Award Winning Blog

Thursday, August 30, 2007

Limited Regulatory Relief When ISPs Misbehave

Consumers and the FCC have limited recourse when an Internet Service Provider acts in a fraudulent, discriminatory or abusive manner. ISPs are not common carriers. They are classified as information service providers and do not have to comply with the regulations deriving from Title II of the Communications Act that apply to telecommunications service providers.

The FCC has a back door way to regulate ISPs, something called "ancillary jurisdiction" based on the Commission's general public interest mandate contained in Title I of the Communications Act. The FCC invoked this authority to regulate cable television as potentially harmful to the availability of "free" broadcast television. Recently the FCC has stretched its Title I authority to
impose selective re-regulation of ISPs.

However, the FCC's limited regulation of ISPs will do nothing to prevent the cable modem/DSL duopoly for abusing collective market power. Even as the FCC plays games with broadband statistics to show how advanced we are compared to other nations, the data shows that nationwide over 96% of all broadband services are supplied by two types of ventures: cable television companies typically allocating 6MHz of bandwidth and telephone companies typically expanding the copper wire local loop by 1500 kHz.

By the FCC's self-fulfilling prophesy the broadband marketplace is robustly competitive and any extortionate or draconian ISP action would trigger a mass migration of subscribers. The FCC calculates that I have 9 broadband choices in my zip code, so I should be able to "vote with my dollars." In reality I have one and only one broadband option: $60 cable modem service. I can't get DSL, cellular broadband offers dialup 60-80 kilobits per second and satellite offers slow speed broadband at double the price.

So much for marketplace self-regulation.