Why Carriers Hate Title II Regulation

FCC_New_LogoOne of the many industry blogs I follow is the Eldo Telecom blog. Frederick L. Pilot, the author of that blog, contends that the FCC has the obligation to enforce universal service rules on broadband in the same way that they have for many years on telecom service. For telephone service this requirement has often been called the ‘carrier-of-last-resort’ obligation and it has been used by the FCC and state commissions to require telephone companies to serve everybody within a defined service area. If somebody builds a new house, for example, the telephone company has been obligated, within reason, to build to serve them.

Pilot says that the FCC created this same obligation for broadband with the newly approved Title II regulations. I’ve followed his chain of logic through the FCC rules and he is right. The carrier of last resort rules are covered under Section 254 and Section 214(e)(3) of the FCC’s rules. And those rules are in place as part of the rules that govern broadband.

The FCC created the Title II regulations by forbearance – they excluded some sections of the existing telephone rules that they did not want to apply to broadband services. The choice of which FCC rules to forbear was arbitrary and the FCC left themselves wiggle room to come back in the future and add to and/or subtract from the list of the rules that apply – and it is this flexibility that the big ISPs most hate about the Title II regulations.

The FCC didn’t really have any other options because they are not allowed, on their own, to write new FCC code – those basic laws come from Congress and the sections mentioned above, for example, come from the Telecommunications Act of 1997.

But I come to a different conclusion than Pilot. He thinks that since the carrier-of-last-resort language is part of the Title II rules for broadband that the FCC should enforce them. I read these particular rules to instead be something that the FCC can choose to enforce if they want to. A carrier-of-last-resort obligation gets triggered by a complicated process of requiring carriers to become am Eligible Telecommunications Carrier (ETC). In order for the FCC to create a universal service obligation for broadband, the FCC and the states would have to go through the ETC process for broadband, like they did in the past for telephone companies. And the rules make it clear that the triggering of ETC is completely at the FCC’s discretion.

The FCC has never mentioned a desire to force carrier-of-last-resort obligations on ISPs, and they may never do so. But they have very obviously reserved this right for use in the future should they so choose. And there are other parts of the Title II rules that now can apply to broadband if the FCC decides to enforce them. If the courts uphold the challenges to the net neutrality ruling there are a whole slew of regulations that apply to telephone service that the FCC could try to impose on ISPs.

I really don’t think the FCC is interested in forcing universal broadband requirements on ISPs for broadband. That would force carriers, for example, to build broadband facilities in rural areas. They know there would be huge and immediate political pushback and probably a reaction from Congress. The FCC instead seems to be trying to entice the large companies to do better.

But since these rules are on the books the FCC could decide at any time to try to enforce them. This creates what I consider to be permanent uncertainty for ISPs. Not only on this one issue, but on a number of potential obligations that are buried inside the FCC rules. I think that these potential, and unenforced rules hang over ISPs like the sword of Damocles.

Don’t get me wrong – I am a big fan of regulating broadband. It’s vital to our way of life now and I think that without net neutrality the big ISPs would run roughshod over all of us. So I love the concept, but like many I am not particularly fond of the specific way that this regulation came about. The long-term problem I foresee is that the political sentiment in the country swings from left to right fairly regularly and regulation by forbearance gives a future FCC the ability to drastically change the way the net neutrality rules are applied and implemented. And that means permanent uncertainty.

One thought on “Why Carriers Hate Title II Regulation

  1. The seeds of uncertainty were sown a generation ago in the early 1990s. At that point, it was becoming clear the Internet would supercede the single purpose telephone and cable TV networks and become the all purpose telecommunications medium of the 21st century.

    However as I discuss in my recent eBook, “Service Unavailable: America’s Telecommunications Infrastructure Crisis,” at that time the United States failed to conduct proper planning and policymaking to ensure the construction of fiber optic infrastructure serving every American home, school and business. Consequently 15 years into the new century, we are facing a crisis of deficient infrastructure and the resulting uncertainty given the lack of a clear path forward. To provide this needed direction, I have proposed a robust federal telecom infrastructure initiative in the final chapter of my book.

    Like

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