Small ISPs Seek Title II Exemptions; Verizon Asks FCC to Keep Old Transparency Rules

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By Lydia Beyoud

Feb. 3 — Smaller and mid-size broadband service providers said the FCC isn't listening to their concerns about being reclassified as common carriers in the agency's forthcoming open Internet rules, members of the American Cable Association said Feb. 3.

The Federal Communications Commission hasn't taken “the careful, granular analysis that we are not causing and cannot cause any harm to consumers and edge providers,” Matthew M. Polka, ACA president and chief executive officer, told reporters during a conference call.

The trade group, which represents about 800 small and mid-size cable operators, municipal broadband providers and rural telephone companies, is seeking exemptions for its members from the likely FCC reclassification of broadband providers under Title II of the Communications Act of 1934.

That regime would grant the FCC significantly more regulatory powers over broadband providers than under the current rules.

The groups support net neutrality principles, but believe the additional regulatory costs of Title II would be too difficult for many ACA members to remain viable, they said in a Feb. 2 FCC filing.

ACA specifically asked the FCC to forbear from applying any section of Title II to smaller ISPs, to declare broadband Internet to be an interstate service and preempt “inconsistent state regulation” that could levy additional regulations or taxes on broadband providers.

Question of Scale 

While the trade group represents companies that all together serve about 19 million consumers, the commission shouldn't view the group's request as asking for that many individuals to not be covered by its net neutrality rules, said Ross Lieberman, ACA senior vice president for government affairs.

“The difference comes down to scale. It sounds like a big number,” he said, but each company on its own serves far fewer customers, on average about 1,000, and thus lacks the ability or desire to put in place arrangements such as throttling or paid prioritization that the FCC is seeking the prevent, Lieberman said.

The group also asked the FCC to protect cable ISPs from increased pole attachment rates as a result of Title II reclassification, and to exempt smaller ISPs from any new or enhanced network management transparency reporting obligations.

During the press call, the group wasn't able to provide any details on how the FCC should determine what size of ISP to exempt from Title II, if it were to grant such relief.

Having large broadband providers classified under Title II while others remained under Title I as information services wouldn't grant small and mid-size providers a competitive advantage, Polka said, because the majority of ACA members operate in rural, high-cost areas of the country, with limited to no other wireline providers in a community.

The FCC is set to vote on the open Internet rulemaking (GN Docket No. 14-28) at its Feb. 26 meeting.

Verizon's Transparency Concerns 

Verizon Communications Inc. also wants the FCC to avoid stricter transparency measures, according to a Feb. 2 FCC filing.

The transparency rules laid out in the commission's 2010 open Internet rules “struck the right balance” and advanced the agency's goals of providing consumers and edge providers useful information about ISP services and the marketplace, Verizon said.

Verizon brought suit (Verizon Commc'ns Inc. v. FCC, D.C. Cir., 11-1355, decision, 1/14/14) against the FCC's 2010 rules, which were struck down by the U.S. Court of Appeals for the District of Columbia Circuit in January 2014.

The ISP giant said the FCC looks poised to significantly increase the disclosures required by broadband providers as part of its vote on the rules. The provisions issued in the FCC notice of proposed rulemaking on the issue would include real-time network performance disclosures, Verizon said.

“There would be no way to report this information concisely, and such disclosures would be meaningless to all but the most technically sophisticated customers,” the company said.

Public Disclosure 

Though the FCC hasn't officially confirmed that it intends to reclassify broadband service providers as common carriers, Republican FCC Commissioner Michael O'Rielly told reporters Feb. 3 that his understanding was that Title II would be applied.

“I'm worried that it's going to be full Title II with a hodgepodge of half-baked forbearance thrown in,” he said.

O'Rielly said he supported Republican lawmakers' calls for FCC Chairman Tom Wheeler to issue the draft net neutrality rules publicly when he circulates them among the agency's four other commissioners. Such public disclosure would provide the public with the opportunity to offer more insightful comment on the rules as the agency adds the final touches to them, he said.

Wheeler has indicated he does not intend to do so and that a number of laws prevent such disclosure, including the Administrative Procedures Act and the Freedom of Information Act, according to a Feb. 2 letter obtained by Bloomberg BNA.

Such impediments to public disclosure of the rules are only administrative hurdles that could be overcome if the FCC expressed the desire to do so, O'Rielly said.

“When you dig through the arguments, you realize it's about management of resources, it's not about statutory problems. I think we can work through that,” he said.

O'Rielly added all items should be issued publicly once they are circulated to commissioners before a vote.

To contact the reporter on this story: Lydia Beyoud in Washington at lbeyoud@bna.com

To contact the editor responsible for this story: Heather Rothman at hrothman@bna.com

Text of the ACA filing is at http://op.bna.com/der.nsf/r?Open=sbay-9tdr57.

Text of the Verizon filing is at http://op.bna.com/der.nsf/r?Open=sbay-9tdsrm.

Text of Wheeler's letter to Republican lawmakers is at http://op.bna.com/der.nsf/r?Open=sbay-9tdtjq.