US net neutrality proposal could lead to broadband taxes, opponents say

Obama's endorsement of utility-style regulation for broadband gets a cool reception at conservative gathering

U.S. President Barack Obama's call for the Federal Communications Commission to pass net neutrality rules by reclassifying broadband as a regulated public utility is a bad idea that could raise broadband prices by 16 percent or more, a parade of Republican politicians and conservative activists said Friday.

Reclassifying broadband as a regulated common carrier under Title II of the Communications Act would expose broadband services to a 16 percent telecom service fee that supports the FCC's Universal Service Fund, said several speakers at net neutrality discussion hosted by antiregulation think tank the Free State Foundation [FSF].

Title II regulation would open broadband up to several new regulations, including USF fees and state and local telecom taxes, speakers at the event said. "Consumers of these services would face an immediate increase in their bills," said Republican FCC member Michael O'Rielly.

Supporters of broadband reclassification say the FCC could exempt broadband from most telecom-style regulations. Title II is the only way the FCC can ensure "clear, bright-line" rules prohibiting broadband providers from selectively blocking or throttling Web content will be enforceable, countered Michael Weinberg, vice president of digital rights group Public Knowledge.

"We are concerned about ISP gatekeeper power," Weinberg said. "We are concerned that ISPs have the ability and the incentive to basically interject themselves into the Internet experience, interject themselves into the conversation."

The FSF's event, titled "thinking the unthinkable," came just days after Obama waded deep into the net neutrality debate by endorsing the reclassification of broadband from a lightly regulated information service to a regulated telecom service.

Obama's call for strong net neutrality rules was unwelcome at the event, where speakers opposing Title II regulation outnumbered proponents seven to one. The foundation invited members of FCC Chairman Tom Wheeler's staff to speak, but they declined, FSF President Randolph May said.

Obama's recent call for reclassification was "extremely troubling," said Representative Bob Latta, an Ohio Republican.

The Internet has thrived in the U.S. over the past 20 years because of light regulations, Latta added. "Too much is at stake to entertain proposals suggesting a different course of action," he said.

Two Republican FCC members said Obama's endorsement of reclassification has a limited effect on the FCC's duties in its ongoing net neutrality proceeding.

Obama's statement "has changed the political climate considerably," Commissioner Ajit Pai said. "But the FCC has been, is now, and I hope will always be an independent agency."

The arguments against Title II regulations haven't changed because of Obama's endorsement, Pai added. "We must base our decision on laws. as established by Congress, and the facts contained in the [net neutrality proceeding's] record," he said. "The president's announcement does not change the law and does not change the facts."

O'Rielly was more pointed. Obama has an "important voice" in the net neutrality debate, but the FCC is "required to make decisions on a full and substantive record, not on the sole views of any particular elected official," he said.

Speakers at the event voiced often-repeated arguments against strong net neutrality rules. New regulations would deter investment in broadband, some said, while noting that AT&T has decided to pause an announced investment in fiber while the FCC works on net neutrality rules.

During the past 10 years, there have been only a couple of broadband provider violations of net neutrality principles, one when a small provider blocked VoIP service and the second when Comcast throttled BitTorrent, said Deborah Taylor Tate, a FSF senior fellow and former Republican FCC member.

"Unless and until we really have a true complaint at the FCC, it's hard for me to understand what the exact problem is," Tate said. "Not some hypothetical what if, but what is the real problem that occurred, so that you could then create rule."

Opponents of Title II regulation have overlooked several examples of mobile broadband providers blocking or throttling text messages and other content, Public Knowledge's Weinberg said.

Weinberg discounted predictions that broadband providers would stop investing in new networks because of strong net neutrality rules. Strong net neutrality rules will increase investment in Web companies, he predicted, and new Web-based services will drive demand for broadband.

AT&T's announcements in 2013 and earlier this year to deploy fiber in new areas didn't offer a lot of specific information, Weinberg said.

"A lot of people had considered that fiber deployment to be fiber to the press release," he said.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's email address is grant_gross@idg.com.

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Tags Michael O'RiellytelecommunicationregulationFree State FoundationMichael WeinbergBarack ObamainternetInternet service providersPublic KnowledgeRandolph MayDeborah Taylor TateBob LattaU.S. Federal Communications CommissiongovernmentAjit Paibroadband

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