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Over Easy: ISPs Favor Regulation — When It Helps Them

Sign sorry no internet todayThe U.S. is woefully behind most other countries in both the speed and cost of access to the Internet. For relatively high-speed Internet at 25 megabits per second, 75 percent of homes have one option at most, according to the Federal Communications Commission — usually either Comcast, Time Warner, AT&T or Verizon. The annual Cost of Connectivity 2014 report, published in October for the third year in a row by the New America Foundation’s Open Technology Institute, examines the cost and speed of broadband Internet access in 24 cities in the United States (U.S.) and abroad. There are interesting comparison charts in that Cost of Connectivity report. It is eye-opening to see how poor our Internet service is, and how high our prices compared to other countries without the telecom duopolies squashing cities’ attempts to build better and cheaper networks.

Internet Service Providers (ISPs) are vehemently against regulation when it will even remotely constrain their anti-competitive behavior — such as being regulated under Title II of the Telecommunications Act for net neutrality — but they’re quite happy to support regulations that protect their iron grip on the broadband market. Private ISPs hate when cities and towns decide to enter the telecommunications business themselves. But with private ISPs facing little competition and offering slow speeds for high prices, municipalities occasionally do decide to build their own broadband networks in competition with ISPs.

To derail this threat to their lucrative revenue, ISPs have teamed up with friends in state legislatures (who undoubtedly receive hefty contributions from the industry) to pass laws that make it more difficult or impossible for cities and towns to offer their own competing broadband service.

Some state restrictions have been in place for decades. Several state laws were passed in the years after the federal Telecommunications Act of 1996 was passed. Another wave of proposals came after a US Supreme Court decision in 2004 that said the Telecommunications Act allows states to prevent municipalities from providing telecommunications services.

The telecom lobbyists helped promote a bill in Kansas (which failed to pass) to outlaw municipal broadband service for residents except in “unserved areas,” and those were carefully defined so that it would be almost impossible to call any area unserved. After protest, the cable lobby group said it would rewrite the bill to change how it defines unserved areas. From the bill,

“Unserved area” means one or more contiguous census blocks within the legal boundaries of a municipality seeking to provide the unserved area with video, telecommunications or broadband service, where at least nine out of 10 households lack access to facilities-based, terrestrial broadband service, either fixed or mobile, or satellite broadband service, at the minimum broadband transmission speed as defined by the FCC.

AT&T isn’t opposed to government handouts, though, as long as they are flowing to the private sector. The company argues that community broadband networks “should not receive any preferential tax treatment,” and that only private companies should be given special treatment. AT&T said, “Indeed, any tax incentives or exemptions should be provided, if at all, to private sector firms to induce them to expand broadband deployment to unserved areas.”

AT&T has been going state by state paying asking state lawmakers to get rid of most remaining consumer protections, such as those requiring continued 911 access to the elderly, so it can get out of DSL markets it doesn’t want to upgrade.

In Kansas specifically, AT&T has promised locals they’ll be awash in all manner of miracle broadband improvements, if only they eliminate the Kansas Corporation Commission’s consumer protection regulations and minimum quality-of-service standards. Well, at least the ones that apply to AT&T.

To bypass an uncompetitive duopoly between AT&T and CableOne, the city of Chanute, Kansas has been exploring the possibility of building a city-wide fiber network that will offer 1 Gbps speed, at a cost of about $40 per month. After AT&T’s attempt to pass new regulations hamstringing the project, the city of Chanute is now confronted with a 1947 law requiring companies to obtain permission from the Kansas Corporation Commission to sell bonds to fund such telecom projects. AT&T is hastening to join the case. According to the Wichita Eagle:

Any decision made by the KCC could impact AT&T’s business operations in the area, which is why we asked to intervene in the proceeding,” the company said in a written response to questions from The Eagle. “AT&T remains interested in both broadband issues and the work of the KCC.

Concludes an article on the Kansas efforts published in Techdirt,

[T]his [AT&T] is the same company that insists that absolutely any regulatory effort to protect consumers from duopoly power is the very worst sort of government over-reach, but has absolutely no qualms about using government over-reach and regulation to make sure broadband prices remain high and service quality continues to suck.

Photo courtesy Philip Greenspun

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I retired from the University of Notre Dame in the Office of Information Technology in 2010. I'm divorced, with two grown children and 8 grandchildren. I'm a lifelong liberal and a "nonbeliever."