Mr. Pai is arguing that the rollback will actually spur more competition in the ISP industry as companies become motivated to offer more choice in internet speeds and service packages to their users.
Under the measure, internet service providers would have to inform customers about issues including blocking, Politico reported Monday.
The Internet Association, a trade group with members including Netflix, Facebook, Google and Amazon.com Inc., said "This proposal undoes almost two decades of bipartisan agreement on baseline net neutrality principles that protect Americans' ability to access the entire internet".
New rules would restore a "light-touch regulatory approach", said Pai, a Republican appointed by President Trump.
"Network providers have business incentives to make their media products more desirable than their competitors, like Netflix or YouTube", the assistant professor said, via CBS News.
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"Under my proposal, the federal government will stop micromanaging the internet", said Pai in a statement.
The embattled rules risk "stifling innovation, costing jobs, and casting a pall over the investment needed", said Michael Powell, chairman of the Washington-based trade group.
Ajit Pai, chairman of the Federal Communications Commission (FCC), pauses while speaking during an open meeting in Washington on November 16.
Passage of the rules would be seen as a victory for big telecom and cable companies such as AT&T, Comcast and Verizon. However, the new rules are highly expected to pass since Pai's party is controlling three of the Commission's five seats. The Obama-era rule that says all internet traffic has to be treated equally.
For businesses like Netflix, they could be forced to pay ISPs for access to fast lane speeds in order to keep up their level of service.
A USA appeals court past year upheld the legality of the net neutrality regulations, which were challenged in a lawsuit led by telecommunications industry trade association US Telecom.
"Net neutrality is the idea that the internet should be free and open for everyone", said Facebook Chief Executive Mark Zuckerberg. The FCC granted initial approval to Pai's plan in May, but had left open many key questions including whether to retain any legal requirements limiting internet providers conduct. It received millions of comments during a review period, with the majority supporting the current protections. However, Chairman Pai doesn't want the American user to fall for this "fearmongering".