Title II’s Burdens On Smaller ISPs Are Real and Costly
By: Chris Kyle, Vice President of Industry & Regulatory, Shentel (ACA Member)
ENDINBURG, Va. – Two years ago, a policy earthquake struck at the Federal Communications Commission. With not much of a warning, the agency decided without justification to burden my small, rural mid-Atlantic broadband communications company, Shentel, with a new, costly and uncertainty-inducing layer of rules and regulations called Title II.
Title II’s mandates impose a thicket of common carrier requirements that were originally developed for the ancient dial-up telephone system of the 1930s. These outdated rules are simply inappropriate, expensive and burdensome for a company like Shentel that is passionate about providing rural consumers with high-performance communications services at affordable rates.
In a recent interview, former FCC Chairman Tom Wheeler — who engineered adoption of the Title II regime — said the suggestion that his policies chilled broadband infrastructure investment was “balderdash.” Wheeler could not be more wrong. On July 17, Shentel filed a declaration with the FCC showing that the direct and material harms stemming from Title II diverted resources away from new network investment to spending on compliance review and legal understanding.
Title II reclassification has increased Shentel’s regulatory compliance expenditures, harming the economics of our business. The major impact of the Title II reclassification and the uncertainty regarding what it would mean for us has been to increase our costs, as we have spent additional time and money to understand the new regulatory obligations.
For example, Title II requires service “upon reasonable” request. To be deemed lawful under Title II, Shentel’s rates, terms, conditions, and practices associated with broadband service must be just and reasonable and not unjustly or unreasonably discriminatory. Understanding the scope of these terms in order to respond to a regulatory or judicial complaint was not inexpensive. Needless to say, all of this extra legal review cost subtracted from the pool of funds set aside for capital expenditures..
Title II also led to a temporary, but costly, spike in our pole attachment fee; it caused us to pause a program designed to educate users on the cost of exceeding their usage plans; and we had to set aside reserves in case a decision not to serve an area based on our concerns about excessive cost led to a complaint.
Title II’s most ardent fans are some of the biggest tech companies in the country, if not the world: Apple, Google, Facebook, Amazon, and Netflix. All of them have nothing to fear from Title II because they are exempt. So, the tech giants’ Title II fervor doesn’t merit serious consideration because it is so obviously rooted in naked self-interest in addition to being arrogantly dismissive of the financial harm to Shentel’s business and the quality of broadband infrastructure in rural America.
Thus, Shentel supports FCC Chairman Ajit Pai in his effort to restore Internet freedom by reversing the agency’s misguided adoption of heavy-handed Internet regulation that it applied exclusively to ISPs. The sooner lopsided Title II regulations are deep-sixed, the better off the whole broadband economy will be. Those who have based their support for Title II by relying on their self-created myths about Shentel’s business conduct will quickly be proven wrong.
Founded 115 years ago, Shentel is a rural provider focused today on delivering voice, video and broadband Internet over both cable and telephone plant in portions of Virginia, West Virginia, and western Maryland.
Shentel serves a lot of very small and remote communities such as Rural Retreat and Farmville, Virginia, with at most only a few thousand households, and also serves economically depressed areas such as McDowell County, W. Va., the second poorest county in the nation.
Shentel has about 51,000 cable broadband Internet subscribers. The notion that my company is a threat to the open Internet — justifying the manacles of Title II – is absurd. Shentel does not block, throttle or discriminate in our handing of Internet traffic. Our broadband Internet access service grants our customers the capability to freely access all lawful content, applications and services on the Internet, generate and transform content at their request, exchange packets with other Internet users and service providers, and run a variety of applications including but not limited to e-mail, web browsing, audio streaming, video streaming, and file sharing.
At Shentel, we appreciate that Chairman Pai understands our concerns. Removing the overhang of Title II regulatory uncertainty will remove the hesitation we have felt in moving ahead with offering consumers innovative new features and services and improving our existing service offerings. It will allow us to focus more fully on increasing broadband deployment in hard-to-serve rural areas and devote scarce resources on finding ways to incent broadband adoption by households lacking Internet access today, rather than spending our limited time and financial resources on backward-looking Title II compliance efforts.