Tag Archives: NCTA

Big ISPs and Speeds

I was recently reminded in a conversation with a client how cable company executives used to tell the public that they didn’t need faster broadband speeds, and what the cable companies offered was fine. Looking through my archives, I found the following statements from 2013, where cable companies were responding to the first Google Fiber offerings of symmetrical gigabit broadband.

In 2013, Time Warner Cable CFO Irene Esteves announced that the company didn’t see the need to deliver Google Fiber speeds to consumers. Comcast Executive Vice President David L. Cohen was quoted as saying that gigabit speeds were pointless due to limitations on the data speeds that could be delivered from websites and the lack of capability of home WiFi routers. Michael Powell, the CEO of the National Cable & Telecommunications Association, characterized gigabit speeds as an “irrelevant exercise in bragging rights”.

The criticisms had some merit at the time. There was no web traffic that operated at speeds even close to a gigabit. Off-the-shelf WiFi routers couldn’t handle anything close to gigabit speeds. But the public didn’t care because performance on fiber was perceived as being significantly better than what was delivered by cable companies, and customers flocked to Google Fiber in the markets where it was introduced. Interestingly, Time Warner obviously thought the Google Fiber threat was real, because the company quickly built fiber-to-the-premise to compete against Google in North Carolina.

There were some customers who benefited from gigabit speeds. I recall talking to a doctor who subscribed to gigabit speeds when it became available from a municipal ISP. This hospital also had gigabit broadband, and the doctor was able to download large MRI files at home in a reasonable amount of time once he had gigabit fiber. I also talked to a photographer who used a different municipal ISP who told me that gigabit speeds made it possible for the first time to upload photography and video libraries to clients without having to wait for hours for the uploads to complete.

The next time that cable companies told the public they didn’t need faster speeds was during the pandemic, when it became clear that cable company upload speeds of 10 Mbps were not able to handle multiple people working and schooling at home at the same time. Every big cable company defended its networks. Charter CEO Tom Rutledge said at the time that Charter’s network was adequate and justified that by pointing out that the majority of customer data usage was downstream. But Charter and other cable companies tweaked their networks during the pandemic to improve upload speeds to 15-20 Mbps. Still today, there are numerous cable networks that have not yet implemented any upgrades to bring significant improvement to upload speeds.

Many ISPs subtly tell their customers they don’t need fast broadband through their pricing. I find small ISPs around the country that still charge extremely high prices for anything faster than their basic broadband product.

This frankly mystifies me. I’ve always guessed that this kind of pricing is for two reasons. First, I think some small ISPs fear that customers who buy faster speeds will somehow cost the ISP a lot more money. But that doesn’t seem to be the case. I recall an Ookla article last year that said that, in some markets, the biggest data users were the customers buying the least expensive broadband package. I’ve had numerous ISPs tell me that their gigabit customers don’t use more broadband than their 100 Mbps customers.

The only other reason for high prices for faster speeds is that they are trying to create the idea that fast speeds are a super-premium product. But I think these ISPs are losing out on a lot of revenue. ISPs who space prices between speed tiers of $15 to $20 see that a lot of customers who are willing to upgrade to faster speeds when it doesn’t cost a lot more per month. Most customers are leery about paying $50 or more per month for a faster speed.

Big ISPs Claim Great Customer Service

In late October, the FCC launched a “Notice of Inquiry that seeks information on current customer service practices to build a public record on the current state of customer support and ways that the FCC can “protect families and businesses that rely on these critical services.” The FCC sought comments from the public about broadband, cable, and telephone providers.

The associations for the big ISPs responded to the docket and basically said that their member companies offer great customer service. NCTA – The Internet and Television Association, which represents the big cable companies, filed comments that said that cable companies provide great service in today’s competitive market as a way to attract and retain customers. USTelecom, the lobbyist for the largest telcos, said that competition gives them no choice but to provide high-quality customer service.

I’ve written a few blogs over the years about the American Customer Service Index (ACSI), which measures customer satisfaction across all major industries each year. The ACSI historically ranked the ISP and cable industry at the bottom compared to other major industries. That put ISPs and cable companies below insurance companies, banks, and airlines in terms of customer satisfaction.

