What are the consequences of an FCC Internet "utility"?

[superboyac]

http://www.nytimes.com/roomfordebate/2015/02/04/regulate-internet-providers

The big news today is the move to regulate the internet as a utility.  I know we have other threads for this, but my main question is what are the consequences to this?  It's hard for me to tell with all the weird political doublespeak and general news narratives.

Some of my basic questions:
Is the internet really a "natural monopoly"? (like gas, water...to me, it doesn't appear to be)
For the normal residential connection...does regulation mean faster or slower speeds per buck spent?
For the normal residential connection...does regulation mean the internet is wide open as it is today? (I don't get this one at all)
Wouldn't any kind of "change" for the internet by default indicate MORE restrictions on content?  To me, it seems logical that this is true because the internet currently is completely "liberated"...it's already 100% free, any change would have to be less free, no?

[wraith808]

More links that have some of the ramifications baked into the article.

http://variety.com/2015/biz/news/net-neutrality-fcc-chairman-proposes-to-reclassify-internet-like-a-utility-1201422752/
http://www.washingtonpost.com/blogs/the-switch/wp/2015/02/04/the-fcc-just-proposed-the-strongest-net-neutrality-rules-ever/
http://venturebeat.com/2015/02/03/source-fcc-will-reclassify-internet-as-public-utility-att-and-verizon-will-immediately-sue/

The issue is Net Neutrality, and how the ISPs regulate internet access more than any of the questions that you ask.  Reclassifying it as a Title II utility will give the Feds more power to regulate the access.  This has a couple of big ramifications that are different than the direction that you're looking at:

1. They could regulate how the major players limit access- and indeed remove all right for them to do so, and then enforce it.
2. Smaller providers that don't have access to what is really a government funded initiative will again have access, creating more competition.

Now, these two points do affect your basic questions.

1. The reasoning that they're using to classify the internet in the same way as gas and water is because in this age, the internet to a large extent has become a necessity for the common citizenry to function in society.  As far as the monopoly part, it's based on the fact that the infrastructure required to operate as a provider is prohibitive.
2 and 3. The implementation of the reclassification would allow more access so that Comcast/Xfinity/Whomever has a virtual monopoly in your area would have more competition, driving prices down and increasing competition over service quality.
4. The purpose of this is to create less restrictions.  In theory, the internet is unrestricted- but that is only as much as your provider makes it so.  If there was the ability to regulate and tell them that they can't restrict and enforce this, then you'd enjoy this as a matter of course, rather than at the whim of your provider.

[eleman]

The big news today is the move to regulate the internet as a utility.

Apparently, no, it isn't so.

[wraith808]

The big news today is the move to regulate the internet as a utility.

Apparently, no, it isn't so.

A good comment from the comments, that I agree with:

The overall message in this post is one that FCC official Gigi Sohn has urged "friendly bloggers"to echo; the same story appears on TechDirt and Public Knowledge. Here's a clue: if you impose universal service taxes, pole attachment rates, and price controls on interconnection (setting the price to zero is price control), you're in utility territory. Call it what it is.

They're just trying to head off opposition by saying, "no, no... we're not trying to classify it as a utility.  No matter what it looks like!"

[eleman]

The big news today is the move to regulate the internet as a utility.

Apparently, no, it isn't so.

A good comment from the comments, that I agree with:

The overall message in this post is one that FCC official Gigi Sohn has urged "friendly bloggers"to echo; the same story appears on TechDirt and Public Knowledge. Here's a clue: if you impose universal service taxes, pole attachment rates, and price controls on interconnection (setting the price to zero is price control), you're in utility territory. Call it what it is.

They're just trying to head off opposition by saying, "no, no... we're not trying to classify it as a utility.  No matter what it looks like!"

Ohh... The quacks like a duck test... You may be right. I didn't look from that angle.

What could be the pros and cons of a utility treatment then? Most of the stuff I read on the matter is from techdirt, so I suspect I have a one-sided view.

[Vurbal]

In what way, exactly, is this treating internet providers as a utility?

Are mobile phone providers regulated like utilities? Because this is weaker than their Title II rules.

It looks more like a platypus to me. 

[40hz]

In what way, exactly, is this treating internet providers as a utility?

Are mobile phone providers regulated like utilities? Because this is weaker than their Title II rules.

It looks more like a platypus to me.  

Same here. The deeper you get into what's being said by those who will actually get to decide, the more this all starts to look like it's just more 'puppet theater' for the kiddies.

[SeraphimLabs]

The fact that major ISPs are whining about the looming possibility that they might actually have regulations to comply with limiting how badly they can molest the american consumer means the FCC absolutely should reclassify ISPs as a Title II utility.

Purely on the basis that it is a natural monopoly, is repeatably and highly abusive to consumers because of that natural monopoly, and because they are turning immense profits off of an aging network that is in dire need of capacity upgrades. Also because I am no longer believing the whole customers per mile line they give when asked about why they don't extend deeper into the countryside after hearing about Time Warner Cable making more than 90% profit.

[wraith808]

In what way, exactly, is this treating internet providers as a utility?

