and Television Expo. "History proves that, absent competition, a predominant position in the market such as yours creates economic incentives to use that market power to protect your traditional business in a way that is ultimately harmful to consumers." Cable and wireless industry trade groups are challenging in court the FCC's new Internet traffic regulations, also known as "net neutrality" rules, that expanded the agency's authority over Internet service providers. "It's terrible regulation," said Michael Fries, president and chief executive of European cable group Liberty Global PLC, which has no U.S. television business. "There is a presumption of guilt and a punishment of success that this industry has achieved that I have never witnessed in my life," Fries said to cheers and applause from the audience. Companies say they do not object to the principles of net neutrality, for instance a ban on blocking or slowing down any Web traffic. But they are fighting the FCC's move in February to reclassify the Internet as a more heavily regulated "telecommunications service," instead of the less regulated "information service" previously. "We are already seeing early signs. .... Poll attachment fees go up, already seeing new classification of taxes, my legal costs are going up," Cox Communications President Patrick Esser said. "My customer pays for that. I don't think it's needed." Wheeler said the FCC's net neutrality rules take into consideration Internet providers' economic concerns, and noted that he would make sure cable companies do not pay excessive fees for attaching their wires to utility poles. Wheeler also indicated that the FCC would review how the agency assesses whether negotiations between pay-TV providers and broadcasters over retransmission of content are conducted in good faith. (Reporting by Alina Selyukh in Washington and Lisa Richwine in Chicago; Editing by Doina Chiacu and Richard Chang)