The current ACSI shows a lot of improvement over time for some parts of the industry. I looked back at the ACSI index from 2019 to make the following comparisons: The overall rating for ISPs since then increased from 62 to 71. This is due almost entirely to higher customer ratings today for fiber ISPs, at 76. Overall, cable companies improved from 62 to 68, although some cable companies still have low rankings, like Mediacom (61) and Optimum/Altice (63). The two biggest cable companies current rankings are Comcast (67) and Charter (68). Almost all other industries have rankings in the high 70s into the 80s.

One of the issues highlighted by the FCC inquiry suggests that ISPs should “offer live customer service support by phone within a reasonable time frame.” USTelecom responded by saying that telco online chatbots are quickly getting better at addressing customer needs.

The few smaller ISPs and municipal ISPs that made it into the ACSI survey show a high level of customer satisfaction – the public ire is aimed at the biggest companies only.

There were numerous filings in the FCC docket from groups representing the public. The filings documented customers who had long service outages and other significant problems. Comments were filed about the problems encountered by customers trying to resolve problems with online customer service. The California Public Utility Commission said in a filing that it believes that big ISPs don’t focus on customer service because they don’t have to – the CPUC said only 26% of California residents have a choice between two fast ISPs.

There was no telling where the FCC under Chairperson Jessica Rosenworcel was headed with this docket, but there likely would have eventually been some guidelines or regulations defining good customer service. It seems almost certain that the issue will be dropped by the new FCC, since Republican-led FCCs have generally favored ISPs over the public.

Banning Early Termination Fees

Back in December, the FCC proposed to prohibit cable companies and satellite companies from charging “unjust or unreasonable early termination fees for end-user communication contracts”. The order was the latest in a series of orders intended to make prices and policies more transparent for customers. The FCC reasoned that termination fees stop customers from canceling services and that eliminating or lowering the fees would promote competition by lowering barriers.

The FCC also asked if it should require cable providers to prorate a customer’s final bill in the month that a customer cancels service. Most cable companies keep the entire final bill regardless of the days of actual service provided. I note from personal experience that online video services also keep the final full month of billing.

Some termination fees for breaking a term contract are extreme and require a customer to pay the full amount of the remaining contract even if they don’t receive the cable service. It’s easy to understand why that is extreme – a big part of the monthly cable fee to subscribers pays for the high cost of the subscribed programming. When a customer cancels a contract, the cable company is no longer paying for programming, and this makes the remaining fees incredibly profitable. It’s odd math, but a cable company’s highest margins come from customers who cancel video service.

The FCC has also heard a lot of horror stories of why customers cancel service. Cable companies are infamous for advertising a low teaser rate but then adding $30 to $50 per month onto the promised rate in the form of hidden fees that were not included in the advertised teaser rate. Many customers quit after the shock of the first bill. The FCC voted in March to force cable companies to eliminate hidden fees, but there will be contracts around for many years that include the impact of hidden fees.

Cable companies have filed comments against the FCC’s proposed elimination of early termination fees. The most creative defense for keeping the fees comes from NCTA, the trade association for the big cable companies. NCTA argued that eliminating early termination fees would harm consumers. They argue the video industry is hyper-competitive and that discounts were created to benefit customers who stay for a long time, not customers who want to switch to another provider. NCTA argues that longer subscriptions reduce long-term acquisition costs and provides a more stable revenue stream for the cable company. It’s hard to think of an argument that could be more pro-cable company and zero pro-consumer.

The Internet and Television Association offers an alternate idea to an outright ban and suggests that the FCC only ban “unjust or unreasonable’ termination fees. They didn’t specifically offer how to distinguish an unjust fee from a reasonable one, but they argue that as long as termination fees are fully disclosed to customers the fees should not be considered as unreasonable.

When the general public hears this kind of announcement from the FCC, they probably wonder why the FCC is always trying to fix cable TV rules but not broadband rules. This is due to the lack of regulatory oversight on broadband. If the courts let the recent FCC adoption of Title II regulations go into effect, the FCC could apply all of the same concepts to broadband as well.

