Net Neutrality Ruling Seen as Enabling Further ISP Regulation
Net neutrality rules upheld Tuesday by a U.S. Court of Appeals for the D.C. Circuit panel (see 1606140023) don't materially affect how ISPs operate, but there is fear the Title II Communications Act classification of broadband opens the doors to numerous other FCC regulations, cable ISPs and others told us. "With the degree of control and oversight the FCC has under Title II, there might be all kinds of regulations," said Tom Simmons, Midcontinent Communications chief of staff. Cable consultant Steve Effros agreed the FCC, backed by the ruling upholding broadband as a Title II telecom service, "can do a whole lot of things, including total rate regulation."
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Numerous industries have been knocked back on their heels by the decision, said a lawyer with broadband and FCC experience, pointing to NCTA's compromise set-top box proposal coming so quickly after the court decision (see 1606160059). The wide deference the D.C. Circuit gave the agency gives Tom Wheeler and future chairmen broader regulatory power, the lawyer said.
Some have said Wheeler may next target zero rating plans, where ISPs exempt certain streaming from monthly data caps or charges. The agency already was reviewing such plans, with Wheeler last month saying what the agency does depends partly on the net neutrality verdict (see 1605250043). In a note to investors after the D.C. Circuit ruling, Macquarie analyst Amy Yong said zero rating services could attract more regulation as ISPs "invest and lean on content as a source of differentiation." The FCC didn't comment Friday. It pointed to a media interview Wheeler gave after the net neutrality decision in which he said the agency had been assuming it would win in court, and the win reinforced the agency's momentum.
Numerous cable ISPs told us the FCC net neutrality rules have had no effect on their businesses. An increasing number of small cable ISPs are seeing that operating a neutral network is a competitive differentiator from major operators, Full Channel President Levi Maaia told us Friday. "It allows for us to set our network apart," he said, adding the net neutrality rules didn't affect procedures for the Rhode Island cable operator. "All the stuff behind the Title II regulations was a solution in search of a problem," Simmons said. "I don't know that imposing us with Title II regulations has … offered any benefit to our customers."
Barring a radical change in politics, rate regulation in the foreseeable future is highly improbable, said New York University economics Professor Nicholas Economides in an interview. "I wouldn't worry about it if I was a telecom or cable company." He said regulations on unbundling services are more possible, though still relatively unlikely.
While a legislative solution or Supreme Court reversal of the D.C. Circuit decision are seen as unlikely (see 1606140040), there's another alternative that could redirect the FCC net neutrality regulatory path, Tom Larsen, Mediacom senior vice president-legal and public affairs, told us: "Google implodes. ... Cable is sort of public enemy number one in the FCC's eyes, but it just takes one major screwup before that could change. Policies could change. That could have a dramatic shift on everything in terms of net neutrality."