The Emperor’s New Clothes: “Rate Regulation” as an Excuse to Gut FCC Consumer Protection Authority

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Recently we highlighted the rapid effort to pass H.R. 2666 (the so-called “No Rate Regulation of Broadband Internet Access Act”) as a poorly crafted effort to prohibit rate regulation. We pointed out a variety of options to mitigate the consequences of the broad sweeping language. Consequences which we allowed were perhaps unintended.

It turns out we can now see they are very much intended. House Rules Committee just announced they will be bringing an amended version of the bill to the floor as soon as next week. Boiled down: the effect of this bill as it is currently written authorizes a variety of consumer rip-offs. If that is not what its authors intend, then it must be defeated or amended.

On its face, the bill has been cleverly rewritten to work in a couple of specific carve-outs, such as exempting enforcement of the “no paid prioritization” rule or protecting interconnection between network providers. Taken individually, these added provisions look at first glance like an attempt at compromise.

But it actually exposes what we fear is the bill’s true intent: The outright authorization of broadband internet access service providers’ ability to charge monopoly rates - and taking the cop who exists to protect consumers from this off the beat.

The problem is that the bill’s proponents still have not heeded our warnings about the definition of rate regulation, which they have written to read:

“The term ‘regulation’ or ‘regulate’ means, with respect to a rate, the use by the Commission of rulemaking or enforcement authority to establish, declare, or review the reasonableness of such rate.”

The implications of that broader “enforcement authority” language on the Federal Communication Commission’s consumer protection authority include, but are not limited to:

  1. Erasing any enforcement abilities over monopoly rates, data caps, and myriad other practices related to pricing that are not explicitly encompassed by the “paid prioritization”’exemption. This is a big problem when the current broadband market effectively comprises regional monopolies and duopolies;

  2. Deliberately obliterating 201(b) enforcement and therefore undermining the fundamental nature and efficacy of the Open Internet Rules;

  3. Rendering many merger conditions in both past and pending mergers related to cost null and void, putting at risk critical public interest benefits upon which many mergers were contingent, like pledges to bring low cost broadband to disadvantaged communities, since the bill revokes the FCC’s ability to review and enforce them.

This provision doesn't just affect the consumers who already face exorbitant prices due to little choice of provider. It also affects small businesses who depend on their local monopoly broadband provider to connect to geographically dispersed employees and contractors, as well as to reach 21st century consumers and compete in a global marketplace.

The thing is, these implications could be so easily addressed by merely revising the bill’s definition of rate regulation to its commonsense meaning, “to set a rate.” Period. Simple, effective, and, in theory, addresses exactly the issue the bill’s proponents purportedly set out to tackle. As Representative Anna Eshoo noted in the House Energy and Commerce Committee bill markup, this proper definition for rate regulation was recently affirmed by the Supreme Court. Public Knowledge has raised this point time and again; and time and again the offending language appears in the next iteration of the bill.

So they haven't tried to fix it, and it seems that they won't. Because as FCC Chairman Wheeler noted in the Senate Appropriations Committee hearing yesterday, last year’s concern over rate setting per se has been coopted and mutated into another all-out strike on the FCC’s ability to do its job. But at least we can applaud the bill’s sponsors for finally putting the writing on the wall.

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