FCC, Do No Harm
Federal Communications Commission Chairman Ajit Pai will soon release a draft order that eliminates the FCC's rules that protect broadband internet access service customers from many abuses by their broadband providers. These protections -- adopted in 2015 and upheld in federal court -- prohibit broadband service providers from blocking access to lawful content, applications, services or non-harmful devices; deliberately targeting some lawful internet traffic to be delivered to users more slowly than other traffic; and favoring some internet traffic in exchange for consideration or prioritizing content and services of their affiliates. You may have heard of these rules -- many people refer to them as net neutrality. At the FCC, they call it Open Internet protections. Without the FCC's 2015 Open Internet regulations, your broadband provider will make the rules that govern how you access the internet.
This should make you nervous. The companies who reach you over the internet -- think Netflix, Pandora, Etsy, and even World Wrestling Entertainment (WWE) -- are certainly nervous. They are telling their investors -- in documents filed at the U.S. Securities and Exchange Commission -- that they are concerned about the significant and increasing market power of wireline and wireless broadband providers. They say that without the FCC's strong, enforceable Open Internet rules, broadband providers will:
- Restrict or prohibit use of their infrastructure;
- Interfere with lawful content and/or services;
- Block, degrade or charge for access to, or bandwidth use of, certain products and services;
- Impose onerous restrictions on the customers’ ability to use services;
- Favor their own content or services over that of other companies;
- Deliver unaffiliated content with less speed, reliability or otherwise on a non-neutral basis as compared to other market participants;
- Reduce the quality of their service by degrading the quality of the data packets they transmit over their networks, giving some companies’ packets low priority while giving their own packets or those of affiliates higher priority, or blocking packets entirely;
- Impede the offering of new services; and
- Impose higher fees for priority access to customers.
That will have grave consequences for these companies. They are telling their investors that without Open Internet rules, they'll experience discrimination and anticompetitive behavior that results in:
- Additional operating expenses;
- Increased costs to consumers for broadband service and, thereby, depressed demand for these companies’ services;
- Decreased ability to sell existing services;
- A loss of existing users;
- Impaired ability to attract new users; and
- Negative consequences on revenue, growth, financial conditions, and cash flow.
Generally, the companies' SEC filings demonstrate that they are concerned that the changes to net neutrality rules Chairman Pai has been talking about will adversely affect the growth, popularity, and use of the internet.
As FCC commissioners consider Chairman Pai's proposal, we hope that they will keep in mind these companies that provide the content and services we all love. If they're harmed, we all are.
For more on this, see Benton's recent filing at the FCC -- and read for yourself what the internet content and services companies are telling their investors.