A decision from the FCC several months ago removed the caps on business broadband pricing for many areas, but a new lawsuit could force it the reinstate the caps. Advocacy groups are scheduled to go before the courts to argue that the Federal Communications Commission failed to justify its change in policy, which could lead to substantial cost increases for small businesses. The big ISPs seem just fine with the new rules, though.
In April of this year, newly minted FCC chairman Ajit Pai led the FCC’s Republican majority in gutting price caps on business broadband services. Under the new, relaxed rules, any county where 50 percent or more of customers are within half a mile of a location served by another broadband provider is considered to be competitive. In those counties, the caps no longer apply. However, being within half a mile of something is a long way from actually having access to it. Even a potential duopoly isn’t what many would consider robust competition.
One of the Commission’s two Democratic members, Mignon Clyburn, claims that fewer than 10 percent of potential customers benefit from the scaled-back broadband price caps. Meanwhile, the Consumer Federation of America (CFA) says that some $ 40 billion in annual BDS overcharges are a result of incumbent market power. These added costs to businesses are then passed onto consumers in the form of higher prices for products and services. The only ones winning here are ISPs.
The FCC’s rationale for this change is that “potential competition” can control prices. If the price gets too high in an area, the nearby competing broadband providers can move in. However, the price caps were only instituted in 2016 following a 10-year study of the business broadband market. Critics of the FCC’s latest action note the 2017 change was not made with the same wealth of data backing it.
Public Knowledge is leading the fight against increasing broadband prices, and has been joined by the CFA and New Networks via an Amicus brief. The groups ask the US Court of Appeals for the Eighth Circuit to invalidate the FCC’s 2017 order on broadband competition. That would reinstate the 2016 caps on pricing. Meanwhile, some businesses like Sprint and Windstream sued over the rules, which could increase their broadband procurement costs. Even a few ISPs are unhappy with the FCC’s decision. CenturyLink is challenging a provision in the rules that requires “excessive annual rate reductions” in markets that will continue to be regulated.
All the lawsuits have been consolidated into a single case. The FCC has yet to reply to the brief filed by Public Knowledge, but has publicly defended its position.