The Top Five Ways Title II Hurts Consumers


Reclassifying ISPs as common carriers under Title II raises all kinds of concerns, but perhaps none are more important than the potential for Title II to harm everyday broadband users.

Here are the top five (or should it be bottom five?) ways Title II hurts consumers:

Title II opens the door to FCC micromanagement of rates and practices

Although FCC Chairman Tom Wheeler has said there will be “no rate regulation” under Title II, that is not entirely true. The Commission plans to retain authority under section 201(b) of the Communications Act, which gives the agency authority to ensure that all rates and practices are reasonable. While some have suggested that this FCC oversight is helpful to consumers, that view is shortsighted. Under the proposed approach, any time an ISP introduces a new service or rate plan, it will have to anticipate defending the reasonableness of that offering before the FCC or in a court. The result will be that ISPs may be reluctant to offer newer, better services simply to avoid wrangling with the Commission about whether or not they are reasonable.

Title II raises the cost of providing broadband

In a variety of ways, introducing Title II regulation will raise the cost of providing today’s broadband services. For example, the fees that cable operators pay electric utilities to string their cable or fiber networks across poles could increase under Title II. ISPs also will experience increased administrative and legal costs attributable to complying with Title II. All of these additional costs would be passed down to consumers, raising their bills.

Title II will lead to a reduction in infrastructure investment

Title II imposes a whole new set of rules and regulations on Internet access services. Following those new rules inevitably will cost ISPs more money — money that could be used to improve infrastructure. Plus, with Title II comes an enormous amount of industry uncertainty. If regulations make an ISP’s investments riskier or less profitable, it’s far less likely to invest. The result will be fewer network advancements, fewer infrastructure improvements, and fewer new products. And if Title II creates a threat to infrastructure investment by established ISPs, the threat to potential new ISPs is even greater. Murky, unclear regulatory environments are the bane of the investor. If the goal is more broadband competition, the path there is certainly not more broadband regulation.

Title II could disrupt other segments of the Internet

One of the least understood consequences of the FCC’s move to impose Title II regulation on ISPs is the spillover effect it will have in other segments of the Internet. For example, in recent days companies like Google and Akamai have expressed concern about the impact regulation might have on their traffic exchange arrangements with ISPs. The FCC will be asserting itself in the Internet to an unprecedented degree and no one, including the FCC itself, has a complete grasp on the implications of that government intrusion for various Internet players and the customers they serve.

Title II will lead to new Internet taxes

They say the ‘T’ in Title II stands for taxes. A recent Progressive Policy Institute study showed that $11 billion in new taxes and fees could be added to the delivery and consumption of broadband. While this estimate has been somewhat controversial, and predicting how state and local governments will react to an FCC decision necessarily involves some speculation, we have no doubt that there will be situations where new taxes and fees will be imposed on broadband customers as a result of the reclassification of broadband service. Whatever the amount of these taxes and fees proves to be, there is no question that new taxes will directly affect consumers by raising the cost of broadband service and depressing interest among non-adopters.

All of these problems (and many more not listed here) can be avoided if, instead of granting the FCC sweeping authority over the Internet with Title II, Congress establishes a bipartisan net neutrality law. We can have our cake and eat it too – net neutrality protections along with incentives to grow and flourish.