Cable Lobbying Group Claims More Competition Would Hurt Consumers

from the insult-to-injury dept

The FCC recently voted 4-1 to approve Charter's $79 billion acquisition of Time Warner Cable and Bright House Networks. The agency just released its full order (pdf) pertaining to the deal, outlining the various conditions the FCC hopes to enforce to keep Charter from simply becoming another Comcast. Among them are a seven-year ban on usage caps, a seven-year ban on charging for direct interconnection (the heart of the telecom industry's battle with Netflix last year), and a ban on any attempt to pressure broadcasters into refusing deals with streaming video providers.

But the FCC says the merger conditions also require Charter to deploy broadband service to an additional 2 million locations, one million of which need to already be served by another competing provider. The faint threat of competition was enough to upset the American Cable Association (ACA), the lobbying organization for smaller cable providers. According to ACA CEO Matthew Polka, the added competition will actually be a horrible thing for consumers, because, uh, well, just because:

"The requirement on Charter to overbuild competitors will harm consumers in two ways...First, it will harm Charter's customers by preventing Charter from investing its resources most efficiently, such as by upgrading its networks to higher speeds. Second, it will harm customers of local, small providers when these customers are satisfied with their existing service."

And here you were thinking competition was a good thing. Of course, if these smaller cable operators don't want Charter coming to town and taking their milk money, they could simply offer cheaper, faster service themselves. Granted that's a totally foreign concept in the cable industry, where large and small cable operators alike have grown comfortable with not only local regulatory capture, but a lack of competition in the broadband space entirely.

Any disruption of this paradigm, no matter how minor, results in all manner of histrionics -- and a quick onset of amnesia regarding the fact that nobody likes cable companies after a generation of poor service and apathy, and therefore will never, ever feel bad for them.

If history is any indication the ACA really doesn't need to worry all that much. Traditionally in telecom, FCC conditions requiring that an ISP "expand to X number of additional homes" are usually conditions that the merging companies volunteer themselves. Why? It's most frequently because that expansion either already happened (and the paperwork hasn't been filed yet) -- or was slated to happen as a matter of course. Or it may not happen at all; such expansion promises are usually never really independently audited by the FCC, which lets companies string the FCC along with an endless flood of expansion promises that more often than not aren't even real.

In other words, the ACA's decision to insult the intelligence of an already annoyed customer base by pretending competition would be bad for them -- only adds insult to injury. Instead of whining about competition, how about just competing? Better yet, how about competing with Charter using a strange, outdated idea known as better customer service?

Filed Under: broadband, cable, competition, fcc, matthew polka
Companies: aca, american cable association, bright house networks, charter, time warner cable

Verizon Now Pleads For Bogus Net Neutrality Rules Under 706 Promising It Won't Sue This Time, Ignoring That Others Will Sue

from the nice-try dept

One of the points that we've made a few times concerning the whole net neutrality fight is that whatever rules are put in place, someone is going to sue. As we noted in that post, Verizon's original filing on the net neutrality plan the FCC announced back in May (based on Section 706) suggested that Verizon would sue over those rules if they were put in place (in contrast to Comcast and AT&T who both said they'd be fine with rules under 706). Since then, it's become clear that lots of other ISPs have made it clear to Verizon that it should shut up and sit tight, because its own lawsuit that kicked out the 2010 rules now seem likely to lead to much stricter laws.

So it's fairly amusing to see Verizon put out a blog post effectively now pleading for the May rules under 706 -- rules that it didn't initially support -- now that it's come out that the FCC is considering this new "hybrid plan." Suddenly, according to Verizon, rules under 706 are unassailable and won't lead to a lawsuit, while everything else will. First, Verizon attacks the full Title II plan, insisting that ISPs will "have no choice" but to sue, and even that consumer groups would sue if the FCC forbears too much:

If the FCC reclassifies Internet access as a Title II service, the hyper-regulatory group will be happy, but may sue anyway if the FCC forbears from too many arcane common carrier rules for their taste (and to keep their fund raising pipeline flowing). As well, the ISPs, and perhaps some in the tech industry, will have no choice but to fight the sudden reversal of two decades of settled law. By departing from the judicially sanctioned Section 706 approach, the FCC will have increased both the likelihood – and the likelihood of success – of any legal challenge.

I've seen no indication that anyone on the consumer advocacy side of things would sue if the FCC forbears too much -- in fact, most of the proposals ask for forbearance from nearly all Title II requirements, leaving just a few in place. But, yes, everyone knows that Verizon and others would sue over Title II rules.

