Big Telecom Takes Aim at Smaller ISP’s in New FCC Petition

| Aug 3, 2018 | Firm News, Telecommunications Law

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The 1996 Telecommunications Act was a landmark piece of legislation that allowed smaller ISP’s to thrive in the increasingly competitive internet provider market dominated by the big carriers like AT&T, Verizon, and Sprint. The Act requires ISP’s to sell their copper-line infrastructure to smaller competitors, CLEC’s and ILEC’s, at regulated rates. This provision insured that the CLEC’s and ILEC’s had a fair shot at a profitable business and that the big boys will not bully them out of the market.

In the 90’s, this provision worked well and competition in the industry was at an all time high with costs staying low. Then, the big carrier became hungry for market share. As these big companies obtained more and more of the market share from the CLEC’s and ILEC’s, they began to make it difficult and cumbersome for the CLEC’s and ILEC’s to have access to their networks. Using their own devices and adding insult to injury, the big carrier pointed out the CLEC’s and ILEC’s were having difficulties they had created as a reason the plan envisioned by the 1996 Telecommunications Act did not work.

All the while this fight is going on, cities like Paris adopted similar legislation and it has worked the way it was supposed to. Competition is thriving and consumers are reaping the benefit with lower prices and higher Internet speeds. As America has lagged behind and made the Act tougher to implement, prices have soared and the smaller companies are being driven out of the market.

In May, Verizon, CenturyLink, and Frontier Communications filed a petition with the FCC arguing that the rules promulgated under the 1996 Act were no longer needed because competition in the broadband network was already high enough and that these regulations promoting smaller ISP’s would inhibit their ability to grow as a business. Since AT&T and Verizon refuse to update their DSL lines, they gave their sister companies Comcast and Charter (who use fiber) a virtual monopoly over markets and directly impacted the small ISP’s ability to get their foot in the door in an industry that already has sky high barriers to entry.

The rules promulgated in the 1996 Act are an important tool for the CLEC’s and ILEC’s to stay afloat in the ever expanding and ever more unpopulated internet provider business. Dane Jasper, CEO of Sonicnet, Inc. stated that, “it can take six to twelve months to build fiber to a business customer, and even longer to build to every home. But a copper service can be delivered in three days.” If these rules are dismantled, smaller ISP’s would lose their existing services which would leave competition scarce, meaning rates would very likely increase. AT&T has even been rumored to want to increase rates by 15% if the FCC petition is passed.

With the repeal of net neutrality and this petition on the doorstep of the FCC, the way we get and interact with the Internet and its providers will soon be a new, different, and more expensive experience.