Wheeler Data Speed Letter to Verizon Seen as Shot Across the Bow for All Wireless ISPs
FCC Chairman Tom Wheeler’s sharply worded July 30 letter to Verizon Wireless raising concerns about the carrier’s slowing some customers’ data speeds on its LTE network starting in October likely has bigger implications for other wireless ISPs as well, industry officials told us. Wheeler told Verizon Wireless CEO Dan Mead he was “deeply troubled” by the development (CD July 31 p1) and asked the carrier to answer a series of questions.
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One big question, several industry lawyers said, is whether Verizon is uniquely situated. The Wheeler letter stresses that Verizon specifically committed to net neutrality when it bought C-block spectrum in the 2008 700 MHz auction. The question is whether companies like AT&T, which also slow some customer data speeds, face the same standard of conduct even though they did not buy C-block spectrum, these lawyers said.
"Chairman Wheeler is clearly sending a message, and not just to Verizon,” said Kevin Werbach, professor at the University of Pennsylvania’s Wharton School and a former member of the Obama administration’s FCC transition team. How Verizon and other wireless ISPs respond to the challenge will determine what happens next, he said: “If the FCC is able to rein in pricing and traffic management practices through jawboning, there will be less pressure for formal open Internet rules on wireless.”
The purpose of the inquiry could be multifold, said former FCC Commissioner Robert McDowell, now at the Hudson Institute. It could be used to force Verizon to agree to voluntary net neutrality rules, he said. It also “could be a shot across the bow indicating the commission is going to reverse the 2010 order and have net neutrality rules apply to wireless,” McDowell said.
The Wheeler letter had much bigger implications, said Randy May of the Free State Foundation. The questions are legitimate if Verizon violated the existing transparency rule by misleading subscribers, he said. “I doubt if that’s the case because I doubt if Verizon ever said that, even on unlimited data plans, it would not manage connection speeds if network congestion required it to do so,” he said. “To me, that is the essence of ‘reasonable’ network management."
May said it’s only “a fairly short step” from the kind of inquiry launched by Wheeler and a traditional utility rate case. “Wheeler refers to Verizon’s ‘revenue streams,’ but without acknowledging any concern about Verizon’s costs, especially the costs imposed on the network during peak demand periods,” May said. “Once you start down this road looking at revenues and costs and demand data, it is difficult” for the firm “to avoid getting embroiled in the type of inquiry that resembles an old-fashioned rate case of the type of proceeding that prevailed in the Title II era. We shouldn’t want to go back to the Title II era, and surely don’t need to with the competition that exists in the wireless marketplace."
The FCC has recognized that carriers can have tiers, so it may just be that Verizon advertised its service as “unlimited,” said a lawyer who does not represent Verizon. “But there could also be a distinction between quantity and speed.” A former FCC spectrum official who represents carriers predicted more letters will come as Wheeler demonstrates the FCC will get tough on net neutrality: “I'd expect this to be the first of many -- a steady stream for as long as the proceeding remains pending.”
The complaint in Wheeler’s letter should be balanced against changes in industry, with ISPs expanding IP connectivity 1,000-fold since the 1990s, the Voice Communication Exchange Committee said in a Friday letter to Wheeler (http://bit.ly/1rX7FyZ). “The narrative takes on a different tone when put in context -- first we will expand connectivity 1000 fold then we will tweak the management of a few cell sites during periods of congestion,” the group said.