If you like the status quo you'll love the FCC's new Internet rules

16 March 2015 by Steve Blum
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I thought you didn’t want anything to change?

Some questions about common carrier Internet rules were answered, some were, again, left hanging in the FCC’s 400-page decision released on Thursday. Here’s the rundown on the five key questions I highlighted last month

Muni broadband systems – the new rules don’t specifically address publicly-owned ISPs, but taken together with the FCC’s decision to preempt state restrictions on muni broadband, it’s pretty clear that there’s no exemption. My working assumption is that going forward the FCC will treat muni systems no differently than private ones. ISPs with fewer than 100,000 subscribers (which includes all existing munis, for now) are temporarily exempt from some of the new reporting standards, but everything else applies.

Role of state commissions – as it turns out, not much: “we announce our firm intention to exercise our preemption authority to preclude states from imposing obligations on broadband service that are inconsistent with the carefully tailored regulatory scheme we adopt in this Order”. There are matters that state regulators, like the California Public Utilities Commission, jointly manage with the feds – pole attachments and universal service obligations come to mind – but the FCC seems to be delineating as narrow a scope of action as possible.

Merging broadband into existing cable and telco rules – on the surface, the new regime is separate from the rules that regulate voice – mobile or POTS – and video service. There is bleed through, though. For example, cable companies might have no choice but to implement common carrier-based consumer protections on the video side of the business, since billing and customer service are integrated with the broadband side. Pole attachments is another area of overlap. Expect regulatory and compliance practice to merge over time, even if the rule books don’t.

Universal service – my read is that the FCC intended to create a basis for subsidising rural ISPs, without the necessity of bundled telephone service, and no more. Others – Fred Pilot at EldoTelecomBlog, for example – differ, and see an open door to federal or state-imposed broadband build out requirements for incumbents, particularly telcos that are already getting universal service fund money. That was a major item on activist wish lists and they will test the limits of the decision’s intent, with the FCC and state commissions and in court over time.

Middle and last mile unbundling – the FCC’s language is clear, saying it will not be “imposing last-mile unbundling requirements” and “just as we forbear from broader unbundling obligations, that same analysis persuades us to forbear from applying…infrastructure sharing and notification requirements”. Middle mile isn’t even on the table. That said, the FCC “retains authority…to address interconnection issues should they arise, including through evaluating whether broadband providers’ conduct is just and reasonable on a case-by-case basis”. Bottom line, if you want access, lawyer up.

Overall, the new broadband common carrier rules are aimed at constraining – thereby preserving – monopoly power rather than ending it. The decision favors the status quo – most of the issues addressed are prospective problems, not current ones. Do not expect a new golden era of competition.