A fairer question to ask is why the FCC hasn’t fixed these kinds of problems in the past. High hidden fees and excessive termination fees have been around for years, and the FCC did nothing about them. The FCC is supposed to find a middle ground between the general public and the companies it regulates. Past FCCs have clearly favored the big cable companies over the interests of the general public, and even a pro-consumer FCC has taken years to get around to these issues.

Trade Associations

Anybody new to the broadband industry quickly finds out that the industry is full of trade associations. There are associations of service providers and other associations representing various segments of the industry, such as electronics manufacturers and construction contractors.

Trade associations play several roles for their members. Most trade associations lobby on behalf of their members, and some associations are primarily lobbyists. Trade associations routinely file position papers with federal and state regulatory agencies on behalf of members. Other trade associations concentrate on providing services to members. Perhaps one of the most useful functions of trade associations is holding conventions and meetings so that like-minded members can talk to their peers. Most of the trade associations that you’ll find quoted in the press are national associations, but there are also numerous regional and state-level trade associations.

Many trade associations are focused on a specific industry segment. CTIA largely represents cellular companies. NTCA is largely comprised of rural ISPs. But a few trade associations are interesting because they include members that seemingly compete against each other. For example, ACA Connects has a wide-ranging membership that includes cable, telco, and fiber companies under the same umbrella. One thing is for sure – an industry newcomer needs a lineup card to keep them all straight.

Viewed from inside the industry, it’s easy to think of trade associations as powerful entities since they can speak for an entire industry segment. But it’s interesting to look at the big picture. There are over 26,000 nationwide trade associations in the country – and every industry imaginable has them.

It’s been interesting to watch the evolution of industry trade associations during my career. When I first started in the 1970s, there were not many associations. But as the industry evolved, new trade associations came to life. The newest association, APPB, was formed in 2022 to represent the interests of municipal broadband providers. Existing trade associations sometimes splinter if the association starts taking positions that not all members endorse. One of the most common disagreements within trade associations is between large members and small members – it’s common for a trade association to adopt positions that favor its largest members.

One of the best examples of this is USTelecom – The Broadband Association. This is the oldest industry trade association that was first created as the Independent Telephone Association in 1897 by a group of non-Bell telephone companies. The first members were looking for a unified voice to lobby against the power of the Bell telephone companies that were running roughshod over regulators at the time.

Over time, the association rebranded as USTA (United States Telecom Association). After the divestiture of AT&T into regional Bell companies, USTA underwent a big change when it allowed former Bell companies to join. Over a few years, a lot of smaller members of the association went elsewhere as the association started to be dominated by the large companies. When I see a USTelecom position now, I always assume it is primarily speaking for AT&T, Verizon, Lumen, and the other large telcos.

USTelecom is also a good example of how trade associations change to reflect the evolution of the industry. The association rebranded to add on the “the Broadband Association” to recognize that telephone companies have morphed primarily into broadband companies. We see the same thing happening all over the industry. When I recently looked at the website for NCTA, the association representing the largest cable companies, one of the predominant articles talks about needing more balanced policies on spectrum – because cable companies are increasingly also becoming cellular companies. Evolution in the industry is inevitable and we’re seeing unprecedented convergence between the companies in the industry and the technologies and businesses they pursue. I have to wonder how convergence will affect trade associations. For example, what will eventually happen to an association like NCTA if cable companies all migrate to fiber – similar questions loom all around the industry.

Cable Companies Tout Speed Increases

Earlier this month, NCTA – The Internet and Television Association – posted an article on its website touting the big increases in broadband speeds since the start of the pandemic. NCTA is the industry trade and lobbying association for medium-sized and large cable companies.

The article touts that the average U.S. download speed has grown from 138 Mbps in March 2020, the first month of the pandemic, to 226 Mbps in June 2022. These speeds come from the Ookla Speedtest Global Index. The cited numbers are the mean, or the average speeds measured by Ookla in the respective months across the whole U.S. Obviously, the cable companies are taking credit for much of the speed increase, and to some extent, that’s true. But there are a number of different reasons why average download speeds are increasing.