And, of course, if the hybrid plan is put in place, folks from both sides may sue:

Recently we’ve heard press reports that the FCC might embrace a “hybrid” model – one that splits Internet access apart (at least in metaphysical terms), and reclassifies the content-provider portion as a Title II service, but bases customer-facing rules on section 706. Both the utility regulation crowd and the ISPs have pushed back hard on this approach. Here the FCC has opened itself to credible challenges by all parties. Again, by departing from the safe harbor of Section 706, the FCC will face strong challenges on the partial move to Title II from those investing in networks. And because the FCC will have to describe why the partial move was necessary, it will open itself to challenge by the utility regulation camp about why a wholesale move to Title II wasn’t equally necessary. Like a full move to Title II, the hybrid approach also fairly guarantees litigation.

But... Verizon insists, suddenly the original proposal under 706 that Verizon itself didn't initially want -- well, that won't lead to litigation in Verizon's fantasy world:

Finally, there is the original section 706-based proposal. In this instance all of the major ISPs and their trade associations have conceded that the FCC can lawfully prohibit harmful paid prioritization on this basis – effectively waiving their ability to challenge the FCC’s authority to do so and taking them out of the litigation path. For their part, the utility regulation camp cannot appeal an FCC decision to rely on 706 as a basis for prohibiting paid prioritization without arguing that those rules are invalid, which they would be loath to do. Their only possible appeal is to argue that the FCC should have regulated even more heavily, and reclassified under Title II to impose legacy common carrier regulations. The Title II advocates will have a very hard time finding a solid basis on which to challenge what they believe is the “under regulation” of this route: the statutory basis is already blessed, and the record will likely support the regulations proposed.

Of course, this ignores the fact that the 2010 rules were under Section 706, and Verizon sued and won. Yes, these new rules try to take into account the specifics of the court's ruling, but still. Section 706 rules can and do lead to lawsuits. In fact... while Verizon would like to pretend everyone would be happy with rules under Section 706, that's clearly not true. The American Cable Association (ACA), in its filing to the FCC (pdf), made it fairly clear that its members would, in fact, sue over the use of Section 706 if (as is expected) the FCC makes it clear that the rules only apply to internet access providers and not online service providers (i.e., Netflix, YouTube, etc.):

In addition to recognizing that asymmetrical application of open Internet rules to only broadband ISPs would be bad policy, it would also be an arbitrary and capricious application of the Commission’s authority since the record soundly shows that ISPs are not the only Internet actors capable of undermining the goals of the proposed open Internet rules. In its comments, ACA argued that not only would failure to apply open Internet rules on all Internet actors that have the ability to block or degrade fail to achieve the primary open Internet goals of the Commission, but asymmetric regulation that constrain the business behavior of a single class of platform providers (i.e., fixed broadband ISPs that are also MVPDs) would distort market incentives....

[....]

Should the Commission adopt new open Internet rules on ISPs as part of this proceeding, the Commission must broaden the scope of its rules to apply equally to all forms of Internet blocking and degradation that interfere with the virtuous circle of innovation, consumer demand, investment and broadband deployment that it is charged to protect, or else it severely risks reversal in the courts. The prolonged uncertainty such a situation would create would do no one – not edge providers, nor access providers nor consumers – any good.

This is the poison pill effort that some broadband providers were trying early on with net neutrality rules, basically telling the FCC if it's going to put any kind of rules on internet access providers (who often do represent a monopoly/duopoly situation), they must also saddle the same rules on internet companies, despite the situation being entirely different. The goal here was to try to scare internet companies into supporting the broadband players' position, but it also shows the thinking of these ISPs and the fact that the basic rules under 706 are almost certainly going to lead to litigation too, contrary to Verizon's new attitude that rules under 706 are universally loved and adored by all.

So, again, key point: no matter what rules the FCC puts in place, someone is going to sue. Given that, the argument that the FCC should choose plan A, B or C based on a lawsuit avoidance strategy makes little to no sense. There will be a lawsuit from someone. You can make reasonable arguments that one or another legal position may be more defensible, but in talking to a lot of different people on all sides of this debate, I'm fairly convinced that no one has a legitimate idea of which plans are more defensible than others. They can all make credible arguments that any of the three plans will win in the courts or lose in the courts. I've seen convincing arguments that the 706 plan can survive the courts, the hybrid plan can survive the courts and the Title II plan can survive the courts. Similarly, I've seen credible arguments that all three would fail in court.

Given all that, if the plan is going to get challenged no matter what, and there will be the dreaded "years of uncertainty" no matter what -- why not just pick the absolute best plan there is to accomplish what the FCC is trying to do?

Filed Under: fcc, litigation, net neutrality, open internet, rules, section 706, title ii
Companies: american cable association, verizon