this is "nightly business report" with tyler mathisen and sue herera. historic vote. the fcc approved sweeping new rules for the internet giving the government greater oversight of one of the nation's most important economic engines. black and blue. ibm ceo announces an ambitious spending plan but was she able to win over wall street? why our nation's airline industry is overloaded and under stress. all that and more "nightly business report" for thursday february 26. >> good evening and welcome everyone. a historic day in washington today. here's why. nearly 90% of american adults use the internet and today, a landmark decision in the nation's capitol ushers in a new erea for internet use. the federal communications

commission in support of net neutrality ensuring all internet traffic is treated differently. the goal to prevent internet providers to control what online content people can access. content can't be blocked, deliberately slowed down or sped up for a price. critics who vow to fight the ruling in court say innovation and investment in the internet will be stifled. as eamon javers reports, the vote itself was divisive and contentious. >> this is what democracy looks like! >> reporter: it was the end of a long hard fought battle over the future of the internet as the fcc commissioners voted 3-2 to pass new rules that would block internet companies from charging more money to certain web sites or slowing speeds for others. >> the ayes have it. >> reporter: before a standing room crowd, the fcc for the first time voted to regulate the internet like a utility and to enforce so-called net neutrality. the fight pits some big content

producing firms like netflix and twitter against some of the big internet broadband service providers like comcast and time warner cable. it's also provoked sharp division here on the commission itself. >> internet has become a powerful force for freedom here and around the world. so it's sad to witness this morning the fcc's unprecedented attempts to replace that freedom with government control. >> reporter: but the deciding vote came from fcc chairman tom wheeler who had been prodded along by president obama earlier this year. >> this is no longer a plan to regulate the internet than a first amendment is a plan to regulate free speech. they both stand for the same concept. openness. expression. and an absence of gate keepers telling people what they c do where they can go and what they can think. >> i'm sorry, but we can't let you go to work today. >> reporter: last year pro-net

neutrality blocked wheeler's home driveway as an effort to push him toward this fcc vote. for now, the internet activists won a big regulatory victory but now the battles likely to move to the courts as challenging the moves on legal ground. for "nightly business report," i'm eamon javers in washington. >> comcast, one of the internet service providers eamon just mentioned, is the parent company of cnbc which produces this program. verizon was one that was against the fcc's decision and the company got creative to drive home the point. releasing a statement in old-fashioned typewriter font to speak out against the decision saying the broadband rules were quote, written in the era of the steam locomotive and the telegraph, end quote. >> craig joining us to talk about what it means for you. he's with moffitt nathanson. craig, welcome. good to have you with us. the real question what does

this mean to me and what i will end up paying for my internet service, that's one baseline question. the question really is will this lead to higher prices for consumers or slower speeds than would have been the case if internet service providers would have been allowed to charge more for faster speeds? >> well let's start with the first part which is what does it mean for you as a consumer? the answer is probably nothing. remember this debate wasn't really about net neutrality anymore. it started there. but it really became about what's the regulatory framework, if you will that allows them to have the statutory authority to do net neutrality? there's been a lot of debate about whether this will actually lead to price regulation. it will probably lead to some imposition of new taxes and fees on internet service, so you

could see some incremental increase to prices. but at least initially, it's not likely to lead to any real change in pricing. >> you know, there's a lot of speculation there's going to be y some of those big companies who did not want this decision to go through. so we might not see the impact for some while. correct? >> that's correct. you're going to see now a protracted period of legal wrangling. once this is published in the federal register which could take a couple of months you'll see all of the internet service providers file suit. they'll ask for an injunction to stay the implementation of the new plan and whether they get it or don't, it will start a long litigation process that will create uncertainty in the industry while it goes on. >> it seems to me that doesn't trust the other side. nobody trusts the government not to step in and regulate prices and nobody trusts the big

internet service providers not to throttle or charge to the content providers. would we be in this position if there was more trust? >> well tyler, the irony here is that this debate isn't about net neutrality anymore because, remember the internet service providers, comcast and verizon and at&t all agreed to abide by the principles of net neutrality voluntarily, and so what this -- >> my point is that they've agreed to abide by the principles of net neutrality and what objected to is being categorized as a title 2 under the cat gorization act of a common carrier and the other hand the government said we don't really want to regulate prices the way the common carriers are regulated but no one trusts the other side. >> you're exactly right and look there are legitimate reasons to be concerned that even with the promise of

