FCC Regulations: Putting Consumers Last

FCC Regulations: Putting Consumers Last

Regulators are busy slogging through the old, familiar territory of speed and price regulatory proceedings. These proceedings maximize the use of hideously expensive regulatory processes, and they ossify what should be nimble deployments of new technology. The themes of controlling prices and controlling speed are woven into many of the proceedings, sometimes inconsistently.

Some examples:

• The 5G wireless service is anticipated to deliver speeds ten times higher than those available from 4G service. The FCC has identified some blocks of 5G spectrum that will go for auction in 2016. Also expected in 2016 are auctions for additional 4G spectrum. The rules for the 2016 auctions are unknown, but the pattern for prior auctions includes set-asides (deep price discounts) for "designated entities" — that is, bidders deemed more equal than others. Rules should be settled as soon as possible, because carriers are already developing the software and hardware for 5G service rollouts as early as 2018 and large scale rollouts are expected in the US, Japan, Korea, Europe and China by 2020.

• In October 2014, the FCC issued a guide on what speeds are considered "broadband" — an important distinction because the FCC's ultimate goal is universal broadband access — but then announced in January 2015 that broadband speed must be six times faster than it needed to be three months earlier. The October 2014 guide, which defined "broadband" as 4 Mbps or better, suggested that two users, one doing basic tasks and one using HD streaming video, would need a combined bandwidth of 1-2 Mbps. Netflix recommended an Internet access speed of 3 Mbps for standard definition video and 5 Mbps for HD video.

When the FCC vaulted to the new minimum definition for broadband, 25 Mbps, it was clearly out of touch with regulatory and industry recommendations. The FCC had decided that the label could be used to lure service providers into upping the prevailing competitive speed.

• A month later, in February 2015, the FCC declared Internet access to be a Title II service under the Telecommunications Act of 1934. That subjects ISPs to the full range of excruciatingly slow and expensive regulatory proceedings that can dictate all aspects of a service, including pricing. The FCC chose a Title II classification because it allowed them to prohibit paid prioritization of Internet access into fast-lanes and slow-lanes, the so-called "net neutrality" populist objective. One speed to fit all does not fit everyone’s needs because some need faster access and some do not. A unitary price will subsidize some and overcharge others. Net neutrality is not even good enough for government work.

• Another FCC proceeding investigates the transition from slower copper-based to faster fiber-optic-based circuitry. The FCC sometimes wants higher speeds and should applaud the transition, but some of the carriers’ competitors have been reliant on leasing business broadband connections that use the old copper-based infrastructure, rather than moving to an all-IP network that uses optical fiber. Competitors do not want the transition to fiber optics unless it also grants a significant price advantage. Of course they could and do build their own circuits, but in many cases, renting some circuits provides a cheaper overall result.

If the FCC accedes to competitor wishes, they will be delaying the transition. The Marie Antoinette outcome would be a command to keep the copper and build the fiber-optics. For providers, maintaining two networks means less investment in an all-IP network. That means less for consumers, but competitors renting copper-based facilities are fine with that.

The proliferation of price-related proceedings at the FCC are reminiscent of the plain old telephone service days, and they belie the radically different technologies, the aggressively competitive marketplace, and the much higher value that consumers receive for their communications dollar. Instead of effective cheerleading for innovations that will delight consumers, the FCC has reverted to the regulatory dark matter of price-policing from an era that should have gone by.

Alan Daley writes for the American Consumer Institute Center for Citizen Research, a nonprofit educational and research organization. For more information about the Institute, visit .

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