May 15: Big Implications for the Future of Broadband Internet

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By Keith Calder

This Thursday, Tom Wheeler—chairman of the Federal Communications Commission— will host a meeting on two major topics concerning net neutrality NPRM and his spectrum auction proposals. This meeting will have big implications on proposed rules that will decide the future of broadband Internet.

According to the Wall Street Journal, new language proposed by Tom Wheeler will attempt to reverse criticism of past proposals which would ban broadband providers from blocking or slowing down websites, but allow them to strike deals in which content companies could pay them for faster delivery of web content to customers.

The proposed plan drew vast criticism from a wide range of companies including Google and Netflix who believe such deals will inherently segregate the internet into “fast and slow lanes,” putting companies at a disadvantage.

This new proposed language takes the same basic approach from the past, but includes provisions which make clear that the FCC will examine any deals between broadband providers and nonpaying companies that unfairly put nonpaying companies content at a disadvantage.

An FCC official said that the draft would seek comment on other such agreements that call for an outright ban on “paid prioritization,” that will look to prohibit big broadband companies Comcast and AT&T from doing deals on some content with terms they are not offering to others. In other words the FCC would allow broadband providers the ability to charge a premium for faster service, but will require that the “fast lanes” offered to one company must be offered to any company willing to pay the additional fee.

In addition, Mr. Wheeler’s new proposal will invite comments on whether broadband internet service should be considered a public utility, subjecting lightly regulated broadband internet to massive government regulations (see: An American Infrastructure Success Story & Broadband: American Free-Market Success vs. Australian Government Failure) If this “reclassification” of broadband servicers came to fruition, it would devastate investment and innovation.

While net neutrality is getting all the attention in the national media, let’s not lose sight of another important issue being decided in Thursday’s meeting: the spectrum auction.

The FCC has decided that it will seek comment on what will ultimately control the spectrum purchasing ability of AT&T and Verizon in order to limit the two largest broadband businesses in the telecommunications industry. In turn the FCC will seek to give T-Mobile and Sprint—foreign owned companies—a leg up in the 2015 auctions by reserving some licenses that wouldn’t be available to Verizon or AT&T.

This is yet another case of FCC cronyism, when government officials continue to pick winners and losers instead of letting the free-market dictate. 

In a filing to the FCC, Verizon officials have called the spectrum auction a “perverse and unjust” rule to subsidize the auctions of two companies [T-Mobile and Sprint] with “well-financed corporate parents.” AT&T echoed the same statement going as far as suggesting that it will not participate in the auction if FCC spectrum plans are adopted. “If the restrictions as proposed are adopted, AT&T will need to seriously consider whether its capital and resources are directed toward other spectrum opportunities that will better enable AT&T to continue to support high quality LTE network deployments to serve its customers.”

If the FCC doesn’t reverse course on both of these crucial issues, the results will be disastrous for our free market economy, consumers, and taxpayers.