Fearing universal service mandate, price regulation small and medium size incumbents claim robust market competition makes Title II regulation unnecessary

ACA Connects, a trade association of small and medium sized telephone and cable companies, has issued a white paper titled Broadband Is Competition Thriving Across America. Anticipating ongoing policy debate on regulation of advanced telecommunications, it presents data it claims show the Federal Communications Commission need not readopt regulations that regard Internet protocol telecommunications as a common carrier utility regulated under Title II of the Communications Act as the Biden administration urged in a July 9, 2021 executive order.

The paper argues robust competitive market forces make regulation unnecessary because nearly nine out of 10 American homes have access to advanced telecommunications meeting the FCC’s throughput-based definition of “broadband.” Homes having access to that and higher bandwidth is likely to increase based on current trends, it adds.

The paper relies on Form 477 reports on their service availability that providers must file with the FCC. The data includes providers using cable, DSL, fiber or fixed wireless technologies but not satellite or other technologies “because capacity limitations may limit the competitive impact of providers using these technologies.”

The paper states common-carrier-style regulation would be “particularly problematic” because of “rapid technological change.” That’s been a consistent message from incumbent investor-owned companies wishing to defer capital investment in upgrading legacy metallic outside plant to fiber to the premise (FTTP) for as long as possible to protect their bottom lines.

That rationale is understandable, but based on a false premise. No new advanced telecommunications delivery infrastructure technologies have emerged that are superior to FTTP, which has been around for decades. Perhaps by the 23rd century, it will be obsoleted by a Star Trek-like quantum subspace channel. But not over the foreseeable future.

While not stated directly, the apparent purpose of the paper stems from concerns that readoption of the Title II regulatory scheme will subject the organization’s member companies to universal service mandates and state rate regulation through public utility commissions.

Framing advanced telecommunications service as a competitive market undercuts the regulatory rationale for Title II regulation because it is predicated on telecommunications as a natural monopoly market like other utilities that don’t lend themselves to meaningful market competition being claimed by ACA Connects. That requires prices to be regulated because market forces won't act to control them and protect affordability. Also, universal service/non-discrimination mandates since homes in areas deemed unprofitable to connect would go without.

Notably, the July 2021 Biden administration executive order was issued with the purpose of promoting competition in the U.S. economy, implicitly recognizing competition is negligible in advanced telecommunications that is dominated by large investor-owned corporations. ACA Connects urges if the Title II rules are readopted, they should apply only to these entities and exempt smaller players like its members. Additionally, its white paper points to the stated plans by large providers to deploy fiber to the premises (FTTP) as evidence of strong market competition making utility regulation unnecessary.