Small- and Medium-Sized ISPs Worry Net Neutrality Would Mean USF Contributions

Commerce’s NTIA is working with other federal agencies and stakeholders, and reviews FCC comments to advise Obama on the issue, according to remarks (http://1.usa.gov/1rHxMXa) July 16 by NTIA Administrator Larry Strickling. Claims made in the letter were “laughable,” said Free Press Policy Director Matt Wood, whose organization backs a Title II approach. It’s unlikely Obama would risk alienating his base by taking a strong stance against Title II, particularly before the November elections, said one opponent of treating ISPs as common carriers, TechFreedom President Berin Szoka. The merits of the arguments also matter, said Jonathan Banks, USTelecom senior vice president, in an interview. The letter lets the administration know that Title II would have “broad economic impacts,” said Banks, whose organization helped gather the signatures.

The letter repeats many of the arguments made by Title II critics, but posed one that Szoka said has been little-discussed in the debate: The possibility that treating broadband providers as common carriers would also mean they have to begin paying into the USF. Problems associated with increased regulations “would be compounded if our broadband subscriber base must absorb price increases resulting from the potential for new fees attributable to the Universal Service Fund, Telecommunications Relay Service, and other programs,” the letter said. “Given the widely acknowledged challenges this country faces in persuading all Americans to adopt broadband, any policy that results in higher costs for providers and new fees for consumers should be a non-starter.” Among the companies that signed the letter were Alaska Communications, Bright House Networks, General Communication, Hawaiian Telcom, Midcontinent Communications and Suddenlink.

"The time, regulatory uncertainty and costs associated with a Title II regime would deter investment in new broadband services and discourage our banks from providing capital for deployment of new infrastructure and improvements,” the letter said. The smaller companies are not in a position to block or discriminate against content providers, and instead could face discrimination from large content providers seeking fees for carrying popular content, said Phillips. “We have strong incentives to meet the needs of our residential and commercial customers and a lengthy track record of doing just that,” the letter said. “Does the federal government really need to heap costly, complex new regulations on our companies? We have no incentive to interfere with our customers’ ability to access the Internet content of their choice. Nor is there any evidence that we have done so."

It’s “easy to claim that Title II is ‘heavy handed’ and burdensome, but that’s just not true,” Wood said: “As we've shown time and again,” Title II “does not dampen investment. It’s a highly flexible and deregulatory framework that applies in all sorts of competitive markets.” He took particular exception to claims Title II would lead to legal costs and USF contributions. “As if there would be no interpretation and no lawyers for Section 706, with its multi-factor tests, entirely untested theories, and individualized negotiations?” Wood said. The USF argument “conveniently ignores the fact that the FCC has been looking to expand the contribution base for years, and did bring interconnected VoIP into the pool without ever finding VoIP to be a telecom service,” he said. The FCC could undo any requirement for ISPs to pay into the USF through forbearance, said Wood, whose organization has opposed expanding contributors to include broadband providers.

An NTIA spokeswoman pointed to Strickling’s remarks, in which he said the agency would “look at the entire end-to-end delivery of content to consumers and understand where, if anywhere, in that framework there might be issues for consumers. Is there a concern with the Title I service that is offered to consumers? Or should our concern be with the service that Internet Service Providers offer to content providers, which perhaps will be more traditional telecom services already offered under Title II?"

NTIA backs increasing the number of Internet users and encouraging more intense use and developing flexible, creative and rapidly adaptable policies to encourage innovation, the spokeswoman said. “We view the Internet as our client, not any one set of stakeholders,” said Strickling. “In developing policy, we must balance the competing interests of users by focusing on what policies best support economic growth and innovation.”