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* Chairman says FCC will be flexible, pragmatic on web rules
* U.S. broadband providers to be regulated more closely
* Europe also working on net neutrality policy
* U.S. to hold next spectrum auction in Q1 2016
By Leila Abboud and Alina Selyukh
BARCELONA/WASHINGTON, March 3 (Reuters) - New rules totighten regulation of U.S. broadband providers are not tooinvasive and are needed to defend consumers' interests andopenness on the internet, the chairman of the U.S.telecommunications industry watchdog said on Tuesday.
Some telecom and cable companies exaggerated when theycomplained the moves would harm them or cripple innovation onthe web, Tom Wheeler, the head of the U.S. FederalCommunications Commission (FCC), said at the Mobile WorldCongress in Barcelona.
Last Thursday, U.S. regulators approved the strictest-everrules on internet providers, who in turn pledged to battle thenew restrictions in the courts and Congress, saying they woulddiscourage investment and stifle innovation.
The new policy reclassifies broadband, both fixed andmobile, as a more heavily regulated "telecommunicationsservice", more like a traditional telephone service.
The rules aimed to protect "net neutrality", Wheeler said,referring to the concept that all traffic on the internet mustbe treated equally regardless of content or source.
"One of the tragedies" of the debate has been peopleinvoking "imaginary horribles", he said, adding that the FCCwould not interfere in telecom or cable groups' businesses.
"There are only four rules in here, plus the yardstick forus to judge what is just and reasonable," said Wheeler.
"There are no broad strokes ordering companies on how to dothings. We want network operators to be as innovative aspossible, and have revenue streams from consumer services thatare unchanged so they can invest and build better networks."
Wheeler said the FCC would look at issues on a case-by-casebasis, acting as a referee to ensure that the internet remainedopen and free.
Net neutrality has become a hot button issue in recent yearsbecause of disputes between network operators andbandwidth-hungry services such as Google's YouTube andNetflix and attempts by some telecom and cablecompanies to block services like Skype and Facebook'sWhatsapp.
SPECIALISED SERVICES
Wheeler showed an audience that included executives fromAT&T a slide with the main points of the rules passed lastThursday.
Internet providers will be banned from blocking or slowingany traffic and from striking deals with content companies,known as paid prioritisation, for smoother delivery of trafficto consumers.
But telecom and cable groups will still be able to set asidecapacity for so-called "specialised services" - providingconnectivity to a smart metre or connected car for example - aslong as they do not disadvantage normal internet services forhomes and businesses.
That exception is important to industry because they thinksuch services could one day be a big earner as everyday objectsare increasingly connected to the web.
European policy makers are working on a net neutrality lawas well, which could be finalised this spring. The chiefexecutives of Vodafone and Deutsche Telekom haveurged a similar pragmatic, flexible approach to "specialisedservices" as the FCC.
The European Parliament, which passed net neutrality ruleslast April and are being negotiated with member states, tried tobuild in protections to ensure that specialised services do notbecome a loophole for industry to exploit. But those are likelyto be watered down in the final version of the law, experts say,under pressure from industry.
Separately, Wheeler said the U.S. will hold its nextspectrum auction in first quarter of next year.
"We will hold for the first time in the world an incentiveauction in which we seek to buy back 600 megahertz spectrum frombroadcasters and repackage it to sell to the wireless industry,"he said. (Editing by Harro Ten Wolde and Susan Thomas)
