United States:
Net Neutrality - The SEC Finally Comes Around
29 March 2012
Foley Hoag LLP
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Lawyers read exciting periodicals such as SEC No-Action Letter
Weekly (published by Wolters Kluwer see
www.wolterskluwerlb.com.). Normally, I would not bore you
with this stuff, but this week the lead article had the titillating
title of "Staff Reverses Position on Net Neutrality
Shareholder Proposals."
Apparently, the SEC has finally come around to the notition that
net neutrality is a really important issue. I have included three
of the salient paragraphs below.
The SEC's Division of Corporation
Finance has advised Sprint Nextel Corporation and AT&T Inc.
that they may not omit from their proxy materials shareholder
proposals that ask the companies to publicly commit to operate
their wireless broadband networks in accordance with network
neutrality principles. The staff explained that, due to the
sustained public debate over the last several years about net
neutrality and the Internet, and the increasing recognition that
the issue raises significant policy consideration, the proposals
may not be omitted in reliance on the ordinary business
exclusion.
AT&T wrote that the proposal
represents an attempt to repackage substantially similar proposals
about its network management practices, which the staff, in the
past, has concluded were excludable as ordinary business. In
AT&T's view, the proposal would directly interfere with its
network management practices and would seriously impair its ability
to provide wireless broadband service to its customers. AT&T
also sought to omit the proposal under Rule 14a-8(i)(2) on the
basis that it would impair the company's ability to comply with
federal wireless licensing requirements.
AT&T said the proposal cited the
same reports as in a 2011 proposal and that the only substantive
addition was a citation to a 2011 survey that presents statistical
information similar to that presented in the January 2010 report
and cited in the 2011 proposal. AT&T challenged the notion that
net neutrality has emerged as a consistent topic of widespread
public debate that would reflect a significant policy issue for
purposes of Rule 14a-8(i)(7).
The point is that stockholders of public companies can propose
that the stockholders, at the company's annual meeting, adopt a
resolution directing the company to observe principles of net
neutrality. It will be interesting to see how many, if any,
companies include this type of resolution and if any of them
pass.
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