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Another net neutrality battle is brewing


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Another net neutrality battle is brewing

Opinions expressed in this pieceare solely those of the author and do not represent the views of SNL Kagan.

Herewe go again. Opponents of the FCC's 2015 redesigned Open Internet Order are attempting to gut the FCC's abilityto regulate common carriers with newly proposed legislation in the U.S. Congress. The latest move is in additionto numerous ongoing legal challenges.

The "No-RateRegulation of Broadband Internet Access Act" (HR 2666)was passed by the U.S. House of Representatives on April 15 and is on the U.S. Senate'scalendar for debate although currently there is no specific date. President Obamais likely to vetothe proposal if it does make it to his desk in order to protect the fundamentalsof net neutrality.

HR 2666prohibits the FCC from regulating the rates charged by broadband Internet serviceproviders. The bill's anti-regulatory posture is heavily supported by big cableand big telco carriers, their respective industry trade groups and their mostlyRepublican allies in Congress.

Opponentsof HR 2666 claim the action will make it difficult for the FCC to review and prohibitmonopolistic, predatory and anti-consumer practices such as speed throttling, datacaps and paid prioritization, which current net neutrality provisions are designedto prevent.

Somecritics claimthat the broad language of HR 2666 is really designed to sabotage most of the FCC'snet neutrality policies.

The bill'sauthor is Adam Kinzinger, a Republican from Illinois who received $139,833 in campaigndonations from telecom special interests in his two-term congressional career, accordingto the database-driven websiteof the Center for Responsive Politics ( His 19 co-sponsorsare all Republicans and also enjoy support from big telco and cable.

Nothing neutral about net neutrality'spartisans

HR 2666passed on a mostly partisan vote of 241 in favor (236 Republican votes) and 173opposed (all Democrats).

CongressionalRepublicans, who deny there is a hidden agenda, claim HR 2666 just codifies theFCC's voluntary restrictions so that the agency can't simply change its mind andseek to overreach on price regulation.

The rhetoricon both sides of the issue has been bolstered by new "independent" academicstudies with questionable conclusions and predictions. To me, they seem long onposturing and short on objectivity, with a generous dose of rhetoric, extrapolation,weighting and mathematical smoke and mirrors.

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The ConsumerFederation of America, a leading member of the pro-net neutrality camp, releaseda reportthis month estimating that incumbent broadband carriers have overcharged Americanbusinesses $75 billion for service over the past five years. FCC Chairman Tom Wheeleralso contendsthat pricing competition has been stifled by big telco and big cable providers.According to a recent story in PC World, FCC figures show that less than 5% of businessbroadband locations nationwide are served by more than two carriers.

The FCChas a hearingscheduled for April 28 that would address monopolistic pricing for dedicated connectionspaid by offices, retailers, banks, schools, hospitals and other businesses to broadbandproviders.

Big ISPs versus the FCC

Cableand telco trade groups claim in a letter of support for HR 2666 that America's broadbandindustry invested more than $80 billion in 2015 to help expand and enhance broadbandaccess. They claim that the FCC could undermine their long-term goals by imposingonerous rate regulation on broadband providers.

USTelecom'sThe Broadband Association, a trade group, commissioned a studyby adjunct professor Hal Singer of Georgetown University's McDonough School of Business,which claims significant loss of jobs and economic output if the FCC is allowedto regulate rates of broadband providers to enterprise.

The studyalso projects that providers will be able to light up nearly 122,000 buildings nationwiderepresenting $9.9 billion in new capital expenditures and 4,900 new fiber milesif the FCC forebears regulation of fiber networks. In addition, the study claimsthat aggregate capital expenditures nationwide could be $52 billion to $75 billionfor business broadband.

As forcompetition, Singer also claims that pricing has declined 7% to 17% from 2013 to2015 for "some" businesses served by nearly 30 incumbent providers.

The bigtelco titans, Verizon CommunicationsInc. and AT&T Inc.,dispute the CFA's estimates for overcharging. Verizon and AT&T believe the CFAnumbers were based on the economics of older copper-wire networks, which increasinglyplay a minor role in the broadband market.

The anti-regulationcamp also insists that competition is being hampered because of the cloud the FCChas cast over potential pricing regulation. USTelecom contends on its blogthat the lack of more fiber capacity for broadband business customers is "abusiness decision" rather than a competitive market failure.

All roads lead to Congress

And thebeat goes on with each side of the issue lobbying lawmakers and regulators basedon their own self interest. In this hyper-charged election year, the same industryforces appear to be lined up in much the same way they have been the past few yearson the issue of net neutrality.

The pro-netneutrality camp is filled with Internet-content and tech-service companies who passionatelybelieve Web and wireless networks should be an equal playing field offering a reliableway for every player regardless of size to distribute content. They claim that deregulationwill stifle innovation and competition, and, ultimately, hurt consumers and enterprise.

In theother corner are large broadband cable and wireless providers — the anti-net neutralityfaction — who have been pushing for deregulation that would allow more free-market,profit-driven practices such as allowing better access at faster speeds to be negotiatedat higher prices with content providers and streamers.

In betweenis an army of well-funded media, telecom and tech lobbyists who spent an estimated$380 million last year trying to influence Congress. That's about 12% of the total$3.2 billion that all industries spent in 2015 on congressional influence, or thesame percentage as it was in 2014 as noted in my Nov. 12, 2014, post"Net neutrality: Will the richest lobbyists win?"

I planto update the influence game's numbers and the players in my next post. Followingthe money has become an armchair sport.