so-called forbearance or the promise not to impose price regulation that this could turn out to be a slippery slope in that direction simply because of the way the 1934 communications act was written, and look. at its very heart, the 1934 communications act is about price regulation. and so to suggest that you can impose a price regulatory act on an industry and then expect that it doesn't at least increase the risk of price regulation is probably being naive. >> craig, we could spend a very interesting hour talking about this but alas we can't. we'll have you back. i know we'll visit this one again. craig moffitt with moffitt. on the wall street nasdaq resumed climb towards 5,000 while falling prices weighed on the dow jones and s&p 500. blue chip fell to 18,214 and nasdaq rose 41 points to 4987

helped in part by apple. a special event likely for the apple watch. one on the blue chips, ibm. shares fell more than 1% after the chief executive failed to wow investors at the annual meeting with analysts. the company announced the big spending plan though and set new financial targets in an effort to win back wall street. david favors spoke at the investor day meeting in new york. >> reporter: ibm's investor briefing has concluded. big headline? the company spend additional $4 billion on key gross initiatives. mobile cloud, and security which represent about $25 billion worth of revenues right now. its goal by 2018 to have those represent as much as $40 billion of the company's revenues or what they're saying will be roughly 40% of overall revenue.

i ask, what gives her the confidence they can deliver on the goals? >> we are a high valued innovation company and to that point, some of the supporting facts. you know when we did the earnings and you and i talked about this we have come out and say the strategic imperatives, the data cloud engagement $25 billion, so what gives me confidence? they grew another very strong 16% of actual rates last year and they are now 27% of ibm. so it was important that we went back in time. we showed everyone today, they've been growing strong double digits for years. started last year 22%. and now 27%. and in fact we've got confidence they'll continue to grow double digits and therefore that leads you to $40 billion which would be greater than 40% of ibm in four years. >> reporter: it has been a hard road of course for ibm in the stock market over the last

couple of years. late last year the company dispatched the so-called road map to earn as much as $20 a share this year. those numbers are just not happening for this company as it deals with declining revenues in many of its older line of business. older, yes, but rametti said it's to grow over the long-term. i'm david favor for "nightly business report" in new york. consumer prices dropped in january. a plunge in gas prices last month lowered consumer prices by about 0.7%. the most in six years. and slightly more than economists had been expecting. also surprising economists was the number of americans filing for unemployment benefits which jumped by 31,000 last week the most since late 2013. in the meantime orders for durable goods which are items meant to last at least three years throws for the first time in three months. and following two days of

testimony on capitol hill by the federal reserve chair janet yellin federal reserve officials, st. louis president james bullard and cleveland president loretta metzer out discussing not only monetary policy but the intense push by lawmakers to rein in the central bank. steve liesman reports. >> reporter: officials rally to the side of ped chair janet yellin a day after accused of political bias by tea party in the house of representatives. >> i think she's a very balanced and careful thinker on monetary policy. i don't see these charges being well founded. >> reporter: in yellin's testimony before the house yesterday, lawmakers pointed to her repeated meetings wlt treasury secretary as well as her speech about inequality just two weeks before the recent congressional elections as proof of her bias in favor of democrats and the white house. but fed officials say nearly

every fed chair held regular with the fed secretary and allen greenechair, back far as 1998 spoke about income inequality but still criticisms today. >> they've been out there for decades, the fed is somehow totally independent of partisan politics entirely and for that reason they should not be held accountable on either front on the monetary side or the regulatory side. >> reporter: there's considerable support for new rules to allow greater scrutiny and control for how the fed makes monetary policy including a bill to audit the setting of interest rate policy which is strongly opposed inside the central bank. >> the fed, the bill they were talking about, i think is misnamed and also misguided. it's not really about auditing the fed. the fed is audited. i think jan brought up the financials to show our financial statements are audited. it's really about having political interest and

