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Broadband CEOs to FCC: We're not a utility

The major U.S. providers say reclassifying broadband as a utility would cost billions and result in slow speeds and fewer choices for consumers.


Chief executives from the nation's biggest broadband providers say they want a free and open Internet, too. The only catch is that they don't think the Federal Communications Commission needs to impose utility-style regulation on broadband services in order to do it.

In a letter to the FCC on Tuesday, CEOs of big broadband providers, such as Lowell McAdam of Verizon, Randall Stephenson of AT&T, Robert Marcus of Time Warner Cable, and Brian Roberts of Comcast -- warned that reclassifying broadband into a Title II public utility would threaten new investment in broadband infrastructure and jeopardize the spread of broadband technology across the U.S.

They said if such action is taken by the FCC -- and it's one of the options being considered -- it would result in slower Internet speeds for everyone and a deepening of the digital divide.

"Reclassification of broadband Internet access offerings as Title II 'telecommunications services' would impose great costs, allowing unprecedented government micromanagement of all aspects of the Internet economy," the CEOs said in their letter.

The broadband CEOs said they are committed to keeping the Internet open and that they remain committed to that goal going forward. And they even said they were willing to work with the FCC to establish "a lawful regulatory framework for protecting the open Internet." But they emphasized that the framework must not include reclassifying broadband services as Title II under the 1996 Telecommunications Act.

Why is reclassification so bad?

The main argument from the CEOs is that reclassifying broadband services so that they're regulated like the telephone network rather than the light regulatory approach the FCC currently takes with the Internet would kill future investment in broadband networks. They argue that the current regulatory framework is why broadband and wireless companies invest more than $60 billion a year in their networks. They claim this more than $1.2 trillion investment over the years has resulted in great improvements in broadband networks every year.

If broadband is treated as a utility, then the government would have authority to "regulate rates, terms and conditions, mandate wholesale access to broadband networks and intrude into the business of content delivery networks, transit providers, and connected devices," they said. This would open the door to government regulation that would stretch beyond broadband service providers and could also affect Internet-based companies, too, the CEOs added.

The CEOs also questioned the FCC's legal authority to even impose service reclassification. And they practically promised they would challenge such a move in court, which would likely tie up this issue for even more years in legal battles.

Ultimately, the CEOs say all of this uncertainty around regulation would harm investment. And the billions of dollars spent every year to improve networks simply wouldn't happen anymore.

"Under Title II, new service offerings, options, and features would be delayed or altogether foregone," the CEOs said in their letter. "Consumers would face less choice, and a less adaptive and responsive Internet. An era of differentiation, innovation, and experimentation would be replaced with a series of 'Government may I?' requests from American entrepreneurs."

The Net neutrality legal battle

The CEOs letter comes just two days before the FCC is set to consider a proposal that would reinstate Open Internet rules, often referred to as Net neutrality rules, that the FCC adopted in 2010. Those rules were challenged in court by Verizon, which argued the FCC had no authority to impose them. And in January, a federal appeals court threw them out. The court acknowledged the FCC has authority to impose some regulation, but it didn't like the legal argument the government used to impose the regulation.

In short, the court said that the FCC could not regulate broadband like it is a utility subject to "common carrier" rules if it did not classify the traffic as a Title II telecommunications service or utility. This gives the FCC two choices in trying to reinstate the rules:

1. It can reclassify broadband as a Title II telecommunications service.

2. It can try to find a way under the current classification and the current law to impose the regulation, without subjecting it to "common carrier" rules.

FCC Chairman Tom Wheeler has opted for the non-classification option as the basis for his initial proposal, which created a firestorm of protest when it was first leaked to the public last month. Since then, digital advocates have mounted an aggressive campaign to get the FCC to reconsider this move. Internet companies have joined the battle as have 11 Democratic US senators.

Why the push for reclassification

There are two main concerns of the groups proposing Title II reclassification. One is that without the ability to create common carrier rules for broadband, there is no way to prevent broadband providers from creating commercial services that would allow them to give priority on the network to certain services. Digital advocates say this would essentially allow broadband providers to create a "fast lane" on the Internet, which would potentially hurt the performance of non-paying services.

The other concern is that without Title II, the FCC will just be putting itself into the same position it had been in with the previous rules adopted in 2010. Back then, former FCC Chairman Julius Genachowski, also contemplated reclassifying broadband as a Title II service. But because of the protests from broadband providers, he decided to forgo that option. Instead, he came up with a , which formed the basis of the now defunct 2010 rules.

But digital advocates say the FCC has been down this path before. And if the agency doesn't put the new rules on more solid legal footing, regardless of whether they explicitly allow for Internet "fast lanes" or they prevent them, it will again be challenged in court. And the prediction is that the FCC will lose on this issue in court for a third time.

Chairman Wheeler seems to be listening to the mounting criticism from advocates, Internet companies, lawmakers, and the concerned general public. And while he still is not proposing that the FCC reclassify broadband traffic, he isn't ruling out the possibility either. In a revised proposal he began circulating on Monday, he leaves open the question of whether Title II should be considered as an option. Additionally, the FCC will also open up for comment a proposal that was recently filed at the FCC by Mozilla, which provides a somewhat different legal path that could allow the FCC to treat broadband traffic as a common carrier.

The real reason for writing this letter

The pressure the advocacy community has put forth on the FCC regarding this issue has likely spooked the big broadband providers. This coupled with the fact that Chairman Wheeler seems to be responding to these moves, has likely given them each pause.

While some of these broadband companies have individually opposed Net neutrality regulation and broadband reclassification formally in previous FCC filings, they are now banding together to make their case as a single entity. What's also striking about the letter is that these companies all say they are willing to work with the FCC to get some rules passed, so long as they don't include reclassifying broadband.

This is a major step, since previously many broadband companies said that while they promised to keep the Internet open for their customers, they did not feel that formal rules were necessary to provide the protection. As mentioned above, Verizon even sued, challenging the FCC's authority to impose such regulation. Now, it looks as though these companies have slightly shifted their stance on whether rules should even be in place.

Still, whatever rules end up in the FCC's final proposal will likely be criticized by big broadband providers if they include a hint of reclassification or "common carrier"style regulation. This means that if the FCC does side more with the digital advocates and decides to take the politically less palatable path of outright reclassification, there will surely be a big fight fueled by the major broadband companies that will go on for another several years.

So even though everyone seems to be in agreement that the Internet should remain "open," we're likely still a long ways off from figuring out how to make that happen.