The prospect of big Republican gains next month has complicated any potential compromise on the net neutrality issue, especially for a trio of major players in the telecommunications sector who bet on a deal with Democrats.

House Republicans have indicated they are unlikely to push ahead with an arrangement spearheaded by Energy and Commerce Chairman Henry Waxman (D-Calif.) just before lawmakers left to campaign for the midterm elections. The deal sputtered after Republicans refused to sign on to it.

Now AT&T Inc., Verizon Communications Inc. and the National Cable and Telecommunications Association may have some making up to do with GOPers, who are irritated that their past allies in the fight against net neutrality regulations worked with Waxman to craft the deal.

A GOP Energy and Commerce Committee staffer said Republican lawmakers were frustrated because they had defended the telecommunications giants against efforts by the Federal Communications Commission to regulate the Internet.

‘Our Members stepped out on a proverbial limb,’ the staffer said. ‘Some may feel they got the limb sawed off behind them.’

The Republican Members poised to take over House panels that oversee the Internet are opposed to government intervention in enacting net neutrality rules, which would bar high-speed Internet providers from giving preferential treatment to some content providers.

The staffer said that Republicans view the net neutrality issue as a ‘solution in search of a problem.’ But Republicans may be prompted to take action, the staffer said, if the FCC moves to impose net neutrality rules. Rep. Joe Barton (Texas) the top Republican on the Energy and Commerce Committee, has listed preventing the FCC from imposing net neutrality rules as one of his top priorities if he becomes chairman of the panel, the staffer said.

Barton is campaigning for a waiver from GOP leadership to become Energy and Commerce chairman to circumvent term limits set by the party conference.

[IMGCAP(1)]Other likely candidates for the job, including Rep. Fred Upton (R-Mich.), are also opposed to the FCC imposing net neutrality rules. Rep. Cliff Stearns (R-Fla.), who is the ranking member on the Energy and Commerce Subcommittee on Communications, Technology and the Internet, has introduced legislation barring the FCC from enforcing net neutrality rules.

Some in the telecommunications industry are holding out hope that Republicans will remain open to compromise legislation, particularly if it means pre-empting FCC action.

Jim Cicconi, AT&T’s senior executive vice president of external and legislative affairs, issued a statement after reaching the agreement with Waxman, saying that ‘we are pleased that Barton and Stearns remain open to congressional action on this issue, and pledge to work closely with them toward that end.’

‘We remain convinced that the proper course is for Congress to decide the scope of authority it wishes the FCC to have in this area,’ he added.

Telecommunications company officials would not comment publicly about suggestions they had alienated Republicans in negotiating a compromise on the issue. But several said privately that they were surprised at the response, considering staffers for Barton and Stearns were in the room when the agreement was being crafted.

Getting Their Hands Dirty?

One person familiar with the negotiations said Republicans may be playing politics by distancing themselves from those talks so as not to alienate their base voters so close to the elections.

‘They don’t want to make it seem like they got their hands dirty regulating the Internet,’ the source said.

Waxman’s proposal would have prevented phone and cable companies from discriminating against legal Internet traffic. It also would have prevented the FCC from reclassifying broadband as a phone service for two years. The FCC says such a reclassification is needed following a federal appeals court decision earlier this year that held the commission did not have authority to stop Comcast Corp. from violating broadband rules.

As a result, some net neutrality advocates said there is an outside chance that a lame-duck Congress, still controlled by Democrats, could tackle the issue.

‘I wouldn’t bet on it. But you work it,’ said Rey Ramsey, the president of TechNet, which represents high-tech companies and content providers such as Google, Facebook and Intel.

The threat of litigation may prompt lawmakers of both parties to take action, Ramsey said.

Waxman left open that possibility last month, saying, ‘cooler heads may prevail after the election.’ But Waxman urged the FCC to move forward if Congress doesn’t act.

It is not clear what the FCC will do when it holds its next meeting at the end of November. If FCC Chairman Julius Genachowski indicates he is prepared to move on the issue, even Republicans might be more willing to consider the compromise legislation, some net neutrality advocates said.

Conservative Support

Not all conservatives are opposed to compromise.

In his tech blog entry earlier this month on the conservative website redstate.com, Neil Stevens urged the approval of the Waxman blueprint.

‘We need to talk up the Waxman bill because it is more limited than any other major proposal we’ve dealt with during this debate,’ he wrote Oct. 4.

But ‘open’ Internet advocates remain pessimistic that Democrats will be motivated to act, particularly if they suffer large losses in the election. These advocates say that even though the telecommunications companies signed on to the Waxman legislation, they ultimately won when the matter was punted to a Congress that may be run by Republicans.

The advocates add that with massive lobbying teams and extensive grass-roots networks, the companies will have little trouble mending fences with Republicans and pushing their agenda in the next Congress.

AT&T and Verizon have contributed $5.6 million to federal candidates and committees of both parties this election cycle. They also have a bipartisan stable of outside lobbying shops. This year, both companies hired a new GOP lobbying firm, Crossroads Strategies, whose partners had previously worked for Ogilvy Government Relations and the Federalist Group before that. One of the partners, John Green, was Congressional liaison for the presidential campaign of Sen. John McCain (R-Ariz.) in 2008.

Art Brodsky, a spokesman for the advocacy group Public Knowledge, said the failure to pass the Waxman measure before the break was a major setback for those trying to preserve open access on the Internet.

‘It resets it to what it was ‘ not much of anything,’ he said.