infiltrate the decisions on a short-run basis. >> reporter: out of setting interest rates to steer the economy is the exact reason the fed was set up as an independent body more than a hundred years ago. but it's unclear if in the hyperpolitical atmosphere of washington if any body or agency can remain above the fray. for "nightly business report," m steve liesman. >> joining us now to talk more about the fed is randall kroz krozner, now professor of economics at the chicago's booth school of business. professor crosner, thank you for being here. >> thank you for having me. >> the role the fed chief took on capitol hill. you know in historical meetings this is the most transparent fed recently that we've had really in history and yet she did take a grilling. what did you make of that whole scene on capitol hill? >> i think part of it is the position the fed is very different than it once was in

terms of the broader public. it used to be the front page of business section and now it's the front of the paper. people are trying to prevent a depression a deflation. no surprise even though the fed made steps forward in transparency there's a lot more scrutiny than there has been before because it's just more known how important it is. it's really aficionados and people like me who have done work on it and now everyone knows how important the central bank is. >> the federal bank has become more central, i guess, is what you're saying. >> exactly. >> one of the things that chair yellin was criticized for was her meeting schedule. how many times she went to the white house, met with treasury officials, compared with how many times she met with congress how many times she may have met with so-called liberal economists. did you see or do you know of any bias in her meetings? do you see any problems there? >> i didn't see any bias.

i think it's very important for the fed chair to be talking to members of congress talking to the secretary of treasury. that's been a standard thing done as far as i know for the whole history of the fed to have a good back and forth with other key decision makers but it's very important to have that discussion. the fed shouldn't be independent in the sense that they never talk to anyone. they shouldn't have political interference in the decisions, but they should be talking to key political actors on both sides of the aisle. >> what do you make of her testimony on the state of the economy and what she still worried about, the income inequality issues the labor issues out there, the lack of wage growth. do you generally agree with her stance on where the economy stands right now? >> the fed is in a tough position because it's coming back and inflation is low and seems to be moving downward rather than upward. i see there's a lot of

challenges in the labor market. we have not had a robust recovery. there are a lot of people not counted as part of the labor force but looking for work so the 5.7 unemployment rate is not representing a robust labor market. >> back to the independence of the fed, what do you think of the idea of either an independent or a congressional, quote, audit of the fed and its policy making? >> i think, as you heard from moster and steve liesman is careful to describe it. it's not just the tradition audit because the fed is audited by a major accounting firm. if you look at the fed's web site you'll see a weekly monthly, and quarterly basis all it holds. it's transparent that way. they use the word but it really means an oversight, more than oversight, sort of an involvement in the decision-making about interest rates and if you look at the history of banks that have been more independent or less independent in the political

process, the ones that are more independent have lower less variable inflation and the overall employment outcomes have been at least as good and generally better and less variable when you don't have the political interference. >> professor, thank you so much. please come back and spend time with us again. >> thank you. >> professor randall crosner with booth school of business. clock is ticking on a potential shutdown of the homeland security department and today, the wrangling among lawmakers contin

the price of crude oil fell to its lowest level in nearly a month during trading today. as inventories continue to grow. west texas intermediate dropped 5.5% to $48.17 and brent also fell. the price of a gallon of gasoline is going in the other direction. it's up 77 cents in california over the past month due in large part to the torrance refinery fire last week. tomorrow midnight is the deadline to fund the department of homeland security or risk a shutdown of the agency. the senate has yet to vote on its bill that would provide the needed funding and the house's next move is still in question. >> president obama told a left wing blog he opposes senate filibusters. but he sat there like a bump on a log watching senate democrats filibuster the debate on this bill. so we're waiting to see what the senate can or can't do and then

we'll make decisions about how we're going to proceed. >> john harwood in washington covering this story tonight. that's amusing language, john, but if there's no funding tomorrow night, what happens, what happens at the airp i be limited fallout that will be visible to the public tyler, because most homeland security employees at functions are considered essential functions of government. what it means is those people will do their jobs but they won't get paid. that's not sustainable over a long period of time which is why we expect this will get resolved over the weekend. but i've got to tell you. i'm sure our viewers are getting tired of this. it's getting tiresome to those how we get up to a brink of crisis without getting a solution. >> do you think there will be a solution? you said over the weekend, certainly, but they tend to take it to the brink and pull back a little bit. it comes at a time where there's a lot of tension around the world in terms of terrorism and security fears. >> reporter: it is really hard to believe, sue, that the

congress cou >> reporter: it is really hard to believe, sue, that the congress could be so tied up in knots over this immigration issue that republicans are complaining about that they wouldn't fund homeland security. and it's why i think it will get resolved. the house is considering what it will do and senate is going to pass a clean funding bill to fund the end of the fiscal year. republicans look to be going through a very short-term plan to fund it for three weeks which means three weeks from now, we'll be right back in this situation. >> john thank you very much. john harwood reporting tonight from washington. >> he's got a lot of patience. all right. jcpenney posted a surprise quarterly after the bell. that's where we begin market focus. revenues disappointed. revenue and same store sales grew as expected but investors not impressed. sh initially plunged but before the close, up 1.5% to

