Small internet providers face a fight for their lives
A couple of weeks ago, a group of CEOs from seven small regional ISPs
gathered in Washington D.C. to meet with the FCC. In a closed-door
conversation with Chairman Ajit Pai and his colleagues, the CEOs made a
case against a recent petition filed by USTelecom -- a trade association
that claims AT&T, Verizon, CenturyLink and Frontier Communications
as members. The petition, if granted, would threaten their very
existence, and, they argue, the future of competitive high speed
internet across the nation.
Filed in May this year, that petition would essentially get rid of a key
requirement in the 1996 Telecommunications Act: that incumbent
telephone companies are required to sell parts of their copper line
infrastructure -- called unbundled network elements (UNEs) -- to
competitors at regulated rates. "The purpose of the 1996 Act was to
inject competition to the incumbent markets of companies like AT&T
and Verizon," Ernesto Falcon, a legislative counsel for the Electronic
Frontier Foundation, told Engadget.
In the late '90s, that's exactly what happened. Small ISPs -- called
competitive local exchange carriers (CLECs) -- cropped up across the
country. They used those UNEs to start their own telephone and internet
companies. Instead of spending a lot of time and money installing their
own infrastructure, they could simply lease out existing copper lines
and build out a customer base that way.
USTelecom argues, that it's not 1996 anymore. It says that there's
already a competitive marketplace and that there's no longer a need to
share its network with anyone. It says that freeing them up from this
obligation will allow them to build faster, cheaper networks for
consumers.
Except that this is not necessarily the case. Over the years, few CLECs
survived. "The dot-com bust was very damaging to a lot of the CLEC
industry back in the day," said Falcon. Most of them went bankrupt or
merged with a larger company, like when Qwest was bought up by
CenturyLink in 2011. Plus, in many markets across the US, most consumers
only have a handful of internet service providers to choose from --
it's either from your cable provider or the telephone company. In fact,
CLECs are often the only ISP in rural markets; Socket, for example, has
around 20,000 customers spread out across rural Missouri.
Worse than reducing competition, preventing smaller ISPs from gaining
access to copper will also hamper the next stage of high-speed internet:
Fiber.
There are three ways to get high-speed internet in America these days,
said Falcon. The first is through a municipality building its own
infrastructure, the second is if a major multi-billion dollar
corporation decides to step in (like in the case of Google Fiber) or if
it's through a CLEC.
"We use that copper network to get started," said Carson Coffman, the
CEO of Socket, to Engadget. Socket is a small ISP out of Columbia,
Missouri. "We'll pick out a small town, go in and use that copper to
start building customers, building interest and signing up people. Once
we get enough revenue, we can go to a bank, and get funding to build our
own fiber network."
That's the method used by Sonic, another independent ISP based out of
Santa Rosa, California. It's one of the largest CLECs in the country,
with over 100,000 customers, but that's still miniscule compared to the
customer base of AT&T and Verizon. It's currently one of a handful
of ISPs delivering fiber to the home in the region. "We're currently
building out Berkeley and Albany, and about a third of the city of San
Francisco," said CEO Dane Jasper.
"If you take them out, then you have almost nothing happening in the high speed market in terms of competition," said Falcon.
What makes matters more problematic is that the USTelecom petition is
utilizing a process called forbearance, which was integrated into the
1996 bill. According to Falcon, the idea behind forbearance is that over
time, you can regulate less as competition starts to take root.
"Forbearance is a very powerful tool for petitioners," said Falcon.
"Because the FCC has to vote it down as a majority in order to reject
it. If the FCC does not act on it, it will be granted into law by next
year. If the FCC has a tie vote, it's granted into law. The FCC will
have to vote it down in order to reject it."
"By granting this forbearance, a future FCC would have to undo that
process first before engaging in the question of open access or shared
infrastructure," Falcon continued. Compounding the issue is that in
2005, when Verizon started to deploy FiOS, the FCC decided to not expand
the copper line sharing requirement to fiber in order to spur fiber
development. "That hasn't really happened," said Falcon. In fact,
Verizon stopped deploying fiber years ago, and Google has stopped its
build out as well.
There are many ramifications for small ISPs if the petition passes: It
could mean no new provisioning (which means no new customers), it could
terminate all access, leaving millions of consumers without a new
provider, or it would increase prices substantially. In fact, in the
initial petition, USTelecom said it wanted to raise prices by 15 percent
immediately.
"It isn't reasonable for USTelecom and its members to say that in a year
and a half, competitive carriers no longer have access to copper," said
Jasper. "That creates a real disincentive for them to invest because it
eliminates us as a competitive pressure."
Further, now that the FCC has opted to eliminate net neutrality
protections, having alternative ISPs is more important than ever. Some,
like Socket and Sonic, have promised to abide by a full neutral web
despite the FCC ruling, and offer a meaningful choice to consumers who
want that option. If they were to go away, that option would vanish.
"A large billion dollar organization that decides how you're going to
pay for it, will be all that you can choose from," said Coffman. "You
won't have an option! Your only choice would be to move."
Right now, the EFF plans to file its own comments to the FCC in August,
prior to the vote on August 6th. And, according to Falcon, the FCC has a
lot to answer for.
"What they're arguing is, if we cut people off they [the incumbent] will
be forced to deploy more fiber and therefore there'll be more fiber and
more high speed internet and that will mean lower prices and that's a
good thing," he said. "But what proof is there that the line-sharing
agreements have disincentivized the move to fiber?" In fact, he said,
the petition if granted would take away their financial means of getting
fiber, which would result in quite the opposite to happen.
"The FCC is required by the law to look what the impact to the
competition would be if granted forbearance as well as what the impact
would be on consumers," said Falcon. "The FCC has to figure out how many
people are affected, look at economic studies, and look at whether
that's true."
"It will be interesting to see what USTelecom says," Falcon continued.
"They will have to respond to concerns. I just don't know how will they
argue it's fit for competition. I don't see how this is in any way good
for competition."
In addition to meeting with commissioners in DC, small ISPs like Sonic
and Socket are attempting to get the word out to the public in the hopes
that they'll talk to their senators and local representatives.
"We would like a level playing field," said Coffman. "Let the consumer
pick the product. Let that be the business that wins. Not the government
stepping in and saying 'Oh that's enough competition because AT&T
said there is.'"
https://www.geezgo.com/sps/30208
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