Are mobile phone providers regulated like utilities? Because this is weaker than their Title II rules.

It's funny that you mention mobile phone providers... because some of them are covered also.  But to the question at hand:

The draft rules seek to impose a modified version of Title II, which was originally written to regulate telephone companies. It will waive a number of provisions, including parts of the law that empower the FCC to set retail prices — something Internet providers fear above all.

However, contrary to many people's expectations, the draft rules will also keep other parts of Title II that allow the FCC to: enforce consumer privacy rules; extract funds from Internet providers to help subsidize services for rural Americans, educators and the poor; and make sure services such as Google Fiber can build new broadband pipes more easily, according to people familiar with the plan.

Internet providers won't be asked to contribute to the subsidy fund, known as Universal Service, right away. The draft rules merely open the door to that obligation down the road should the FCC determine that step is necessary. (The Universal Service Fund helps schools and libraries buy Internet service and reduces the cost of telephone service for low-income Americans. It also subsidizes connectivity for rural areas. If the FCC later decides to ask Internet providers to pay into the fund, the money would go toward these programs.)

In addition, senior FCC officials confirmed, Wheeler's draft proposal applies strong rules to the Internet backbone — the part of the Web responsible for carrying Internet traffic to the doorstep of Comcast, Verizon and others before those companies ferry that content to you. The proposal stops short of laying down specific regulations there; it merely says companies should not favor some Web traffic over others in that part of the network. But under the draft rules, the FCC could investigate deals similar to the one Netflix signed with Comcast, Verizon and others to ensure its content is delivered quickly to customers. That's a huge deal for Netflix.

Looks pretty much to be regulated like Title II to me, though I could be wrong.

Thoughts?

[40hz]

Looks pretty much to be regulated like Title II to me, though I could be wrong.

Thoughts?

This from Techdirt?

Stop Saying That The FCC Is 'Treating Internet As A Utility' -- It's Not
from the mythbusting dept

Now that FCC boss Tom Wheeler has made it official that he's going to present rules to reclassify broadband under Title II for the purpose of implementing stronger net neutrality rules (details still to come...), the opponents to this effort have come out of the woodwork to insist, over and over again, that reclassifying is "treating the internet as a utility." The cable industry's main lobbyists, NCTA, decried "Wheeler's proposal to impose the heavy burden of Title II public utility regulation...." and AT&T screamed about how "these regulations that we're talking about are public-utility-style regulations..." Former Congressman Rick Boucher, who is now lobbying for AT&T whined that "subjecting broadband to public utility regulation under Title II is unnecessary."

Hell, even those who are merely reporting on the issue are calling it "treating internet as a utility." Here's the Wall Street Journal, NPR, CNET, Engadget and the Associated Press all claiming that the new rules "treat" or "regulate" the "internet as a public utility."

And they're all wrong. While there are some "utility" like aspects in Title II, Wheeler actually made it pretty clear he's not using those sections in the net neutrality rules that he's putting together (though, again, the details here will matter, and we haven't seen them yet). What he's doing here is just using Title II to be able to designate broadband as a common carrier, but just being a "common carrier" is not the same as being a "public utility" -- a point that John Bergmeyer at Public Knowledge makes nicely, by highlighting that there are lots of common carriers that aren't utilities...

Interesting... (read the rest of it here)

[superboyac]

yea, nice article.
so that makes more sense now.  My next question would be, what did we accomplish by this step of formally classifying the internet as a "common carrier" ?  who does this benefit?  what is going to change?

[app103]

Purely on the basis that it is a natural monopoly, is repeatably and highly abusive to consumers because of that natural monopoly, and because they are turning immense profits off of an aging network that is in dire need of capacity upgrades.

But in most parts of the country, it's not a natural monopoly. It's an unnatural monopoly. A natural monopoly would be when you naturally have no competition. An unnatural one is when you suck extra money out of the pockets of your customers to provide local municipalities with kickbacks franchise fees to secure the legal right to not have any competition within that municipality.

However, contrary to many people's expectations, the draft rules will also keep other parts of Title II that allow the FCC to: enforce consumer privacy rules; extract funds from Internet providers to help subsidize services for rural Americans, educators and the poor; and make sure services such as Google Fiber can build new broadband pipes more easily, according to people familiar with the plan.

Internet providers won't be asked to contribute to the subsidy fund, known as Universal Service, right away. The draft rules merely open the door to that obligation down the road should the FCC determine that step is necessary. (The Universal Service Fund helps schools and libraries buy Internet service and reduces the cost of telephone service for low-income Americans. It also subsidizes connectivity for rural areas. If the FCC later decides to ask Internet providers to pay into the fund, the money would go toward these programs.)

Check your landline phone bill, gas & electric bill. Your phone and utility company were told to contribute to this fund out of their profits, but never has contributed a dime towards it. Instead you have. You pay for it, for them, 100%. And the same will happen when (not if) the FCC demands money from the ISPs. Your bill will go up to cover it.

My next question would be, what did we accomplish by this step of formally classifying the internet as a "common carrier" ?  who does this benefit?  what is going to change?

