Small but Powerful: Despite Objections, Small ISPs Need Net Neutrality TooMay 17, 2017
Update: Since the publication of this blog post, dozens of small ISPs came out in support of the current net neutrality rules in a letter addressed to Chairman Pai.
As we gear up to defend and protect the net neutrality rules, parties on both sides are speaking up. One particular group, small Internet Service Providers, claim that the Federal Communication Commission’s 2015 Open Internet Order has been a death sentence for them, hindering their ability to invest and compete in the market. These small ISPs have taken to advocating against net neutrality rules but there is something missing from their claims: substance.
Usually represented by trade groups like the Competitive Carriers Association, US Telecom Association, and the American Cable Association, to name a few, small ISPs generally serve a customer base in the hundreds or thousands. Compare that to the likes of Comcast, Verizon, Charter, and AT&T, which control 70 percent of the market, with consumer counts in the millions.
Given their comparatively small size, these small ISPs don’t believe the net neutrality rules should apply to them. Citing regulatory burdens of complying with the Open Internet Order and the uncertainty of the newly minted rules, they believe the rules put them in a high cost/low benefit situation because they don’t have the same market power or incentive to make deals with edge providers. But these claims are hollow.
First, the idea that these companies don’t have “market power” is wrong. Many of them are monopolies in the areas they serve. It’s true that most smaller ISPs don’t have the same upstream clout to block or degrade online services in exchange for toll payments as larger ISPs. They can block the services and make the demands, but the payments are less likely to be forthcoming, since they don’t control access to millions of customers. But the Open Internet rules are not designed just to address the kinds of economic extortion that are the specialty of the largest ISPs. They also exist to ensure that customers can access the internet content and services of their choice. It’s easy to see a small ISP cutting a deal with, for example, DirecTV, to bundle its satellite or online services with their internet service, and throttling the bandwidth available to competing video services. You don’t need to have the scale of Comcast to enter into these kinds of deals, and the Open Internet rules should protect the users of small ISPs as well as large ones.
Additionally, none of the small ISPs or trade associations that represent them actually point to or identify the particular regulations that are oh-so-burdensome to their businesses. In the last fight for net neutrality, their biggest concern was the enhanced transparency requirements, which require ISPs to disclose promotional rates, fees, surcharges, and data caps, as well as information regarding network management practices. After much debate, the FCC extended an exemption to these rules to any ISP with fewer than 250,000 subscribers (originally capped at 100,000 subscribers) for an additional five years. Despite this fact, these groups are still crying wolf.
It is also worth noting that many of these small ISPs are not paragons of free enterprise, but get government subsidies in exchange for providing internet service to rural areas that are often harder to serve. Generally speaking, companies that receive public benefits are expected to serve the public. Unfortunately, several ISPs have abused this program – taking the government funds but failing to provide service. Last year, the FCC imposed millions of dollars in fines against small ISPs and has continued to investigate fraud and abuse of the Universal Service Fund. Yet here they stand, claiming not to have the power to do harm and wanting fewer regulations.
While small ISPs would like to have you believing that they are under attack due to the net neutrality rules, it’s simply not true. In fact, they haven’t been able to point out particularly “burdensome regulations” that are causing their distress. Instead, they are making empty claims and in some instances, already displaying the power they do in fact have to abuse the system. It is imperative that we separate fact from fiction as we continue to fight and protect net neutrality.
Image credit: Flickr user Lauren Mitchell