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Why Entitle-ify Special Access If There’s No FCC Utility Rate Regulation?

We will learn quickly and unequivocally at the FCC’s August 6th meeting, if the FCC is true to its word -- that there will be no “utility-style rate regulation” of broadband.

While the FCC’s Open Internet Order fact sheet stated: “the Order makes clear that broadband providers shall not be subject to tariffs or other form of rate approval, unbundling, or other forms of utility regulation,” will the FCC majority -- in its first post-Open-Internet-order ruling -- cynically do the exact opposite by imposing de facto “utility-style rate regulation” to the IP transition from copper to fiber networks?

Specifically, the FCC’s latest tech-transition fact sheet states the FCC will: “Require that replacement services be offered to competitive providers at rates, terms and conditions that are reasonably comparable to those of the legacy services. This would be an interim measure, pending the completion of the FCC’s special access proceeding which is examining these issues more broadly.”

Now a drum-roll please..... for the grand entrance of the “new and improved”..... FCC special access lobby….. “Competify!!!”

TryCompetify.com is the latest re-branding of communications facilities competitors who don’t want to invest in their own network facilities, but want those which do, to subsidize them – via below-market-cost, special access discount prices, effectively paid for by American consumers.

That’s why this new made-up slogan of the FCC special access lobby – “Try Competitify” -- begs a counter-slogan: “Why Entitle-ify?” …businesses with telentitlements? Why on unified networks regulate below-market-cost, business wholesale rates subsidized by market-based consumer prices?

Just like this “competify” scheme is not to promote “competition,” but “utility-style rate regulation” by another name, it also is not about protecting consumers, but getting unwitting consumers to subsidize businesses yet again in the name of Title II, the “strongest possible” net neutrality rules.

Now consider how this emerging FCC special access lobby – which consists of: COMPTEL, CCIA, Engine, Public Knowledge, Sprint, Level 3, the Broadband Coalition – are largely the same cast of characters that led the Title II net neutrality charge for “no fast lanes,” now rebranded as “no paid prioritization.”

Remember “paid prioritization” is all about the FCC setting a permanent price of zero for all downstream traffic for big businesses like Netflix, Google-YouTube, Amazon, and others, completely subsidized by market-based, consumer prices once again!

Anyone that knows about the history of the social compact underlying Title II utility rate regulation before the passage of the 1996 Telecom Act knows the FCC set higher prices for businesses and lower prices for residential consumers. Businesses subsidized consumers’ communications bills.

Why is the FCC’s “modernized Title II” New Deal so upside-down that it perversely redistributes wealth from consumers to FCC-friendly corporations?

And why have public interest groups like Public Knowledge been co-opted to advocate for corporate welfare for the un-needy?

The most damning evidence that this FCC is more interested in protecting special interests supportive of maximizing the FCC’s regulatory role than in protecting consumers, is the fact that when the FCC has had a policy choice, not once but twice, in paid prioritization and in special access, this FCC’s political instinct has been to throw the consumer under the bus in favor of forcing consumers to subsidize special business interests who feel entitled to higher profits via free or deeply-discounted FCC “utility-style rates” for communications services.

In sum, “competify” really means “competing” more for FCC subsidies in Washington, than for customer revenue in the marketplace.

I hope I am wrong, but sadly, it looks like the FCC at its August 6th meeting, is on path to not be true to its word when it asserted Title II authority in March -- that there will be no “utility-style rate regulation” of broadband, because the FCC apparently plans to de facto mandate unbundling of fiber facilities for the very first time and to force new big special access price cuts on selective broadband competitors, over time.

In the real world, coercive pricing, terms and conditions are considered the epitome of “utility-style rate regulation.”

 

 

Scott Cleland served as Deputy U.S. Coordinator for International Communications & Information Policy in the George H. W. Bush Administration. He is President of Precursor LLC, a research consultancy for Fortune 500 companies, and Chairman of NetCompetition, a pro-competition e-forum supported by broadband interests.

 

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