$9.12. gap is forecasting a drop in profit for the year blaming a stronger dollar and issues related to the slowdown at the west coast ports. the company did approve a $1 billion stock buyback and that sent shares initially higher after hours. before the close, the stock was up a few cents to $40.37. in retail kohl's said its results in holiday quarter topped estimates and hiked dividend by 14% to 45 cents a share, a dividend yeelield of 2.5%. it's forecasting sales above estimates. shares up to $71.96. it was the opposite story, however, for sears. that retailer posted a loss which was narrower than expected but revenue missed. same store sales at name sake stores and at kmart fell along with its earnings the company said proceeding with plans to split off a few hundred stores into separately owned real estate company or reet.

it slumped to $50.09. >> barnes and noble bookstore will spin off college books business from its retail and nook units. the separation is expected to be completed by august of this year and will create two independently publicly traded companies. the retailer said the move will allow for better strategy and focus. the shares popped almost 7% to $45.92. big announcement from anheuser busch. beer giant raised 46% and announced a $1 billion share buyback program. it's forecasr beer sales. that sent up shares $3 to $127.49. seaworld reported a wider loss in fourth quarter as attendance keeps falling. the company has been battling negative publicity since the documentary out a few years ago argued performing killer whales shouldn't be kept in captivity.

the stock there fell about 6% to $19.17. and still ahead, crowded airports and packed planes. antiquated infrastructure. is our airline industry simply overloaded and what's being done to alleviate that stress? united airlines issued an urgent warning to pilots following near misses and incidents involving cockpiter ror errors errors. the danger of poor cockpit communication. as philip lebeau reports, these inlts may be symptoms of a

larger issue facing the entire >> reporter: the memo from united airlines to its pilots was blunt. follow safety procedures in the cockpit. it highlighted significant safety concerns following four events and near misses leading up to the memo's release in mid january. one of those incidents involved united pilots needing to do an emergency pull-up to avoid crashing. united said we constantly monitor flight operations data and regularly communicate the findings with our pilots. our approach to safety is in line with the faa safety management system. and enables to recognize potential issues and adjust our actions to further ensure the safety of our customers and coworkers. while no one was hurt on the united flight the warning highlights a growing problem for airlines in america. they are dealing with more congestion and more challenges from a system desperately in

need of an upgrade. >> you would think the benefit of being in an airplane is fly more or less in a straight line to your destination, but that's not what they do. it's the highways in the sky with a lot of separation between airplanes to compensate for the fact that infrastructure is so old. >> reporter: there are initial steps to update the air traffic control system with advanced software that should cut down on congestion and potential incidents in the air and the tarmac something needed as carriers move to add more flights in certain high density hubs. >> you add another five or 10% capacity to what we have now and we would be back there in the busiest airports. you'd like to see something more proactive happening. >> reporter: adding is a looming shortage of pilots as older pilots face mandatory retirement while foreign airlines especially those in asia are growing quickly and competing with u.s. airlines to hire pilots. for u.s. airlines these issues come at a time when profits are

soaring, which has some critics call for airlines themselves to pay for upgrading the nation's commercial aviation system. a move many admit is unlikely to happen. philip lebeau, "nightly business report," chicago. that's "nightly business report" for tonight. i'm sue herera. >> i'm tyler mathisen. thank you from me as well. have a good evening. we hope to see you back here.

>> the following kqed production was produced in high definition. [ ♪ music ♪ ] it's all about licking your plate. >> the food was just fabulous. >> i should be in psychoanalysis for the amount of money i spend in restaurants. >> i had a horrible experience. >> i don't even think we were at the same restaurant. >> and everybody