One of the primary reasons is directly related to the cable companies. Over the last year, cable companies have almost universally increased the download speed of the base broadband product to 200 Mbps to 300 Mbps. This not only applies to new customers, but many existing customers woke up one day in the last year with a download speed increase. This is something that the cable companies had done periodically since the days when speeds were 6 Mbps download. Since Comcast and Charter alone serve over half of all broadband customers in the country, anything the big cable companies do to increase speeds affects a lot of people and drives up the national average speed.

Another factor that is driving up average speeds is more homes getting access to fiber. This is starting to rachet up and many homes are now seeing a second fast choice other than the cable company. When looking at the amount of fiber being built and the sales goals of the fiber companies, this is going to be picking up in the coming years. To some extent, the big cable companies are also building fiber. Charter, in particular, is building fiber on the fringe of its traditional cable markets to new subdivisions or areas where the company has gotten grants. I’ve been hearing from Charter cable customers lately who are frustrated that the company is building fiber nearby and not in their neighborhood.

One of the major reasons for the average speed increases reflects poorly on the cable companies. Over the last two years, there has been a huge migration of homes buying faster broadband packages. These are homes that struggled with broadband performance and upgraded to get better speeds. Most people didn’t realize (and still may not realize) that their issues during the pandemic were mostly due to poor upload bandwidth from the cable companies. Folks upgraded to faster download packages hoping to get better upload performance, and even after the upgrade, many did not. You’ll notice on the NCTA website that there is no mention of upload bandwidth – a topic the cable companies absolutely do not want to discuss.

A final factor that is contributing to a faster national average download speed is the rapid expansion of fiber in rural areas. While this doesn’t represent a big slice of people, the national average speeds are boosted when households migrate from download speeds of 1 or 2 Mbps to fast download speeds on fiber. There is currently a lot of construction going on funded by the FCC’s ACAM program, federal grants and subsidies like ReConnect and RDOF, and numerous state broadband grants.

So yes, the cable companies deserve credit for increasing download speeds – and they are a big part of the reason behind the faster national average speeds. But it’s not all due to the cable companies.

Ideas for Better Broadband Mapping

The FCC is soliciting ideas on better ways to map broadband coverage. Everybody agrees that the current broadband maps are dreadful and misrepresent broadband availability. The current maps are created from data that the FCC collects from ISPs on the 477 form where each ISP lists broadband coverage by census block. One of the many problems with the current mapping process (I won’t list them all) is that census blocks can cover a large geographic area in rural America, and reporting at the census block level tends to blur together different circumstances where some folks have broadband and others have none.

There have been two interesting proposals so far. Several parties have suggested that the FCC gather broadband speed availability by address. That sounds like the ultimate database, but there are numerous reasons why this is not practical.

The other recommendation is a 3-stage process recommended by NCTA. First, data would be collected by polygon shapefiles. I’m not entirely sure what that means, but I assume it means using smaller geographic footprints than census blocks. Collecting the same data as today using a smaller footprint ought to be more accurate. Second, and the best idea I’ve heard suggested, is to allow people to challenge the data in the mapping database. I’ve been suggesting that for several years. Third, NCTA wants to focus on pinpointing unserved areas. I’m not sure what that means, but perhaps it means creating shapefiles to match the different availability of speeds.

These ideas might provide better broadband maps than we have today, but I’m guessing they will still have big problems. The biggest issue with trying to map broadband speeds is that many of the broadband technologies in use vary widely in actual performance in the field.

  • Consider DSL. We’ve always known that DSL performance decreases with distance from a DSL base station. However, DSL performance is not as simple as that. DSL also varies for other reasons like the size of the gauge of copper at a customer or the quality of the copper. Next door neighbors can have a significantly different DSL experience if they have different size wires in their copper drops, or if the wires at one of the homes have degraded over time. DSL also differs by technology. A telco might operate different DSL technologies out of the same central office and see different performance from ADSL versus VDSL. There really is no way for a telco to predict the DSL speed available at a home without installing it and testing the actual speed achieved.
  • Fixed wireless and fixed cellular broadband have similar issues. Just like DSL, the strength of a signal from a wireless transmitter decreases over distance. However, distance isn’t the only issue and things like foliage affect a wireless signal. Neighbors might have a very different fixed wireless experience if one has a maple tree and the other has a pine tree in the front yard. To really make it difficult to define the speed, the speeds on wireless systems are affected to some degree by precipitation, humidity and temperature. Anybody who’s ever lived with fixed wireless broadband understands this variability. WISPs these days also use multiple spectrum blocks, and so the speed delivered at any given time is a function of the particular mix of spectrum being used.

