Big Telcos Pressure FCC on Net Neutrality, Broadband, Spectrum


So let’s say you’re a big telecom company and you’re used to competing against the other big telecom companies, carving up the US market into uneven thirds and leaving the less desirable parts on the plate. Maximizing shareholder value with high rates and low capex. Awesome.   That’s a pretty solid game until the internet happens and now hotshot little upstarts like Google or rando municipal networks want seat at the table. Who asked them, right? Right. Now these three should have to make space because millions of people think they know what they want from the internet? Um no, the rules of dibs are the rules of dibs. No takebacks.

At least that’s what we’re left to glean from the Tony Soprano style filing AT&T made with the FCC on net neutrality.  Ars Technica first flagged this filing which among other things says that if the FCC kills off net neutrality the company might lower everyone’s internet bills. Moreover, startups should be given the ‘opportunity’ to pay for access like Netflix just did with Comcast. To wit:

“Allowing individualized dealings between ISPs and edge providers is sound policy for a number of reasons. By enabling smaller edge providers to negotiate special arrangements for the handling of their traffic, flexible net neutrality rules will empower start-ups to compete more effectively against more entrenched and well-heeled rivals. And by enabling ISPs to recover the costs of network upgrades not just from consumers but also from the edge providers whose applications benefit from such upgrades, flexible rules also will promote deployment of additional broadband infrastructure and improved features. They also will reduce the cost of broadband service for consumers, facilitating greater adoption.”

Read that in James Gandolfini’s voice in your mind because that seems to be how it’s meant. Consider the flipside of this scenario – if the FCC opts to go with net neutrality anyway, the company is basically saying all these new fees we’re inevitably going to pile on, are the hands of the FCC. Cash strapped startups could’ve been paying for access now they’ll be lucky to afford dial-up.  AT&T has already laid the groundwork for this in a recent blog post where they say the few who use Netflix should have to pay instead of the many.

We’re sure the people in rural Kentucky who can’t even get reliable landline calls, or people in rural America who’d just like access period didn’t see House of Cards, but the rest of us did. Even when we aren’t Netflixing, it’s likely we’re using our bandwidth in myriad other ways that we’ve already paid the tolls for.

This is essentially what the Netflix CEO Reed Hastings said to Comcast when he opted to pay for access “for the near term.” The LA Times notes  Hastings is likely to make Comcast’s record of broken promises and poor service an issue during government examination of its proposed merger with Time Warner Cable.  Comcast can’t pull an AT&T here because it is already bound by open internet rules over and above net neutrality, based on its acquisition of NBCUniversal in 2011. Still, Netflix, Google and other relative newcomers will have a lot to work with if they want to raise issues in net neutrality or the proposed merger. Already almost half of US households lack a provider to switch to if they wanted to according to FCC data, raising serious questions about competition.

Then there is municipal broadband. CivSource has been beating the drum for a while now on the coordinated attack on municipal broadband networks even though the big providers have said they have no plans to build in a number of rural areas (but dibs).  Now, the Institute for Local Self-Reliance and advocacy group Public Knowledge have both filed with the FCC calling on the Commission to nix local state laws prohibiting municipal broadband networks entirely. The Commission hasn’t commented on what it intends to do around municipal broadband but it has stated expanding rural broadband access is a key focus area. 19 states have laws on the books banning municipal networks, which can serve as a ban on services like Google Fiber and handily strip away competition for say AT&T.

The telcos may not be building, but they are totally on lobbying – data from the Center for Public Integrity says AT&T spent $15.9 million to lobby on exactly these issues and also to vie for more spectrum in the upcoming auction.

The figure exposes another fight happening inside big telecom. When it comes to wireless, the incumbents have a vested interest in making sure that the playing field tilts toward them by holding the majority of the spectrum. Specifically, AT&T and Verizon want the most to add to what they already own, which is already much more than Sprint or T-Mobile. The lobbyists are there to make sure they get it. While Comcast seems to be opting for strategic acquisition of providers, AT&T seemingly wants control of the network by owning the network. They just want to give the FCC and the average American a choice on how and when we’ll pay the fees.

We did try to get someone at AT&T for comment, but so far nothing yet.