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Interim Rules?

Industry Turns Up Heat on FCC Not to Reclassify Broadband as a Common Carrier

With an FCC vote on classifying mobile and fixed broadband as a Title II common carrier service on tap for Feb. 26, the drum beat against the plan is getting louder. Wireless carriers and associations independently released letters and studies Thursday. FCC officials, meanwhile, are denying the latest rumor that Chairman Tom Wheeler will have the commission vote on interim rather than permanent rules, at least in part, at the meeting. Industry officials on both sides of the issue said the noise level likely will increase leading up to the vote.

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Verizon released a paper by two economists questioning the theory that wireless ISPs enjoy a “terminating access monopoly” they can use to restrict consumer choice and disadvantage consumers and that they should be treated like common carriers by regulators. The paper is by Andres Lerner of Compass Lexecon and Janusz Ordover, an economics professor at New York University. The paper said the wireless market is fiercely competitive. Carriers compete “intensely for customers on the basis of price, network coverage and reliability, plan characteristics, and with respect to other important aspects of the wireless ecosystem, including the provision of handset devices, operating systems, applications, and content,” the economists said. They said customers do switch service, with churn as high as 26 percent for individual carriers.

The very nature of wireless broadband Internet access “means that the fundamental assumptions of the ‘terminating access monopoly’ theory are not present, and distinguishes wireless broadband Internet access from other services where the Commission has invoked that theory,” the economists said. Carriers are responsive to competitive controls, they said: “Any restrictions on access to the content or services of online providers would lower demand for the network itself, which would lead current subscribers to switch to other providers and inhibit the ability of the wireless broadband provider to attract new customers.”

The Health IT Now Coalition, the M-Health Regulatory Coalition and the Wireless-Life Sciences Alliance filed a joint letter at the FCC Thursday warning against the effect Communications Act Title II reclassification could have on wireless broadband. CTIA posted the letter on its website. The connected health sector “has thrived under the current regulatory model,” and has been “extraordinarily innovative and vibrant,” the groups said. “We are concerned that the wrong regulatory rules could inhibit or greatly delay needed network investment and innovation that will be critical to next-generation health solutions. We should not put at risk advancements that could reduce latency, improve quality of service, and help unlock 5G and machine-to-machine opportunities.”

Rysavy Research said FCC control of quality of service (QoS) and congestion management through net neutrality rules would be an innovation killer as industry deploys LTE and other new technologies. “QoS is a powerful tool with many knobs and switches that controls how traffic flows through a wireless network,” the report said. It said neutrality rules that involve government deciding whether and when QoS or other network management approaches should be used will freeze innovation. The industry needs to be able to experiment with advanced network capabilities, especially those that haven't been used before, such as QoS management, the research firm said.

Under LTE, QoS is a tool for carriers to differentiate themselves, Rysavy said. Any proposal that holds that “like” applications should receive “like” QoS treatment in congestion situations raises many “thorny” questions, the paper said. It asked: How would regulators define congestion? What is a “like” application? Who defines the categories? “Video applications, for example, may have completely different functions,” Rysavy said. “One may be doctors diagnosing medical emergencies, one may be educational, one may be entertainment, and one may be gaming. Are these one or four categories? If one, the rules will make no sense, but if four, hundreds, if not thousands, of categories may have to be defined.” Mobile Future filed the report at the FCC Thursday. “The report emphasizes that a complex regulatory scheme that attempts to anticipate or dictate how wireless network management might work in the future will only inhibit the deployment of network innovations that will improve the mobile broadband experience for hundreds of millions of Americans,” the group said.

Public Knowledge would support the FCC's taking less than final action on parts of the order at the Feb. 26 meeting, ​Senior Vice President Harold Feld said. The group said as much in a December filing, Feld told us. “As we've consistently argued, the FCC does not need to solve all the problems in one bite,” he said. “The FCC needs to reclassify and get the actual net neutrality rules in place. I would note that at this point all the carriers have agreed to a no prioritization rule, so there is no harm in putting that in place immediately. But rather then rush to forbear, the FCC can, and should, issue a temporary stay of the rules and provisions from which it does not immediately forbear so that it can properly determine the right policy.” There’s no need for the FCC to hurry, he said: “This is our digital future we're talking about here.”

Former FCC Commissioner Robert McDowell, now at Wiley Rein, said Thursday that an interim order can have the same negative effects as a permanent order. McDowell voted against the 2010 rules as a member of the FCC. "History teaches us that 'interim' orders can end up being temporary in name only,” he said. “Often, they last for years and can be de facto permanent rulemakings."