Regardless of the technology being used, one of the biggest issues affecting broadband speeds is the customer home. Customers (or ISPs) might be using outdated and obsolete WiFi routers or modems (like Charter did for many years in upstate New York). DSL speeds are just as affected by the condition of the inside copper wiring as the outdoor wiring. The edge broadband devices can also be an issue – when Google Fiber first offered gigabit fiber in Kansas City almost nobody owned a computer capable of handling that much speed.

Any way we try to define broadband speeds – even by individual home – is going to still be inaccurate. Trying to map broadband speeds is a perfect example of trying to fit a round peg in a square hole. It’s obvious that we can do a better job of this than we are doing today. I pity a fixed wireless ISP if they are somehow required to report broadband speeds by address, or even by a small polygon. They only know the speed at a given address after going to the roof of a home and measuring it.

The more fundamental issue here is that we want to use the maps for two different policy purposes. One goal is to be able to count the number of households that have broadband available. The improved mapping ideas will improve this counting function – within all of the limitations of the technologies I described above.

But mapping is a dreadful tool when we use it to start drawing lines on a map defining which households can get grant money to improve their broadband. At that point the mapping is no longer a theoretical exercise and a poorly drawn line will block homes from getting better broadband. None of the mapping ideas will really fix this problem and we need to stop using maps when awarding grants. It’s so much easier to decide that faster technology is better than slower technology. For example, grant money ought to be available for anybody that wants to replace DSL on copper with fiber. I don’t need a map to know that is a good idea. The grant process can use other ways to prioritize areas with low customer density without relying on crappy broadband maps.

We need to use maps only for what they are good for – to get an idea of what is available in a given area. Mapping is never going to be accurate enough to use to decide which customers can or cannot get better broadband.

New Net Neutrality Legislation

On February 7, as hearings were being held on net neutrality, Congressional Republicans said they were going to offer up three different versions of a bill intended to reinstate net neutrality principles. The newest bill, the Open Internet Act of 2019, was introduced by Rep Bob Latta of Ohio. They also offered up bills previously introduced by Rep. Greg Walden of Oregon and Sen John Thune of South Dakota.

All three bills would reestablish rules against ISP blocking web traffic, throttling customers or implementing paid-prioritization, which has been referred to as creating fast lanes that give some web traffic prioritization over other traffic. Hanging over all of these bills is a court review of a challenge of the FCC’s right to kill net neutrality – a successful challenge would reinstate the original FCC net neutrality rules. There are also a number of states poised to introduce their own net neutrality rules should the court challenge fail.

The court case and the threat of state net neutrality rules are prodding Congress to enact net neutrality legislation. Legislation has always been the preferred solution for imposing any major changes in regulation. When there’s no legislation, then rules like net neutrality are subject to being changed every time there is a new FCC or a new administration. Nobody in the country benefits – not ISPs and not citizens – when policies like net neutrality change every time there is a new administration.

These three bills were clearly influenced by the big ISPs. They include nearly the identical talking points that are being promoted by NCTA, the lobbying arm of the largest ISPs, headed by ex-FCC Commissioner Michael Powell. There are two primary differences in these bills and the original net neutrality rules that were established by the last FCC.

The first is a provision that the legislation would allow the ISPs to stray from the net neutrality principles if there is a ‘public benefit’ from doing so. That would allow ISPs to adopt any web practice they want as long as they can concoct a story about how the practice creates a public benefit. Since there are winners and losers from almost any network practice of ISPs, it wouldn’t be hard to identify those that benefit from a given practice. From a regulatory perspective, this is as close as we can come to a joke. If a regulated entity gets to decide when a regulation applies, then it’s not really a regulation.

