This is a blog aimed at people who look at the nuances of regulation. But like many such issues, it has implications for some ISPs. Today’s blog talks about the definition of broadband. You might not think that’s important, but as the FCC reinstates Title II regulation, the definition of broadband defines what is and isn’t directly regulated.

In the latest Order that reinstated Title II regulation, the FCC notes that it continues “ to define “broadband Internet access service” as a mass-market retail service by wire or radio that provides the capability to transmit data to and receive data from all or substantially all Internet endpoints, including any capabilities that are incidental to and enable the operation of the communications service, but excluding dial-up Internet access service.” It’s a short definition, but it raises some interesting regulatory questions.

The first term in the definition to understand is mass-market. The FCC defines that to be “a service marketed and sold on a standardized basis to residential customers, small businesses, and other end-user customers, such as schools and libraries.” The FCC contrasts retail service with wholesale services, where carriers sell service to other carriers, and enterprise services, which are specialized broadband services sold to large businesses. Mass-market implies standardized products and services sold to many customers.

I think that from a practical perspective the FCC’s definition is out of touch of the market when looking at broadband sold to small and medium businesses. The FCC definition assumes that most businesses are buying a mass-market product at a standard range of speeds and prices. That’s not my experience in looking at real business broadband. My consulting firm has been working with communities to understand broadband, and for years we’ve heard from businesses that some ISPs charge a wide range of prices for what seems like the identical product. I’ve talked to businesses in the same market where the price for a 100 Mbps connection from a cable or telephone company network might vary from $75 to $500 – with no apparent technical differences, other than the ability of a salesperson to talk a business into paying a higher price. The apparent price discrimination would seem to mean that broadband for small businesses in such markets is something other than mass-market.

The same is true for schools and libraries, particularly those that participate in the E-Rate program that subsidized broadband rates for schools that have a significant percentage of students participating in a school lunch program. My experience is that such schools often pay a much higher price for broadband than would a business in the same community that buys the same service. ISPs can charge more since the FCC’s Schools and Libraries Fund pays most of the bill, not the schools. In my experience, schools are definitely not buying a mass-market broadband product.

The next interesting word in the definition is ‘retail’. That obviously means a broadband service that an ISP markets and sells directly to end user customers. There are non-traditional customer arrangements in the market that don’t fit neatly into the traditional retail mold. Consider Utopia and other open-access network providers. A broadband customer on the Utopia network gets a bill from Utopia for using the network and another bill from their chosen ISP for the broadband connection to the Internet. It’s muddy from a regulatory perspective about which regulatory requirements apply to the fiber network owner versus the broadband provider.

What is most interesting about the definition of broadband is that anything that doesn’t fit neatly under the definition of broadband is not directly regulated by the FCC. The FCC dealt with these situations in the recent Order, which said that while wholesale services and enterprise services are not directly regulated, “the Commission would be able to take action to address them pursuant to its Title II authority . . . That wholesale services do not fall within the definition of BIAS does not mean that they do not fall within the ambit of Title II in some circumstances or otherwise may be subject to the Commission’s oversight under section 201(b), which provides the Commission authority to ensure that all practices “in connection with” BIAS are “just and reasonable.” The FCC goes on to say more specifically that Title II rules give the FCC the authority to intervene in disputes between wholesale providers and customers. This FCC approach creates uncertainty for ISPs that only operate in the wholesale or enterprise space. They will have to somehow decide which FCC rules apply to them and which don’t.