Reasonable Entreaty Denied

by Mike Wendy on May 12, 2015

Last Friday, the FCC denied the petition of a group wanting to stay the President’s so-called Net Neutrality / Open Internet rules, pending resolution of the matter in court. This action was expected, and we now move another tortured step down the road in the challenge to (ultimately) overturn the dubious rules.

Without a stay at the FCC or in court, the Order will go into effect on June 12th. Good stuff, eh?

Net Neutrality - a hot, steaming mess that the President and his FCC want to let linger for years to come.

Net Neutrality – a hot, steaming mess that the President and his FCC want to let linger for years to come.

Not really.

The group wants to temporarily stop the rules – which reclassify Internet access services into heavily regulated telephone services – because the “Commission’s drastic departure from established law threatens [them] and the public with immediate, irreparable harm.” They believe the court will agree, too. Consequently, to save time, energy and resources, they requested a stay at the Commission so the courts can sort out the mess before having to go through with the expense and confusion of complying with a likely untenable Order.

Not surprisingly, the FCC rejected their reasonable entreaties.

Among many of the issues that really gets me exercised here is the effect the Net Neutrality Order will have on small Internet providers, and what that generally means for Internet innovation going forward. Ostensibly, the President, through his “independent” FCC, bemoans the plight and myriad challenges of small (especially rural) providers. Yet, when the rubber meets the country road, the President comes out with a Order that is so tight, restrictive and controlling it can’t possibly be viewed as a rational way to grow the Internet rurally, or anywhere for that matter.

The group asking for the stay thinks the rules will sink them and consumer choice, noting in their petition:

This open season of regulation and litigation will impose immediate and unrecoverable costs…[S]mall providers particularly will be harmed, as they “don’t have the means or the margins to withstand a regulatory onslaught.” Some may be “squeezed…out of business altogether”…

…Moreover, because they are spending scarce resources complying with broad yet uncertain Title II requirements, these smaller providers, many of whom serve consumers in rural areas where competitive choices are fewer, will not be able to invest those resources to improve and expand broadband service or to devote those resources to improving their products or their customer service…

…[A]s a direct result of this Order, one provider that serves southern Illinois has determined that it will now need 66% more customers to justify deploying Internet access service at a new base station and may actually have to “uninstall” some existing customers. Other providers have similarly been forced to cancel or reconsider additional deployments, to the detriment of consumers who would benefit from expanded service and competitive choice. For example, a fixed wireless broadband provider serving rural areas of northern Illinois has estimated that the additional risk and expense created by the Order will require it to delay or cancel projects including capacity upgrades to seven towers; construction of additional towers and repeater sites; a TV White Space experiment to serve customers in heavily wooded areas; and upgrades to backhaul capacity.

How does going out of business, or using resources for regulatory compliance instead of network upgrades, help grow the privately-financed Internet?

That’s right – it doesn’t. It can’t.

Many industry analysts believe the Net Neutrality rules were primarily designed to crush the biggest national communications companies into submission. Problem is, there are nearly 1,800 broadband providers here in America. The overwhelming majority of them are small and serve rural locales. They’re in areas that no one wants to, or can, serve but them. The very places that the FCC exploits in its pro-Net Neutrality advocacy to “prove” that all Americans aren’t getting broadband access on a reasonable or timely basis, and as a result, FDR-styled Net Neutrality laws must be enacted to ensure that universal access happens.

Of course, most all Americans have broadband choices – even those living in rural locales. Until the Net Neutrality rules were decided in February, the economics were in place to keep the ‘Net growing and developing.  Now, those economics are in jeopardy.

The President chose all stick and no carrot with Net Neutrality. Unfortunately, small guys are just as much on the hook as the big providers, but at much larger costs because they’re far less able to absorb the disproportionate effects of the radical new rule.

Either the Administration is colossally oblivious to this reality…

…Or it just doesn’t care.

Either option is bad. The whole new, old regulatory paradigm enfeebles the ability of private risk takers – small to large – to build the Internet for Americans and the world.

I guess I shouldn’t be shocked, coming from a Administration that can’t stand anything small. The consequence of this, however, is a big mess that won’t likely see proper resolution until sometime in 2017 at its earliest – an eternity in Internet time.

More to come…

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