Regulation - What is it Good For?

Complaining to the FCC

Ars Technical recently looked at complaints about ISPs in the specific categories of availability, billing, and speed that were filed with the FCC during the first eleven months of 2014. Probably in what is not a surprise to anybody, Comcast got more complaints than any other carrier. But there were complaints filed against all of the major ISPs.

The FCC complaint process is interesting. In the new system a filer is given a tracking number so that they can see the progress of their complaint. Somebody at the FCC’s Consumer Inquiries and Complaints Division looks at every complaint and they might contact a filer if they want more information about the complaint. If the FCC decides that the complaint is actionable – meaning that it’s something the carrier should know about, they forward the complaint to the carrier. The carrier must then respond in writing to the complaint within 30 days and must copy the consumer on the response.

The FCC reports that carriers usually take a stab at resolving complaints when that’s possible. If there has been a billing dispute, an FCC complaint can get the carrier to examine the records and hopefully correct the problem.

As can be imagined, people often complain about policies that are not really actionable. Ars Technical saw that the issue with the most complaints is the trials of the new Comcast data caps. Other than complaints about how Comcast is supposedly measuring data usage poorly, there are no specific rules being broken by just having the data cap. One would expect for complaints about the existence of the cap that the customer will receive a nice form letter from Comcast telling them how the caps are all about fairness.

A few of the complaints I read were about people hoping that the FCC could bring broadband access to their neighborhoods. They are generally from people who live just outside existing networks and who can’t understand why their neighbors have broadband and they don’t. There is little the FCC can do with this complaint other than to log them in the category of folks without hope of broadband.

A number of the issues found in specific complaints are the same kinds that often make consumer web sites. These might include billing issues that haven’t been cleared up in years. This seems to be the one category of complaint where it is effective to complain to the FCC since that will often finally clear up a persistent billing issue.

There are complaints from customers who are getting data speeds that are a fraction of what they have subscribed to. The FCC can’t really fix this, but they are in the process of requiring ISPs to be more honest with their customers about the speeds they deliver. You have to feel sorry for the folks who say they are paying for a 30 Mbps data product and who get speeds just barely above dial-up.

In preparing to write this blog I did a quick poll of a dozen of my larger clients and asked them if they had ever gotten a complain through the FCC process. These were all ISPs with more than 25,000 customers and a few quite a bit larger than that. I was not surprised to find that none of them could ever recall getting such a complaint, at least not in recent years. This reaffirms my belief that smaller companies do a much better job of customer service than larger companies. They may not always satisfy a customer, but they don’t shuttle them off to endless and frustrating calls to customer service and they try hard to try to solve their issues.

For any of you that have ever been tempted to file a complaint, the new online process is really easy to understand. The FCC’s web site provides easy instructions on how to complain. It asks the consumer to choose a category for the complaint. These are wide ranging and don’t just include ISPs but cover the entire wide spectrum of issues regulated or monitored by the FCC. But it’s hard to think that any category gets more complaints than ISP broadband issues since that has grown in such importance to the majority of households.

Regulation - What is it Good For? The Industry

Is Net Neutrality Hurting Telecom Investment?

Leading up to the net neutrality decision a lot of the big carriers claimed that putting broadband under Title II regulation would kill their desire to make new investments in broadband. AT&T went so far as to tell the FCC that they would stop all capital investments if net neutrality was ordered. Chairman Tom Wheeler of the FCC quickly called their bluff on this and AT&T backed down.

But net neutrality has been the law now for a while and the large carriers are still crying the same tune. There are regular postings by USTelecom, the trade group for the large carriers, claiming that Title II is hurting investment in the industry.

There is uncertainty in the industry due to the fact that much of the FCC’s ruling is being challenged in the courts. At a recent hearing of the House Communications Subcommittee, Frank Louthan of Raymond James told the committee that the big carriers are making investments in line with what they think will be the final rules after the court fights. I’m sure he’s right because that’s what large companies always do when they face uncertainty – they pick what they think will happen and operate under that assumption. But in this case the uncertainty is ironic since it is being caused directly by the lawsuit brought by the carriers that don’t like the uncertainty.

And it’s hard to see that net neutrality is hurting the biggest carriers. Certainly nobody was affected more by the rule changes than the big cable companies who had essentially no regulation on their broadband before the net neutrality rules. Ars Technical has dug into the most recent financials for these companies and reports that large cable companies have increased capital spending. They report that Comcast’s capital spending this year is up 11% over last year and Time Warner is up 10%. And every large cable company has said they are going to be pouring money into upgrades to DOCSIS 3.1 over the next year, so their capital spending is not going to go down in the foreseeable future.

I always wonder what exactly the carriers don’t like about net neutrality. Net neutrality stopped the carriers from making deals that enriched themselves but that restricted customer choices. But it seems like the public was very much on the FCC’s side on this issue and it’s hard for the carriers to find any sympathy for their cause. Probably more problematic for the carriers is that the FCC, in a surprising part of the net neutrality ruling, put in place rules on the network side of the carriers. They were all getting ready to start charging large content providers like Netflix for bringing content to their networks. The FCC decided that the millions of customers paying for monthly broadband were already paying that cost. What the carriers seem most annoyed about is that customers actually want to use the broadband to which they subscribe. The carriers have plans to put an end to that and everybody is watching Comcast’s new attempt at data caps.

One topic that came up in the House hearings was the fact that much of the net neutrality order was done by forbearance, meaning that the FCC chose which existing rules for telephone service would apply or not apply to regulating data. The carriers fear that a future activist FCC could change their mind at any time on the rules that have been forborne and either change the regulations or else hold change over the carriers’ heads while negotiating other issues. On that topic I agree with the carriers and what the FCC has given they also have the right to take away. The only real fix for this would be a new telecom act from Congress, and with our divided political parties that doesn’t seem very likely.

I remember this same level of teeth gnashing and hair rending by AT&T and Verizon after the Telecommunications Act of 1996. They challenged that ruling and spent the next several years complaining about it loudly. But eventually they were complaining to deaf ears, and in this case one has to think that whatever the courts order is going to stand as the law for a while. But eventually the complaining about the Act died down and both companies have gone on to be far more profitable than they were before the Act. Perhaps they ought to go back and revisit their own recent history and just get on with what they do best—make money.