When FCC chairman Julius Genachowski last week said the words ‘Title II,’ we heard US reactions which varied everywhere from unspeakable paroxysms of anger to sagely nodding of heads and most steps in-between.
The FCC was proposing that broadband be regulated as a telecommunications service rather than as it is at present, treated as an information service. The changes are being brought in so that the FCC can impose net neutrality rules on all broadband operators.
Few people who heard this got past the ‘Title II’ statements, and had they read the full report from Genachowski they would perhaps have been less worried. Specifically he is only interested in what he calls a ‘third way’, discarding both full adherence to Title II provisions of the 1934 Communications Act or continuing to operate merely with Title I provisions giving the FCC only ‘ancillary’ authority over regulating broadband. The idea is that broadband and broadband only from among Cable’s services, would be changed to adhere to Title II regulations.
Specifically Genachowski wants to include ONLY the provisions referred to in Sections 201, 202, 208, 222, 254, and 255 of the Act, and only the broadband, so let’s go through these. Section 201 is all about demanding transparent charging mechanisms, so that consumers know what they are letting themselves in for. There is some wording about charges being ‘just and reasonable’ and there is the natural fear that this gives the FCC an umbrella tool to enforce changes to charges and makes the cable companies into cost plus businesses, with low margins, but we think this really refers to being just and reasonable in allocating charges to different aspects of the service, so you don’t charge more, for instance, for fixed voice than for mobile voice etc’
Section 202 is perhaps the key element that makes net neutrality safe, which is the point of this suggestion, in that it ensures that it bans discrimination ‘ so that you can’t refuse to offer services to one particular company or group or give undue preference for one over the other.
There are several sections now omitted, 203 about filing a list of charges with the FCC ‘ this would have been ridiculous for cable since it operates different charges in different places and adjusts pricing daily and 204 and 205 collectively would give the FCC control over price increases, but are omitted.
In 208 a simple complaints procedure is laid down, going via the FCC and in 222 there is a commitment towards the privacy of customer data, 254 is about upholding universal service principles, including making payments to and getting payments from the universal service fund and 255 a generic commitment to supply to people with disabilities.
As far as we can see nothing in these paragraphs of Title II gives the FCC direct control or even major influence over margin or charging at a broadband operator, especially not in this limited form, despite concerned investor voices being heard discussing the deal. The US cable operators are already badly enough thought about by US investors, with their constant need to spend capex and upgrade plant, without having a limit artificially put on their ability to set their own prices.
The FCC says that the goal is to restore the status quo which existed prior to a US court telling the FCC that it had over stepped its authority in telling Comcast that it could not block P2P traffic. In other words before the courts handed the operators a stick to beat the FCC, defying its position in support of network neutrality.
The problem, in the FCC’s words, is finding a way to continue to attract investment to broadband at the same time as protecting consumers. Well that’s not exactly right is it. It’s more about protecting investment and protecting the businesses such as Google, which have sprung up on the internet, than really being about consumers. It is in the long run, since any increases in costs forced on Google would invariably find their way to consumers one way or another.
Genachowski made the point this was to be thought of as a light-touch and that other, more extreme measures would be unacceptable, but his tone seems to be threatening to the cablecos, suggesting that if they do not like this solution, one can be found that they like even less. And he consistently made the point that he and the rest of the FCC was on the side of the free market and private investment and he was not trying to hinder market forces and that his reason for pushing this approach was that without this change of classification, the FCC could no longer police broadband and net neutrality.
The FCC points out that this is the approach that was applied to regulating wireless communications and it will now take this approach to a public process whereby it seeks comment on the approach from all stakeholders. It will then making a ruling.
Not being aligned to either of the US political parties we don’t have a take on how the comment process here will go. It is likely, we are told, that there will be many complaining voices. But treating the Internet as an information service, to the point where cable is not regulated in the same way as a telco, while providing identical services, was only ever going to last for so long, and Comcast and the other major cablecos in the US are more and more looking like AT&T and Verizon in which services they can offer and their reach and if we are to see what we feel is the inevitable continued consolidation of US cable, into fewer and fewer operations, then this step also seems to be inevitable.