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FCC takes first steps to deregulate ISPs, but does it actually matter?

regulation red tape european commission

The FCC has taken the first step towards ending Title II in the US, serving its Notice of Proposed Rulemaking to partly define the roadmap of deregulation.

The notice itself promises three things. Firstly, to reverse the Title II utility-style government regulation which has been in place for two years now. Secondly, to return to the Commission’s original classification of mobile broadband Internet access service as a private mobile service. And finally, to eliminate the catch-all internet conduct standard created by the Title II order.

“The Internet wasn’t broken in 2015,” said FCC Chairman Ajit Pai, in typical flamboyant style. “We were not living in a digital dystopia. Nonetheless, the FCC that year succumbed to pressure from the White House and changed course. Even though the FCC couldn’t find any evidence of market failure, it turned its back on almost two decades of success.”

Alongside this announcement, the FCC has also begun a public consultation to decide if and how regulations dictating the media industry should be modified or eliminated. It’s another move which has been fuelled by the premise the current regulatory landscape is limiting the commercial abilities and ambitions of US businesses.

While any change in regulatory stance should be noted, there is very much a question of how much we should really care. This isn’t so much an economic decision, but appears to be more ideological. The line has been drawn in the sand and sides have been picked. Pai and his Republican army are on the side of deregulation with Commissioner Mignon Clyburn and her Democratic soldiers on the side of greater government oversight. It’s a typical Right versus Left match of political ping pong.

Both sides have good and valid arguments, but there is a sense to Pai’s position; why should the telco industry be so heavily regulated?

Yes, there is need to ensure fair distribution of the internet, and there is also a requirement to safeguard the consumer but the internet doesn’t have to be a utility in the same way water does, for example. Water is subject to utility regulations because you cannot pay for better water from your taps. You pay a bill, and the water flows. There is not a separate pipe which allows you to get premium water. Irrelevant as to whether you are rich or poor, it all comes from the same place.

In terms of internet traffic, there is another option, which could facilitate new business models. There is an opportunity to create two tiers for internet traffic, allowing the ISPs to charge a premium to companies like Netflix for higher bandwidth. Netflix could then look at a premium account for customers who want buffer-free, HD-quality episodes of Jersey Shore.

The complication here is to ensure the basic service doesn’t screw the consumer; the second tier of service needs to provide a service which would be considered satisfactory. There is a fine balance to be made, but essentially there does need to be regulation to ensure consumers are not being strong-armed into premium services because of poor experience.

It’s a fine line to trend, but ultimately the question is does it actually matter? Probably not.

ISPs are spending a significant amount of cash to upgrade networks and provide the connected era which we so eagerly demand, so they should be allowed to make some money. However, the digital economy has now become a necessity, therefore we should not be held to ransom by the connectivity providers. There is a balance to be struck in the middle, but don’t expect it to be found in the immediate future; the differences between the two parties are too great currently.

Ultimately, the outcome of this saga has already been decided. ISPs will mostly deliver a good service because of the element of choice. Unlike other utilities, water is another excellent example here, consumers have the luxury of choice when it comes to selecting an ISP, and the ISPs will battle to gain those consumers. It will mean better experiences and cheaper prices.

So yes, regulation is very important, but let’s recognise this for what it ultimately is; a game of political ping pong over the level of influence government has over the internet.


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