Make Internet service a utility: what's the worst that can happen?

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The cable industry takes a subtle approach to anti-Title II advertising.

It's 2020, and a coronavirus pandemic has underscored just how crucial broadband service is to Americans' lives for work, entertainment, and school. Internet service is a necessity, and yet it is not regulated as a utility company as are services like water and electricity. But in 2014 (when this story was originally published) and 2015, there was a heated debate over whether the Federal Communications Commission should treat broadband service as a utility, or, more precisely, as a common Title II operator service. , in order to impose net neutrality rules.

We are resurfacing this December 2014 article, which examined the cable industry's argument that public service style regulation would hurt broadband users and providers. Ultimately, the FCC reclassified broadband to enforce net neutrality in 2015, but never imposed strict regulations on public services such as price limits or unbundling of the network. Broadband users enthusiastically endorsed the rules, and ISPs later admitted to investors that the additional regulation did not harm their businesses. But FCC President Ajit Pai deregulated the broadband industry anyway, removing net neutrality rules and other consumer protections, such as a ban on hidden fees. Since Pai's decision, major ISPs have been tapering investment in the network despite operating in the largely unregulated environment they were seeking, and the FCC has relied on ISPs' voluntary promises rather than actual rules to uphold to customers online during the pandemic.

There seems to be nothing the broadband industry fears more than Title II of the Communications Act.

Title II gives the Federal Communications Commission the power to regulate telecommunications providers as public service companies or "common operators,quot;. Like landline providers, common operators must offer services to the public on reasonable terms. To regulate Internet Service Providers (ISPs) as utilities, the FCC must reclassify broadband as a telecommunications service, a move that consumer advocacy groups and even President Obama have lobbied the FCC for me to take action.

Under Obama's proposal, reclassification would only be used to enforce net neutrality rules that prevent ISPs from blocking or throttling applications and websites or from charging applications and websites for priority access to consumers. The FCC would be expected to avoid imposing stricter public service rules in a legal process known as "tolerance."

Although Title II offers benefits that help providers build networks, ISPs and telecommunications industry groups have argued that Title II would bring a series of oppressive regulations that the FCC would have difficulty not enforcing. They claim that Title II will impose so many additional costs that they will be forced to increase prices, although customers may point out that ISPs have no qualms about raising prices to begin with.

So what exactly are ISPs afraid of? We wanted to find out what is the worst case scenario for broadband providers. Hypothetically, assuming that the FCC would impose all possible Title II regulations (even though Obama specifically said that he it doesn't you want that to happen), what kind of new regulations would ISPs have to follow and what new costs would they absorb? And would consumers pay the price on higher bills and worse service?

The cable industry has a lot to say on this subject.

For answers, we spoke to the largest trade group in the cable industry, the National Cable and Telecommunications Association (NCTA). Represents cable providers such as Comcast, Time Warner Cable, Cox, Cablevision and Charter.

A major requirement that Title II could bring is the regulation of the rates charged by Internet providers, either by imposing a uniform limit on what all providers can charge or by forcing each to obtain permission to increase prices and justify them. depending on the amount they invest in their networks.

Theoretically, the FCC could also enforce "unbundling the local loop," forcing network operators to lease access to infrastructure for the last mile. In turn, this could bring in a new set of competitors that would resell Internet service through incumbent networks without having to run their own cables in every city and town, similar to how the DSL market operated before that the FCC removed the disaggregation requirement in 2005.

On the bright side of cable companies, the NCTA is confident that the FCC will not impose unbundling of the local loop.

"What people are most concerned about is probably rate regulation."

"The breakdown in the (Communications) Act is under Section 251C, which only applies to incumbent local exchange operators," NCTA associate general counsel Steve Morris told Morris.

An established local exchange operator, or "ILEC,quot;, is a telephone company that had a regional monopoly before markets opened up to competitive local exchange operators, or "CLEC,quot;.