The other big difference from the proposed legislation and the original net neutrality order is the lack of what is called a ‘general conduct standard’. The original net neutrality order understood that the Internet is a rapidly evolving and that any specific rules governing Internet behavior would be obsolete almost as soon as they are enacted. ISPs and the other big players on the web are able to design ways around almost any imaginable legislative rules.

The original net neutrality order took the tactic of establishing the three basic net neutrality principles but didn’t provide any specific direction on how the FCC was supposed to enforce them. The concept of the general conduct standard is that the FCC will look at each bad practice of an ISP to see if it violates the net neutrality principles. Any FCC ruling would thus be somewhat narrow, except that a ruling against a specific ISP practice would generally apply to others doing the same thing.

The original net neutrality order envisioned a cycle where the FCC rules against bad practices and the ISPs then try to find another way to get what they want – so there would be a continuous cycle of ISPs introducing questionable behavior with the FCC deciding each time if the new practice violates the intent of the net neutrality principles. This was a really clever solution for trying to regulate an industry that changes as quickly as the ISP and web world.

The proposed legislation does away with the general conduct standard. That means that the FCC would not have the ability to judge specific ISP behavior as meeting or not meeting the net neutrality standards. This would take all of the teeth out of net neutrality rules since the FCC would have little authority to ban specific bad practices. This was summarized most succinctly by former FCC Chairman Tom Wheeler who testified in the recent Congressional hearings that if Congress established net neutrality rules it ought to allow for “a referee on the field with the ability to throw the flag for unjust and unreasonable activity.”

The bottom line is that the proposed legislation would reintroduce the basic tenets of net neutrality but would give the FCC almost no authority to enforce the rules. It’s impossible to imagine these bills being passed by a divided Congress, so we’re back to waiting on the Courts or perhaps on states trying to regulate net neutrality on their own – meaning a long-term muddled period of regulatory uncertainty.

Is Broadband ‘Wildly Competitive’?

The FCC is in the process of creating its first report to Congress required by the Ray Baum Act, which is the bill that reauthorized the FCC spending for 2019 and 2020. That bill requires the FCC to create a report every two years that, among other things assesses the “state of competition in the communications marketplace, including competition to deliver voice, video, audio, and data services among providers of telecommunications, providers of commercial mobile service, multichannel video programming distributors, broadcast stations, providers of satellite communications, Internet service providers, and other providers of communications services”.

The FCC accepted comments about what should be included in its first report, and as you might imagine received a wide variety of comments from the industry and other interested parties.

In typical big carrier fashion, the NCTA – The Internet & Television Association, the lobbying group representing the largest ISPs filed with the FCC arguing that the broadband marketplace is already ‘wildly competitive’. The big ISPs have a vested interest in the FCC reaching such a conclusion, because that would mean that the FCC wouldn’t have to take actions to create more competition.

The reasoning the big carriers are using to make this claim is ironic. They argue that the FCC shouldn’t use its own 25/3 Mbps definition of broadband since the FCC is currently spending billions of dollars in the CAF II program to deploy broadband that meets a lower standard of 10/1 Mbps. They say that if US broadband is examined for the amount of competition at the lower 10/1 threshold that most markets in the US are competitive. That’s ironic because the FCC was pressured into giving all of the CAF II money to the big telcos after intense lobbying and the funds were originally intended to be awarded through a reverse auction where ISPs would have been rewarded for building broadband capable of delivering speeds up to 1 Gbps.

Further, if the FCC was to accept the idea that 10/1 Mbps is acceptable broadband then the FCC would probably be obligated to count cellular broadband as an economic substitute for landline broadband since it delivers speeds in the same range as the CAF II deployments.

However, making that same determination is impossible at faster speeds. Even the FCC’s own highly-skewed mapping data shows there are not many households in the country with two options for buying 100 Mbps service. Where households have two choices for buying 25/3 Mbps broadband the second option is almost always DSL, which the big telcos are letting die a natural technological death, and which often delivers speeds much slower than advertised. As I’ve written about in this blog, my firm has done surveys in numerous communities where the delivered speeds for both cable modems and DSL were significantly slower than the advertised speeds and certainly slower than the data in the FCC database that is collected from the big ISPs and used to create the FCC’s broadband coverage maps and other statistics.