We established an additional revenue stream for the government, of course, which they will use to bribe ISPs into not withdrawing service from less profitable rural areas, not jacking up the rates of those living within those areas.

[40hz]

My next question would be, what did we accomplish by this step of formally classifying the internet as a "common carrier" ?  who does this benefit?  what is going to change?

We established an additional revenue stream for the government, of course,

Indeed.

which they will use to bribe ISPs into not withdrawing service from less profitable rural areas, not jacking up the rates of those living within those areas.

I think it will be more to bribe them to marginally upgrade their services to something that approaches barely usable. They already have plant and equipment in place so there's some small incentive for them to continue milking it until they can't any longer. And then sell their fully depreciated and obsolete equipment and non-profitable business divisions off to some poor sucker at fire sale prices - like what AT&T recently sold to Frontier Communications - or to the Baby Bells a few decades earlier.

Sure looks like it's "business as usual" - as in: the public, once again, getting fleeced blind.

[wraith808]

Looks pretty much to be regulated like Title II to me, though I could be wrong.

Thoughts?

This from Techdirt?

Stop Saying That The FCC Is 'Treating Internet As A Utility' -- It's Not
from the mythbusting dept

Now that FCC boss Tom Wheeler has made it official that he's going to present rules to reclassify broadband under Title II for the purpose of implementing stronger net neutrality rules (details still to come...), the opponents to this effort have come out of the woodwork to insist, over and over again, that reclassifying is "treating the internet as a utility." The cable industry's main lobbyists, NCTA, decried "Wheeler's proposal to impose the heavy burden of Title II public utility regulation...." and AT&T screamed about how "these regulations that we're talking about are public-utility-style regulations..." Former Congressman Rick Boucher, who is now lobbying for AT&T whined that "subjecting broadband to public utility regulation under Title II is unnecessary."

Hell, even those who are merely reporting on the issue are calling it "treating internet as a utility." Here's the Wall Street Journal, NPR, CNET, Engadget and the Associated Press all claiming that the new rules "treat" or "regulate" the "internet as a public utility."

And they're all wrong. While there are some "utility" like aspects in Title II, Wheeler actually made it pretty clear he's not using those sections in the net neutrality rules that he's putting together (though, again, the details here will matter, and we haven't seen them yet). What he's doing here is just using Title II to be able to designate broadband as a common carrier, but just being a "common carrier" is not the same as being a "public utility" -- a point that John Bergmeyer at Public Knowledge makes nicely, by highlighting that there are lots of common carriers that aren't utilities...

Interesting... (read the rest of it here)

Yeah... I read that.  Read my comment above.

[Vurbal]

Once again, those proposed regulations are completely unrelated to how utilities are regulated. All they would do is prevent providers from using their monopoly power in anti-competitive ways. In theory that's SOP for regulating all industries.

Utility regulations pretty much fall into 2 categories, quality of service and rate schedule approval. If they were being treated as utilities, ISPs would be required to adhere to a minimum QOS level. If your individual Internet connection wasn't working, they would be required to fix it within hours, a day or 2 at most, just like traditional PSTN providers. Even a VOIP service sold by a cable provider doesn't get that level of regulation - at least not between the ISP and customer.

For example, Mediacom, the local cable company here, resells Sprint PSTN connections for their VOIP offering. If you call with a connection, or even quality problem and it's due to a problem between their CO and where the PSTN wires terminate, they fix it within 24 hours. If the problem is somewhere between the cable headend and your phone, you're at the mercy of Mediacom's schedulers.

They will get one of their VOIP specialists out as soon as possible, but if they happen to be unusually busy, and especially if you can't be there for a midday appointment, you may not see a tech for several days - even a week or more. If it were PSTN to the home, that would result in enough FCC fines to eat up all their profits and then some.

The television signal OTOH is regulated as a utility. If that goes out, they'll have someone there within 48 hours. If you call Internet support and your TV service is also affected, your service call gets scheduled from a completely different job queue. If there isn't an appointment available within 48 hours, the rep calls dispatch and it gets dumped on somebody's schedule anyway. If a tech ends up short on time, TV calls get priority and Internet calls get rescheduled.

Their ability to set arbitrary rates and impose arbitrary data caps would be similarly unaffected. The phone company's rates for PSTN service are capped at just slightly above maintenance cost for phone service. After the massive deregulation in the 90s, or unbundling as it was called in the industry, they can charge extra for everything beyond the phone number and basic service, but they are required to offer the barebones service by itself. Not that people are going to get service without "extras" like caller ID, but they have to offer it.

There are rural telcos who game the system by providing PSTN termination for out of area VOIP services. However, that's still only because they have government permission to charge extra for connections through their switches. And, once again, the utility regulations stop once the VOIP data is transmitted. One of those telcos tried to sell the company I worked for that service, and my boss turned them down for exactly that reason.

My point is this. When the lobbyists claim this plan amounts to utility regulations, it's purely to back up their claim that they won't have money to invest in the network. All it would really do is prevent them from erecting artificial barriers that interfere with the normal functioning of the Internet.