Net neutrality rules pass FCC. Why Comcast shouldn't worry.
The FCC's new net neutrality rules, voted in Thursday, prevent cable companies from blocking Internet content or creating digital 'fast lanes' for preferred customers, something Internet providers haven't engaged in. Bigger reforms would break up the broadband monopolies.
The Federal Communications Commission won a lot of fans in approving their revised "net neutrality" rules Thursday. None of them were cable companies.
The telecommunications industry was quick to voice its disapproval for the commission’s new guidelines, which passed in a 3-to-2 vote along party lines. The rules classify broadband Internet as a public utility, preventing Internet service providers (ISPs) from blocking certain content and creating “fast lanes” with better speeds for companies that can pay for it.
“The Internet is too important to allow broadband providers to make the rules,” FCC Chairman Tom Wheeler said in the lead-up to the vote. He also tackled criticisms that the new regulations would stifle innovation and undercut investment in Internet services. “Nothing we do today alters the model for economic expansion,” he insisted, noting that companies like Google, Sprint, and T-Mobile had expressed support for the rules. He added that Cablevision, a leading ISP, has said the regulations wouldn’t have “any real impact” on its finances in a recent earnings report.
That did little to placate industry lobbyists and their supporters in Washington. FCC commissioner Ajit Pai, a Republican who voted against the rules, called them “a monumental and unlawful power grab,” bent on “solving a problem that doesn’t exist.”
"The day after this order becomes law, consumers will see nothing different in their experience,” the National Cable & Telecommunications Association, a lobbying group for the cable industry. said in a statement. “However, they surely will bear the burden of new taxes and increased costs, and they will likely wait longer for faster and more innovative networks since investment will slow in the face of bureaucratic oversight.”
The Business Roundtable, a right-leaning group of chief executive officers, said it was “frustrated and alarmed,” by the FCC’s ruling in an e-mailed statement, and called on Congress to intervene. Verizon griped that the ruling imposed 1930s regulations on a 21st century Internet, emphasizing the point by releasing its reaction statement in Morse code.
Despite the outcry, however, nothing about the way companies like Comcast and Verizon currently do business will change, at least in the near term. No ISP actually offers a “fast lane” for premium content, nor do they block or slow down certain websites. Financially, the specter of regulation hasn’t had much of an impact, either. A group of telecommunications CEOs sent the FCC a letter in May warning that governmental overreach could have an “investment-chilling effect.” But as Tim Wu pointed out in the New Yorker Thursday, stocks for broadband providers actually jumped after Mr. Wheeler first announced net neutrality rules on Feb. 4, and they’ve stayed high.
This is all par for the course when it comes to regulating communication, says Chip Pickering, CEO of COMPTEL, a lobbying group for Internet content providers, in a phone interview. He argues that the biggest telephone and cable companies have always opposed regulations that would create a more competitive field, from the breakup of AT&T in the 1980s to the overhaul of the Telecommunication Act in 1996. “Incumbent [companies] always oppose it,” he says, “but in every case their values increased and their services got better.” In five years, he argues, companies like Comcast and Verizon will have benefited as much as start-ups.
If start-ups can get into the game at all, that is. While ensuring that consumers won’t pay more to access certain types of content, the FCC rules did nothing to dislodge the status of companies like Comcast and AT&T as the sole broadband provider for many areas of the country. If Comcast is allowed to buy Time Warner Cable, the new company will be the only choice for broadband in nearly two-thirds of the United States, opponents of the merger say, and the prohibitive costs for companies who want to build their own fiber networks mean competition is virtually nonexistent.
There is some movement on that front: Also on Thursday, the FCC voted to override state laws preventing cities from building their own high-speed Internet networks to compete with the likes of Verizon and Comcast. But such networks are still a long way off and, like the FCC rules, will likely face legal challenges from the broadband industry.
“The new rules should be seen as little more than a preventive measure for abuses that have largely yet to occur,” Jacob Davidson wrote in an editorial for Time. “For more meaningful reform, Americans should throw their support behind other policies that will break broadband monopolies and actually improve their connections.”
So don’t cry for Comcast. Not yet, at least.