"Our preliminary view is that there is no way you can find that an ISP is a local exchange operator, so those provisions should not apply to ISPs," Morris said. Landline companies that also offer Internet services, such as AT,amp;T and Verizon, remain ILEC and could theoretically be subject to unbundling. But this is unlikely given that the FCC abandoned disaggregation almost a decade ago.

While other Title II regulations would not necessarily apply to Internet providers due to the FCC's powers of tolerance, industry groups argue that tolerance is a highly complicated process that will make it difficult for the FCC to avoid imposing common rules of operators that go far beyond net neutrality. .

"I think what people are most concerned about is probably rate regulation," Morris said.

There are multiple markets in which the FCC could regulate the rates charged by Internet providers. The most obvious are the prices charged to residential and commercial customers who subscribe to broadband. The NCTA doesn't seem concerned about that.

"Most people seem to say that the commission could refrain from that," Morris said. "The president seemed to say there was no need for that kind of regulation."

However, regulation of interconnection agreements between Internet service providers and other large network operators like Level 3 and Cogent and online content providers like Netflix is ​​more likely. Netflix and others have asked the FCC to order interconnection agreements "without settlement," which are made without payment. Traditionally, no-pay interconnection has only been available in cases where the ISP and the entity to which it connects exchange an approximately equal amount of traffic. Netflix wants free access to the network, regardless of whether the traffic is balanced, and the site could fulfill its Title II wish.

"Netflix and Level 3 and Cogent have been pushing for mandatory, un-settled interconnection and traffic swapping," Morris said. "Well, that's the rate regulation. You know, saying that someone has to do something at zero price, that's the rate regulation."

The primary goal of net neutrality advocates is to ban paid prioritization deals where online content providers pay to accelerate their traffic on the so-called "last mile," the path from the edge of the network to an ISP to a consumer's home. (ISPs have yet to come to any such agreement, but could do so because the FCC's previous net neutrality rules were overturned in a court order in January 2014.) Interconnection is different from paid prioritization; It occurs only at the edge of an ISP's network where it connects to the rest of the Internet and would not be affected by most network neutrality proposals.

Neutrality meeting in favor of the network in the White House. "Src =" http://cdn.arstechnica.net/wp-content/uploads/2014/12/white-house-net-neutrality-protest-640x360.jpg "width =" 640 "height =" 360 "srcset = "// cdn.arstechnica.net/wp-content/uploads/2014/12/white-house-net-neutrality-protest-1280x720.jpg 2x
Enlarge / / Network neutrality rally at the White House.

The FCC is reviewing the interconnection agreements, but has not said whether it plans to regulate interconnection rates. With Title II, you could insist on reasonable rates without necessarily requiring that interconnection be free. "Reasonable,quot; would be left open for interpretation and would be decided on a case-by-case basis when there are complaints.

Harold Feld, attorney and senior vice president of the Public Knowledge group of the pro-Title II group, noted that Section 251A of Title II requires telecommunications operators to interconnect with other operators. A requirement like this could have helped force Comcast's hand when demanding Cogent's pay in exchange for updating the links used to transport Netflix and other traffic. That dispute was indirectly resolved when Netflix paid Comcast, but customers suffered worse performance in the meantime.

Assuming Cogent also considered itself a telecommunications provider, "the FCC could say, 'Look, you can't just sit there and do nothing when you're facing capacity constraints'," Feld told Up News Info. "There has to be some way to upgrade to meet the demand for capacity when it is clear that there is demand for capacity." They might even say in general, "Its price has to be related to cost." # 39; ".

Under Title II, Netflix could also complain to the FCC if it believed that Comcast and other ISPs were charging unreasonable interconnection fees, because Netflix would be a customer of a common operator, Feld said.

But rate regulation is not something the FCC does lightly. The commission has spent years gathering price data in the special access market, in which companies like Sprint and T-Mobile buy bandwidth from companies like AT,amp;T, Verizon and CenturyLink, without making a final decision.

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