Being an ISP

Over time, this blog has talked about everything broadband, but I don’t think I’ve ever talked about being an ISP. In the simplest terms, an ISP is somebody that connects to a home or business and routes broadband traffic to and from the Internet. ISPs do a lot more these days. For example, they protect customers against hacking and bad behavior on the web.

We all know the big ISPs like Comcast, Charter, AT&T, and Verizon since these four ISPs serve over 75% of all broadband customers in the country. All of the other ISPs you hear about collectively serve the other one-fourth of the U.S. market.

The heyday of the ISP industry, in terms of the total number of ISPs, was probably in the late 1990s when anybody could be a dial-up ISP by buying a modem bank, some telephone lines, and a connection to the Internet. It seems like every small town and even many neighborhoods had one or more ISPs who competed with the few big nationwide players like AOL and CompuServe.

ISPs come in every shape and size. The ones we most think about as ISPs own networks that reach people’s homes, either through wires or wirelessly. Satellite companies like Viasat and Starlink are ISPs. But there are other kinds of ISPs. For example, some ISPs lease fiber connections from a city or somebody else that owns a network. There are still some ISPs delivering broadband over leased telco copper wires. A lot of people don’t think of cellular carriers as ISPs, but most people today have smartphones and connect to the Internet using apps. In many of the surveys we conduct, we see that as many as 10% of households only connect to the Internet over a cellular connection.

ISPs are somewhat regulated, but it gets complicated. The FCC under Ajit Pai largely deregulated broadband by wiping out the FCC’s Title II authority to regulate ISPs except for a handful of regulations specifically required by Congress. In doing so, Chairman Pai constantly referred to his deregulation as light-touch regulation, but the FCC eliminated 90% of the ways that the agency might theoretically be able to regulate ISPs. Consequently, the current FCC has very little regulatory authority over ISPs.

This doesn’t mean that ISPs are fully unregulated. ISPs are supposed to comply with a few regulations. For example, they are supposed to register with the FBI and describe the steps needed if the FBI wants to surveil a customer on an ISP network. An ISP has to officially register with the FCC if it wants to participate in receiving any funding from the Universal Service Fund. Many states expect ISPs to register as carriers – mostly, so the state knows who they are.

The FCC requires ISPs to use the Form 477 process to report the location of customers by Census Block, along with a description of the technology being used and the speeds delivered. But broadband regulation is taken so lightly that a lot of ISPs ignore this completely. For example, in almost every county I’ve ever worked in, there is a least one ISP that doesn’t report customers to the FCC. There doesn’t seem to be any penalty for not reporting or at least any that I’ve ever seen. Some of the ISPs that skirt regulation are sizable and sell fiber connections to large businesses in multiple markets.

ISPs are also theoretically regulated by the Federal Trade Commission. But that is truly light regulation because the FTC can’t easily establish rules or policies that affect all ISPs. Instead, the agency occasionally punishes a specific ISP for bad behavior, mostly centered on mistreating customers in some manner.

There are a lot of entities that don’t even realize they are ISPs. Governments often build fiber networks to connect various government buildings into a local network. But when cities then connect all of the government locations to the Internet, they have become an ISP. Cities also often branch out and provide a fiber connection to a few large businesses in a community – often without realizing this makes them an ISP like any other.

The big ISP industry believes that broadband regulation will be coming back when the FCC finally gets a fifth Commissioner. Companies with monopoly powers in all industries would love to be unregulated, and so far, the only two groups of companies that have largely been able to pull this off are ISPs and the giant web content companies. The need for some regulatory oversight is obvious. For example, the FCC is currently investigating the response efforts of big ISPs after a major storm. But without explicit regulatory authority, I’m not sure the agency has any authority to compel ISPs to do more to be ready for disaster recovery.

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