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US internet providers fear EU-style rules

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US internet providers fear EU-style rules

Proposals will lead to unwarranted regulatory interference, say companies


US internet providers fear plans to regulate broadband as a public utility will give the government the power to mimic European policies, such as forcing companies to share their infrastructure.

Such steps, which European policy makers say have been in the public interest, would chill broadband investment and represent unwarranted regulatory interference, broadband companies say.

Their comments come after Tom Wheeler, chairman of the Federal Communications Commission, the US telecoms regulator, this week announced plans aimed at preventing broadband providers from blocking or prioritising particular websites or apps.

On Wednesday, Mr Wheeler set out plans to reclassify broadband as a public utility under part of a communications law called Title II. This would give the FCC the same sweeping powers other regulators wield over utilities.

Broadband providers say that as well as allowing the regulator to enforce so-called net neutrality, Title II would also allow it to take steps similar to those used in the EU to break the stranglehold of former telecoms monopolies.

They say that once Title II is activated — as expected when the FCC votes on the proposals on February 26 — it will be easier for the regulator to control prices or force incumbents to share their network “pipes” with rivals.

“Despite the repeated assurances from [President Barack Obama] and [FCC] chairman Wheeler, we remain concerned that this proposal will confer sweeping discretion to regulate rates and set the economic terms and conditions of business relationships,” said Michael Powell, president of the NCTA cable lobby group.

The battle over net neutrality pits fixed-line and wireless providers such as Comcast, Verizon and AT&T against big bandwidth users that oppose discrimination, such as Netflix and Apple.

It is an issue on both sides of the Atlantic. The EU is attempting to introduce a single rule on net neutrality across the bloc, where regulation is a patchwork. At present, some countries such as the Netherlands already require internet service providers to treat all data equally, while others do not.

Andrus Ansip, vice-president for the digital single market at the European Commission, has repeatedly called for net neutrality. But attempts to introduce EU-wide rules have been bogged down by disagreements between member states amid fierce lobbying from telecoms groups, who say strict rules will stymie investment.

Rick Boucher, a former US congressman who represents broadband companies at a law firm and the Internet Innovation Alliance, a campaign group, says the biggest fear of US broadband companies is that incumbents will be forced to let rivals use their infrastructure for a fee, a process called local loop unbundling.

“This is what has the broadband companies so worried. The reclassification of broadband opens vast areas of uncertainty,” he says.

Unbundling has been a key component of EU competition policy on former state telecoms monopolies. It has fostered greater broadband competition and some policy makers hope it has already promoted net neutrality, for example by deterring internet providers from “throttling” popular sites such as Netflix to push customers towards their own rival services.

But Mr Boucher, singling out France, says the range of service providers now accessible by consumers often offer uniformly slow connections: “It’s competition in theory, but in fact you are getting DSL service [the slowest form of broadband] from everybody. So it’s not competition that is particularly meaningful.”

In the US, Verizon told the FCC in comments last year that using Title II could make US unbundling almost inevitable, chilling broadband investment and having “disastrous consequences” for consumers.

Chairman Wheeler can’t on one hand say that the economics of the industry are such that we need Title II, but then wave his hands in a breezy way and say he is not going apply 99 per cent of it

Robert McDowell, a former Republican FCC commissioner

However, the evidence from Europe is not so bleak. Counting all forms of broadband, 12 European countries have more subscriptions per person than the US, according to the OECD. Some 18 European countries offer more affordable broadband than the US, it says — a result some internet activists attribute to unbundling.

A senior FCC official stressed the commission’s aversion to heavy-handedness and said the trends of recent years made it clear that light touch internet regulation was in the ascendant. But she acknowledged it was impossible to speculate about what a future FCC would do.

One factor that might give broadband companies reason to worry is that 82 per cent of US households have access to only one broadband provider offering speeds of at least 50 megabits per second. Given that these speeds will soon be seen as average, the chance of a future regulator deciding to fix such a chronic lack of choice with Title II is not negligible.

Reclassifying broadband as a utility also gives internet activists a chance to file lawsuits against the regulator to force it to be even tougher on broadband providers.

By proposing to only enforce parts of Title II related to its immediate goal, the regulator is storing up trouble, says Robert McDowell, a former Republican FCC commissioner. “Chairman Wheeler can’t on one hand say that the economics of the industry are such that we need Title II, but then wave his hands in a breezy way and say he is not going apply 99 per cent of it.”


Letter in response to this report:

Reclassification of broadband is justified / From Martyn Roetter

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