FCC wholesale word games will kill retail competition

Looked at one way, the draft decision to lighten regulation of wholesale broadband services that’s been floated by the new chair of the Federal Communications Commission isn’t a lot different from the one proposed by the old chairman. Both versions backed away from regulating prices or terms for higher speed, dedicated industrial-grade connections – those faster than 45 Mbps – while keeping some controls on slower services based on legacy copper technology.

Current chairman Ajit Pai wants to back further away than Tom Wheeler, the guy he replaced, did. That’s consistent with Pai’s ambition to be weed whacker in chief. Not surprising.

The big difference is the way that Pai’s draft starts to chip away at the common carrier designation that Wheeler’s FCC applied to broadband service. In a bit of circular logic that would be hilarious as a stand up comedy routine but profoundly disturbing coming from a regulator, Pai’s draft declares that wholesale broadband services offered by cable companies don’t fall under common carrier rules because, well, they don’t follow common carrier rules

With respect to its wholesale cellular backhaul service and E-Access service, Comcast explains that it makes individualized decisions whether it will, in fact, offer such services in a given instance or to a given customer. Comcast describes its offering of retail Ethernet Dedicated Internet Access Service (EDI) and Ethernet transport similarly, explaining that it does not hold out such services to all interested buyers. For its part, Charter explains that particularly in the case of business data services provided to enterprise customers, it makes individualized decisions whether to offer service to given customers. The case-by-case decisions about whether to offer these services to a given customer described by Comcast and Charter stand in contrast to the “quasi-public character” that is a “critical” premise of common carrier classification—and the associated heightened duties—identified by the D.C. Circuit [appeals court].

Absent common carrier obligations, Comcast, Charter and other cable companies can decide who they’ll offer services to and how much they’ll charge based on how deals will impact their business models. They can use their monopoly control of wholesale bandwidth to choke off last mile, retail competitors. Pai wants to let them do it.

It’s one thing to whack away regulatory weeds. It’s quite another to carve out exceptions and use that regulatory power to protect monopolies by mowing down competitors.