The only way to claim that broadband is ‘wildly competitive’ is to count broadband speeds slower than the FCC’s 25/3 Mbps definition. If the FCC was to accept cellular broadband and satellite broadband as the equivalent of landline broadband, then a large majority of homes would be deemed to have access to multiple sources of broadband. I would restate the NCTA’s ‘wildly competitive’ claim to say that a majority of homes in the country today have access to multiple crappy sources of broadband.

We’ll have to see what the FCC tells Congress in their first report. I suspect their story is going to be closer to what the big ISPs are suggesting than to the reality of the broadband marketplace. This FCC already seriously considered accepting cellular and satellite broadband as an equivalent substitute for landline broadband because doing so would mean that there are not many places left where they need to ‘solve’ the lack of broadband.

The FCC finds itself in an unusual position. It gave up regulation of broadband when it killed Title II regulation. Yet the agency is still tasked with tracking broadband, and they are still required by law to make sure that everybody in the country has access to broadband. Let’s just hope that the agency doesn’t go so far as to tell Congress that their job is done since broadband is already ‘wildly competitive’.

Killing FTC Regulation?

NCTA, the lobbying group for the big cable companies filed a pleading with the Federal Trade Commission (FTC) asking the agency to not get involved with regulating the broadband industry. When the FCC killed net neutrality, Chairman Ajit Pai promised that it was okay for the FCC to step away from broadband regulation since the FTC was going to take over much of the regulatory role. Now, a month after net neutrality went into effect we have the big cable ISPs arguing that the FTC should have a limited role in regulation broadband. The NTCA comments were filed in a docket that asks how the FTC should handle the regulatory role handed to them by the FCC.

Pai’s claim was weak from the outset because of the nature of the way that the FTC regulates. They basically pursue corporations of all kinds that violate federal trade rules or who abuse the general public. For example, the FTC went after AT&T for throttling customers who had purchased unlimited data plans. However, FTC rulings don’t carry the same weight as FCC orders. Rulings are specific to the company under investigation. Rulings might lead other companies to modify their behavior, but an FTC order doesn’t create a legal precedent that automatically applies to all carriers. In contrast, FCC rulings can be made to apply to the whole industry and rulings can change the regulations for every ISP.

The NCTA petition asks the FTC to not pursue complaints about regulatory complaints against ISPs. For example, they argue that the agency shouldn’t be singling out ISPs for unique regulatory burdens, but should instead pursue the large Internet providers like Facebook and Google. The NCTA claims that market forces will prevent bad behavior by ISP and will punish a carrier that abuses its customers. They claim there is sufficient competition for cable broadband, such as from DSL, that customers will leave an ISP that is behaving poorly. In a world where they have demolished DSL and where cable is a virtual monopoly in most markets they really made that argument! We have a long history in the industry that says otherwise, and even when regulated by the FCC there are long laundry lists of ways that carriers have mistreated their customers.

One of the more interesting requests is that the ISPs want the FTC to preempt state and local rules that try to regulate them. I am sure this is due to vigorous activity at the state level currently to create rules for net neutrality and privacy regulations. They want the FTC to issue guidelines to state Attorney Generals and state consumer protection agencies to remind them that broadband is regulated only at the federal level. It’s an interesting argument to make after the FCC has punted on regulating broadband and when this filing is asking the FTC to do the same. The ISPs want the FTC to leave them alone while asking the agency to act as the watchdog to stop others from trying to regulate the industry.

I think this pleading was inevitable since the big ISPs are trying to take full advantage of the FCC walking away from broadband regulation. The ISPs view this as an opportunity to kill regulation everywhere. At best the FTC would be a weak regulator of broadband, but the ISPs don’t want any scrutiny of the way they treat their customers.

The history of telecom regulation has always been in what I call waves. Over time the amount of regulations build up to a point where companies can make a valid claim of being over-regulated. Over-regulation can then be relieved either by Congress or by a business-friendly FCC who loosens regulatory constraints. But when regulations get too lax the big carriers inevitably break enough rules that attracts an increase of new regulation.

