Will FCC Title II rules provide relief for local officials besieged with chronic complaints over poor Internet access?

Say you're a local elected official. One of the biggest issues your constituents bring to your attention for assistance is poor Internet access. Those who held office before you fielded calls and emails on this subject for years, seeing them spike in 2020-22 during the COVID pandemic.

Flummoxed and frustrated constituents tell you they see homes and small businesses not far way or even just down the road being offered service, but none is available to them despite repeated requests. Often, they may live just outside of town limits in unincorporated county jurisdiction. They try to make do with hard to afford satellite service or smartphone hot spots. Or fixed wireless that offers minimal connectivity at a high price.

Since Internet access was only briefly regulated as a public utility between 2015 and 2018, referring your constituents to the state public utilities commission (PUC) or the FCC won’t be able help them other than recording their complaint and sending them to the same provider that has repeatedly declined their requests for service. 

That could potentially change this year if the FCC adopts regulations next week classifying Internet service as a telecommunications utility under Title II of the federal Communications Act. That would regulate Internet access like landline voice telephone service before it under a federal-state framework between the FCC and state PUCs. That means providers would be required to honor reasonable requests for service and would be prohibited from refusing service to a particular area.

This has significant implications since much of the nation’s existing landline deployment looks like a Swiss cheese with providers cherry picking higher density and income areas likelier to generate more revenues and greater profits for their investors. Homes and small businesses in the holes on the periphery are left without connections.

Assuming the FCC regulation becomes law, local elected officials should keep an eye on how it will be enforced when, for example, a constituent complains they have asked for service and been refused connectivity or told they’d have to come with thousands of dollars for a connection.

One of the main tasks that regulators will face is determining which provider must honor the request for service. While the language of the proposed regulation includes refers to where providers have built infrastructure and offer advanced telecommunications services which they refer to as their “footprint,” federal law (47 U.S.C. 214(e)(5)) affords state PUCs and the FCC authority to develop providers’ geographic parameters for the purpose of Title II’s universal service mandate requiring providers to offer service to all serviceable addresses within their service areas. One possibility is states could utilize state video franchise areas to designate carriers of last resort.

Additionally, the FCC regulation would give regulators authority to sanction discriminatory conduct under 47 U.S.C. 202 barring “unjust or unreasonable discrimination in charges, practices, classifications, regulations, facilities, or services for or in connection with like communication service, directly or indirectly, by any means or device, or to make or give any undue or unreasonable preference or advantage to any particular person, class of persons, or locality, or to subject any particular person, class of persons, or locality to any undue or unreasonable prejudice or disadvantage.” The statute allows for fines of $6,000 for each violation and $300 daily penalties for ongoing violations.

FCC set to move into key role on universal advanced telecommunications service

Within one month following the enactment of the Infrastructure Investment and Jobs Act President Biden will sign into law next week, the Federal Communications Commission must commence a proceeding to determine how the FCC should achieve universal advanced telecommunications service. The measure mandates the FCC report to Congress by next August options for “improving its effectiveness in achieving the universal service goals” taking into account the bill and other legislation addressing the goal of universal service. Universal service was attained for voice telephone service in the previous century. The report gives the FCC authority to make “recommendations for Congress on further actions the Commission and Congress could take to improve the ability of the Commission to achieve” universal service.

Notably, the infrastructure bill emphasizes the FCC report “may not in any way reduce the congressional mandate to achieve the universal service goals.” But it gives the FCC an opportunity to weigh in as to whether it “believes such an expansion is in the public interest.”

The infrastructure bill’s enactment comes as the administration looks to put its mark on the FCC by nominating FCC member Jessica Rosenworcel to serve as chair and Gigi Sohn as a member of the panel. In an executive order issued in July, President Biden called on the FCC to reinstate Obama administration regulations repealed during the Trump administration that would mandate universal service by classifying IP delivered services as common carrier telecommunications under Title II of the Communications Act of 1934.

Incumbents’ strategy to lock down underserved, unserved territories could backfire

Telecommunications infrastructure costs a lot to build and maintain. In that regard, it’s like roads and highways. Roads and highways are typically publicly owned and operated because the upfront cost to plan and build them added to the significant expense of ongoing maintenance can’t attract capital. The return on that major investment takes too long. Investment capital can earn a quicker and more certain profit invested elsewhere.

Under the same rationale, legacy telephone and cable companies build and upgrade their networks to provide today’s advanced telecommunications services utilizing Internet protocol on a limited basis— only where they can generate fast returns for inpatient investor capital.

The result is an incomplete telecom infrastructure. Or to use the transportation metaphor, it’s like having thoroughfares in the central part of town with outliers forced to rely on dirt and gravel roads. Investing additional funds in cable plant and other facilities to provide these services would take too long to cover the cost and begin generating profits on that investment.

But that doesn’t mean legacy providers see those dirt and gravel roads as outside of their transportation system. Since telecom infrastructure is a natural monopoly, investor-owned legacy telcos and cablecos want to keep it locked down as if it were their exclusive franchise.

That underlies the debate over public versus private ownership of telecom infrastructure. Incumbent providers decry public or community owned and operated infrastructure as duplicating their own proprietary networks, constituting unfair competition. Winning that competition from their perspective isn’t about traditional business competition: gaining and retaining market shares. Rather, it’s all about preserving hegemony over their self-declared service (or more accurately, “unservice” territories.)

That’s a zero sum game that produces many losers, condemning millions to an indeterminate future of dirt and gravel roads. According to a recent Federal Communications Commission report, an estimated 26 million Americans are offline and unable to obtain Internet access at a time when the Internet is rapidly replacing the single purpose legacy telephone and cable networks as an all purpose, global telecommunications system capable of simultaneous delivery of voice, data and video services.

Because of its high construction and operating costs, telecom infrastructure is a natural monopoly. However, a deliberate strategy to oppose community-based efforts to build a more complete and sustainable telecom infrastructure to reach those neighborhoods typically served solely by POTS (Plain Old Telephone Service) copper plant and shunned by cable providers could be construed by regulators and the courts as monopolistic and unfair market conduct.

It would be easy to argue citing the recent FCC data on Internet disconnected America that such conduct produces measurable damage and deprives consumers of telecommunications services and choices. For the incumbents, attempting to keep a lock on an unserved or underserved service territory may be more of a liability rather than an asset in the long run.