SEC Denies Carrier Attempts to Block Shareholder Net Neutrality Votes

The U.S. Securities and Exchange Commission has rejected attempts by three telecom companies to block shareholder votes on whether they should commit to net neutrality principles.

This week, the SEC declined to act on requests by AT&T, Verizon Communications and Sprint Nextel to block the votes. All three companies had argued that net neutrality was not a significant policy issue under SEC definitions and, therefore, they weren't required to put the matter to a shareholder vote.

The SEC disagreed, saying in letters to the company that there's been a "sustained public debate over the last several years concerning net neutrality and the Internet and the increasing recognition that the issue raises significant policy considerations."

Carriers had successfully suppressed shareholder proposals on net neutrality in the past three years.

Since early 2010, net neutrality advocates, including musician Michael "Mike D" Diamond of the Beastie Boys, have pushed for shareholder votes in support of net neutrality practices at broadband and mobile providers.

Diamond was one of several investors in Verizon and AT&T, also including the Nathan Cummings Foundation and the Benedictine Sisters of Mount St. Scholastica in Atchison, Kansas, who pushed for the votes. The foundation pushed for the vote at Sprint.

Net neutrality has implications for "social and economic justice" and long-term shareholder value, Laura Campos, director of shareholder activities at the Nathan Cummings Foundation, said in a statement. "The foundation is concerned that over the longer-term, a failure to operate their wireless broadband networks in accordance with the principles of network neutrality could negatively impact their market shares and damage their reputations with consumers," she said.

The upcoming shareholder votes may not need to be successful to have an impact on company practices, said Michael Connor, executive director of the Open Media and Information Companies Initiative (Open MIC), an advocacy group that has pushed for the votes.

"We have a lot of work to do over the next couple of months, but we're very hopeful that institutional and individual shareholders will agree that an open wireless Internet is critically important for individuals, for the companies and for the health of our economy," he said.

Verizon declined to comment on the SEC action. An AT&T representative did not respond to a request for a comment.

Verizon, in a letter to the SEC this month, argued that little has changed in the debate over net neutrality since prior attempts to force shareholder votes. The SEC, in the past, has voiced a "well-established position" allowing the company to block the proposed votes, wrote Mary Louise Weber, Verizon's assistant general counsel.

The shareholder proposals are both "impermissibly vague" and seek to "micro manage Verizon's ordinary business operations," Weber added.

Sprint had also sought to block the vote because it dealt with the company's "ordinary business operations," spokesman John Taylor said. SEC rules allow companies to block proposed shareholder votes if they relate to ordinary business operations and do not raise substantial policy questions.

Sprint is considering its next steps, Taylor said.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is grant_gross@idg.com.

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