Misconceptions of Title II Regulation

It seems likely that a newly formed FCC will tackle the reinstitution of regulation. We can only speculate how they’ll do it, but the easiest path would be to declare broadband to be a “telecommunications service’ under Title II regulations. A cleaner path would for Congress to finally pass an updated telecom act that would address broadband regulation, but nobody is holding their breath waiting for Congress to do the right thing.

This is a topic that clients and peers have recently wanted to talk about. I can already see that the big ISPs have turned up the PR machine to lobby against the reregulation of broadband and we can expect the press to be full of warnings about how regulation will destroy the Internet. I thought it would be useful to discuss just what Title II regulation of the Internet means and doesn’t mean. It’s something we don’t have to speculate about since Title II regulation of broadband was in place before Chairman Pai’s FCC got rid of it.

Most importantly, declaring broadband a regulated service doesn’t regulate the ‘Internet”. It means broadband would be regulated, not Internet content. This means that the FCC would again have to power to regulate ISPs or companies that transmit data on long-haul fiber networks. The FCC is not seeking to regulate Facebook, which would make many people nervous – they want to regulate Comcast, which I imagine a lot of people think is a good idea.

We have a good idea of what the FCC would put back in place once broadband is regulated because we know what disappeared when broadband was deregulated:

  • The FCC will begin again taking complaints from customers about abuses by ISPs. The FCC complaint process provided a mechanism for customers to get redress for bad instances of overbilling or other bad ISP behavior. The fact that a complaint process existed made the big ISPs at least try to not abuse customers.
  • The FCC will also be able to again mediate disputes between carriers. You may remember that there was a bunch of complaints at the FCC when broadband was regulated looking at issues like the big ISPs that were strong-arming companies like Netflix to pay more by throttling their signals as a negotiating tactic. We stopped hearing about such issues when the FCC stopped being the referee in such complaints. It’s not likely that bad carrier behavior ceased, just that we stopped hearing about it.
  • The FCC is almost certainly going to reinstate net neutrality, which basically says that ISPs can’t discriminate between different kinds of web traffic. ISPs don’t really hate this and the CEO of every major ISP went on the record at some point in the past saying they could live with net neutrality.
  • With regulation, the FCC could have told ISPs how to react to the pandemic. Numerous other federal agencies were able to impose emergency rules to protect the public and the economy, but the FCC was powerless to do anything.

There are some other things the FCC could do with reinstated Title II regulation:

  • The FCC could regulate broadband prices but is extremely unlikely to do so. Doing this would finally awaken Congress via industry lobbyists. However, the FCC could use the threat of rate regulation to get ISPs to pare back on the worst practices like hidden fees or exorbitant fees for going over data caps. I am positive that all of the ISP anguish about regulation is a worry that there will be constraints on rates. The big cable companies clearly envision $150 monthly broadband rates in a decade, and they don’t want anybody telling them they can’t do this – at a time when the cable companies are wiping out the vestiges of urban DSL and become real monopolies.
  • I find it likely that the FCC would use regulation to push the consumer privacy issues harder.

The list above is all that we are likely to see from a reintroduction of Title II regulation. But the ISP arguments against regulation aren’t likely to mention any of the above issues – all of which are popular with the public. Instead, the ISP arguments against regulation will make the following spurious claims.

  • ISPs will threaten that increased regulation will mean less investment in infrastructure. This is the funniest thing the big ISPs have ever argued because there has never been a big ISP board meeting where somebody suggested cutting back on investments due to regulation – this never ever happened in any boardroom.
  • ISPs will warn that the FCC will ‘break the Internet’ by imposing heavy regulations. The above list of regulations doesn’t come close to being heavy regulation when you realize that broadband is one of the key industries in the country, operated largely by monopolies. Nobody blinks an eye over regulators keeping an eye on automobiles or airlines.

The big ISPs have been extremely clever and call the current regulatory regime ‘light-touch’ regulation, when in fact it is no-touch regulation – broadband is as close as possible to being fully unregulated. The real issue in play is that ISPs have powerful enough lobbyists to get what they want. But as a country, it’s crazy to not regulate perhaps our most important industry that is controlled by monopolies. The public deserves better than that.

One thought on “Misconceptions of Title II Regulation

  1. Good overview. One other area in which the Commission may make ISPs sad is price transparency, i.e. requiring providers to prominently disclose their actual retail charges (inc surcharges and fees) and incorporating those costs in the Commission’s public datasets, mapping and broadband access analyses. This isn’t dependent on Title II but the enforcement authority would be clearer.

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