On Heels of BDS Regulation Rollback, FCC to Consider Gutting Net Neutrality

The Federal Communications Commission last week voted to significantly ease regulatory requirements in the $45 billion business data services (BDS) market, and now Chairman Ajit Pai has announced a plan to roll back net neutrality rules.

During a speech Wednesday at the Newseum in Washington, D.C., Pai outlined a plan to reduce the government’s oversight of high-speed internet providers. Two years ago, the Commission adopted regulations that treat broadband as a telecommunications service, prohibit blocking and slowing down of Web content, and ban Internet providers from prioritizing certain traffic.

“The FCC, on a party-line vote, decided to impose a set of heavy-handed regulations upon the internet,” Pai said. “It decided to slap an old regulatory framework called ‘Title II’ – originally designed in the 1930s for the Ma Bell telephone monopoly – upon thousands of Internet service providers, big and small. It decided to put the federal government at the center of the internet. Two years ago, I warned that we were making a serious mistake. Most importantly, I said that Title II regulation would reduce investment in broadband infrastructure. It’s basic economics: The more heavily you regulate something, the less of it you’re likely to get.”

Pai said his plan will bring high-speed internet access to more Americans, create jobs, boost competition and better protect online privacy.

“Do we want the government to control the Internet?” he said. “Or do we want to embrace the light-touch approach established by President Clinton and a Republican Congress in 1996, and repeatedly reaffirmed by Democratic and Republican FCCs alike?”{ad}

At its May 18 meeting, the FCC will consider a notice of proposed rulemaking, and if adopted, the Commission will seek public input on this proposal.

Kathy Grillo, Verizon’s senior vice president and deputy general counsel, public policy and government affairs, said the telco supports both net neutrality and Pai’s proposal to roll back Title II utility regulation on broadband.

“Title II (or public utility regulation) is the wrong way to ensure net neutrality; it undermines investment, reduces jobs and stifles innovative new services,” she said. “And by locking in current practices and players, it actually discourages the increased competition consumers are demanding.”

CenturyLink said Pai’s plan offers a “long-sought-after solution to the problem of over-regulating the Internet and helping the internet ecosystem continue to evolve to meet growing consumer demand.”

The Internet Association, a group that represents more than 40 top Internet companies, including Google, Facebook, and Netflix, said the current rules are working and “these consumer protections should not be changed.”

“The existing 2015 open Internet order protects consumers from ISPs looking to play gatekeeper or prioritize their own …

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… content at the expense of competition online,” said Michael Beckerman, the association’s president and CEO. “Rolling back these rules or reducing the legal sustainability of the order will result in a worse internet for consumers and less innovation online.”

U.S. Sen. Bill Nelson, a Florida Democrat and member of the Senate Commerce Committee, issued a statement saying “gutting these rules robs Americans of protections that preserve their access to the open and free Internet.”

“Depriving the FCC of its ongoing, forward-looking oversight of the broadband industry amounts to a dereliction of duty at a time when guaranteeing an open internet is more critical than ever,” he said.

Regarding BDS regulation, the order adopted by the Commission states that because of “substantial and growing” competition in the BDS market, legacy regulation “inhibits the investment required for the transition of BDS from legacy TDM networks to high-speed Ethernet connectivity.”

“There’s an allure, I’ll concede, to micromanaging prices, terms and conditions,” Pai said in a statement. “But hopes and good intentions can’t override economic analysis and hard data. Micromanagement can thwart competition. It can stifle investment. It can prevent us from ever achieving long-term results that benefit consumers.”

Commissioner Mignon Clyburn, who voted against the order, called it “one of the worst I have seen in my years at the commission.”

“As I see it, this order deepens the digital divide,” she said. “Communities where competition is unlikely to ever develop will see substantial deregulation, so rural and poor areas will see prices go up without the hope of any relief. Today is a sad day for the proud small business owners across this great nation, for rural hospitals, schools, libraries and police departments, indeed, for all consumers.”

CenturyLink commended the Commission for “recognizing the widespread competition in the business-data services market and aligning the Commission’s regulations to reflect competitive market realities.”{ad}

“Right-sizing these regulations based on a fact-based, data-driven analysis will promote investment in next-generation broadband facilities and help spur economic growth across America,” said John F. Jones, CenturyLink’s senior vice president of public policy and government relations. 

Chip Pickering, CEO of Incompas, the trade association for competitive networks, said that outside of the FCC and a “handful of AT&T lobbyists, there is not a single person on the planet who believes we currently have enough broadband competition.” Last August, Incompas and Verizon submitted a proposal that included price reductions and a competitive market test for the FCC to consider as it analyzed the market.

“Prices are going up, and customer service is going down,” he said. “That doesn’t happen in free markets with competitive choice. By saying one provider is sufficient, the FCC is favoring old incumbents over new innovators. It is punishing small business customers, and holds back entrepreneurs. Our networks drive our economy, and blocking competition from one of our economy’s most important sectors is dangerous.”