By Maggie Shiels
Technology reporter, BBC News, Silicon Valley
The US ranks 15th in the world for providing access to high-speed internet
US regulators unveiled plans to change the way broadband services are overseen so they can fulfil commitments to bring high speed net access to every citizen.
This so-called "third way" will insist on principles that require cable firms to treat all net traffic equally.
The Federal Communications Commission (FCC) was forced to act after a court found it had no mandate to dictate on how ISPs run their networks.
Advocacy groups said the ruling put the FCC's broadband plan in "legal limbo".
Under present rules the FCC has what is known as "ancillary" authority over broadband providers such as Comcast, AT&T and Verizon which means that they are lightly regulated.
In April, a US court ruled that in 2008 the FCC overstepped those powers when it sanctioned Comcast for slowing down certain types of data traffic - mainly when subscribers downloaded large files.
Plans to redefine broadband as a telecommunications service instead of its present definition as an information service would normally give the Commission authority over rates, practices, regulations, facilities and so on.
But under the "third way" proposals, the FCC has taken a more softly-softly approach. It says that it will not regulate rates charged by telephone and cable companies for internet services, regulate internet content, services, applications or electronic commerce sites.
FCC chairman Julius Genachowski said the Comcast decision had created a "serious problem" and that the new regulatory framework would give the Commission the "modest authority it needs to foster a world-leading broadband infrastructure for all Americans".
The FCC said a third of all US households - 100 million Americans - do not have a broadband connection.
The FCC hopes its new approach will satisfy the cable operators and critics as well as assuage the concerns of advocacy groups and supporters of net neutrality.
"The important thing was to find a path forward and give the FCC some appropriate but limited authority," David Sohn of the Centre for Democracy and Technology told the BBC.
"They are clear this should be limited to broadband access and not extend to content regulation or them regulating the internet broadly."
Broadband is increasingly essential to the daily life of every American
Julius Genachowski, FCC Chairman
Public Knowledge, a digital rights advocacy group, said the way forward would not be trouble-free.
"We expect a pitched battle on this approach," spokesman Art Brodsky told the BBC.
"We knew from the beginning that anything the Commission does would be taken to court and we bet the telephone and cable operators have their Supreme Court lawyers already lined up. But at the end of the day we will win and get back in place a solid regulatory structure that ensures a cop is back on the beat looking out for consumers."
Businessweek reported that, shortly after the FCC announcement, shares of major cable-television carriers fell. Comcast, Time Warner Cable and Cablevisions Systems, the three largest publicly traded cable operators in the US, all lost around 5%.
The FCC has said broadband was "the greatest infrastructure challenge"
Cable and phone companies said the new regulations will make it harder for them to justify network investments to shareholders because the FCC might require them to share their pipes with rivals in the future, putting a limit on returns.
Thomas Tauke, an executive vice president at Verizon told the New York Times the approach was "legally unsupported" and could only bring "confusion and delay to the important work of continuing the build the nation's broadband future".
Cablevision said using rules drawn up in the early 20th Century to regulate network providers is a bad move.
"We operate in a highly competitive environment," said Tom Rutledge, Cablevision's chief operating officer in a conference call.
"We've built fantastic products as a result of the competitive situation that has existed under existing law. We don't think there's a real problem."
The FCC will soon seek public comment on Mr Genachowski's proposal. It will have to be approved by three of the five commissioners to get the go ahead. Mr Genachowski is expected to have the support of his two fellow Democracts at the agency.
The two Republicans, Robert McDowell and Meredith Baker, said they were disappointed with the plan.
In a joint statement they said "this dramatic step to regulate the internet is unnecessary".