We are certainly hitting the bottom of a trough of a regulatory wave as regulations are being eliminated or ignored. Over time the large monopolies in the industry will do what monopolies always do. They will take advantage of this period of light regulation and will abuse customers in various ways and invite new regulations. My bet is that customer privacy will be the issue that will start the climb back to the top of the regulatory wave. The ISPs argument that market forces will force good behavior on their part is pretty laughable to anybody who has watched the big carriers over the years.

A Regulatory Definition of Broadband

In one of the more bizarre filings I’ve seen at the FCC, the National Cable Television Association (NCTA) asked the FCC to abandon the two-year old definition of broadband set at 25 Mbps down and 3 Mbps up. NCTA is the lobbying and trade association of the largest cable companies like Comcast, Charter, Cox, Mediacom, Altice, etc. Smaller cable companies along with smaller telephone companies have a different trade association, the American Cable Association (ACA). This was a short filing that was a follow-up to an ex parte meeting, and rather than tell you what they said, the gist of the letter is as follows:

We urged the Commission to state clearly in the next report that “advanced telecommunications capability” simply denotes an “advanced” level of broadband, and that the previously adopted benchmark of 25 Mbps/3 Mbps is not the only valid or economically significant measure of broadband service. By the same token, we recommended that the next report should keep separate its discussion of whether “advanced telecommunications capability” is being deployed in a reasonable and timely manner, on the one hand, and any discussion of the state of the “broadband” marketplace on the other.  We noted that the next report presents an opportunity for the Commission to recognize that competition in the broadband marketplace is robust and rapidly evolving in most areas, while at the same time identifying opportunities to close the digital divide in unserved rural areas.

The reason I call it bizarre is that I can’t fathom the motivation behind this effort. Let me look at each of the different parts of this statement. First, they don’t think that the 25/3 threshold is the ‘only valid or economically significant measure of broadband service.’ I would think the 25/3 threshold would please these companies because these big cable companies almost universally already deploy networks capable of delivering speeds greater than that threshold. And in many markets their competition, mostly DSL, does not meet these speeds. So why are they complaining about a definition of broadband that they clearly meet?

They don’t offer an alternative standard and it’s hard to think there can be a standard other than broadband speed. It seems to me that eliminating the speed standard would help their competition and it would allow DSL and wireless WISPs to claim to have the same kind of broadband as a cable modem.

They then ask the FCC to not link discussions about broadband being deployed in a reasonable and timely manner with any actual state of the broadband marketplace. The FCC has been ordered by Congress to report on those two things and it’s hard to think of a way to discuss one without the other. I’m not sure how the FCC can talk about the state of the broadband industry without looking at the number of consumers buying broadband and showing the broadband speeds that are made available to them. Those FCC reports do a great job of highlighting the regional differences in broadband speeds, and more importantly the difference between urban and rural broadband speeds.

But again, why do the cable companies want to break that link in the way that the FCC reports broadband usage? The cable companies are at the top of the heap when it comes to broadband speeds. Comcast says they are going to have gigabit speeds available throughout their footprint within the next few years. Cox has announced major upgrades. Even smaller members like Altice say they are upgrading to all fiber (which might get them tossed out of NCTA). These FCC reports generally highlight the inadequacy of DSL outside of the cable company footprints and don’t show urban broadband in a bad light.

Finally, they want the FCC to recognize that there is robust competition in broadband. And maybe this is what is bothering them because more and more the cable companies are being referred to as monopolies. The fact is there is not robust competition for broadband. Verizon has FiOS in the northeast and a few other major cities have a fiber competitor in addition to the cable and telephone incumbents. But in other markets the cable companies are killing the telephone companies. Cable companies continue to add millions of new customers annually at the expense of DSL. AT&T and Verizon are currently working to tear down rural copper, and in another decade they will begin tearing down urban copper. At that point the cable companies will have won the landline broadband war completely unless there is a surprising upsurge in building urban fiber.

The only other reason the cable companies might be asking for this is that both Comcast and Charter are talking about getting into the wireless business. As such they could begin selling rural LTE broadband – a product that does not meet the FCC’s definition of broadband. I can’t think of any other reason, because for the most part the big cable companies have won the broadband wars in their markets. This filing would have been business as usual coming from the telcos, but it’s a surprising request from the cable companies.