With few exceptions, too much of anything can be
inefficient and wasteful. But, wouldn’t
it be nice if we had more choices, more competitors in the market, when we were
looking to buy access to the Internet for our home or business? Could you imagine comparing upload and
download speeds, quality of service, and prices for a dozen or more broadband options?
Today, while 70 percent of U.S. households have access
to fixed high speed internet (download speed of 25 mbps or higher), only 21
percent have a choice between two or more providers. Why so few choices? The upfront investment costs for the
distribution plant are in the billions of dollars. It is why, according to the Leichtman Group,
that 95 percent of the U.S. broadband market is served by just 14 telecom and cable
providers. Even Google has dialed back
its plans to get in the game. So, when
competition cannot thrive because economies of scale are so significant that
the market can only accommodate a small number of firms in each geographical
market, regulation is necessary to ensure just and reasonable outcomes. The question is how much regulation, because,
more often than not, regulation is overdone (costly) and extends beyond its “useful”
life. But, until there are changes to
technology or the way we consume information services, regulation is all we got. Calling it “light-touch”, as the FCC did in
both its 2015 Order and its reversal of that Order last week, tries to make us
feel better about it. But, that should
not be the emphasis. Let’s get regulatory
oversight right. Let’s ensure that ISPs,
privately-held or even municipalities, are incentivized to invest in state-of-the
art infrastructure while ensuring that consumers and competitors are not harmed
or disadvantaged. This goldilocks “ask”
will not be easy to achieve, given the political climate, the pace of vertical
and horizontal consolidation within the industry, and the regulatory flip-flops*. But, we must try!
*Regulatory
History of Telecommunications and Information Services
Date
|
Discussion
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1910-1934
|
The
Mann-Elkins Act of 1910 amended the
Interstate Commerce Act of 1887 to extend common carrier regulation to telecommunication
services. By law, common carriers are
required to provide non-discriminatory “transport” services to the general
public.
The Communications
Act of 1934 established the Federal Communications Commission (FCC) as
the regulatory body with oversight of interstate telecommunications services.
Title II of the Act describes the responsibilities of a common carrier.
|
1966-1980
|
The
FCC conducted a series of proceedings (Computer Inquiries) to examine and
alter policies in response to the convergence of computers and
communications.
The
FCC, in its Second Computer Inquiry
(1980), established a regulatory framework that distinguished between “basic
service’ and “enhanced service.” Basic
service was “limited to the common carrier offering of transmission capacity
for the movement of information” while an enhanced service was “any offering
over the telecommunications network” that was more than a basic transmission
service.”
|
1996
|
The
Telecommunications Act amended the Communications Act of 1934 with the
intention of significantly relaxing regulations which were seen as impediments
to investment and innovation. Section
706 of the statute directed the FCC to “take immediate action to accelerate
deployment of such capability by removing barriers to infrastructure
investment and by promoting competition in the telecommunications market.” Telecommunications (basic) service, including
access to the Internet over telephone lines (DSL), would continue to be regulated
under Title II. Information (enhanced
services) would be regulated under Title I.
|
2005
2006
|
In
National Cable & Telecommunications
Association v. Brand X Internet Services (2005), the Supreme Court upheld the
FCC’s decision that cable modem service providers are information service
providers (Title I) and not common carriers (Title II).
In 2006, the FCC
stopped applying common carrier regulations and Computer Inquiry requirements to broadband internet services
provided by telephone companies.
|
2010-2014
|
In
its 2010 Open Internet Order, the
FCC implemented rules against blocking and unreasonable discrimination by
ISPs. The conduct rules were in place
for several years until, in 2014, in Verizon
v. FCC, the Court struck them down because the rules fell outside the
Commission’s “statutory grant of authority” under Title I.
|
2015
|
In
a 3-2 vote on Protecting and Promoting
the Open Internet, the FCC classified fixed and mobile ISPs as common
carriers under modified Title II rules and banned blocking, throttling, and
paid prioritization.
|
2017
|
In
a 3-2 vote on Restoring Internet
Freedom, the FCC reclassified broadband Internet access service as an information
service under Title I and handed over jurisdiction to the FTC in determining
if ISPs are engaging in unfair business practices.
|
