Sunday, April 30, 2017

Did FCC Just Damage School Internet

In the wonky alphabet soup depths of policy, this thing happened in April-- the FCC decided to uncap BDS pricing, because free market competition.

Wires competing for space on free market pole

Business Data Services refers to the kind of bulk internet access sold by providers like Verizon and ATT to business and other institutional buyers. Like small businesses or hospitals or libraries or schools.

And while there is no limit on what providers can charge you for home internet, the BDS sector has always been highly regulated, based on the argument that schools and libraries and mom-and-pop businesses should not be priced out of the market.

The end of the cap allows service providers to charge whatever they think the market can bear (or even employ the time-honored practice of jacking up prices in order to drive away customers you don't want to serve). The cap removal is conditional-- it can only happen in counties where there is competition. Competition in this case is defined as "any other isp provider within a half mile of fifty percent of the buildings being served." Estimates are that about a third of the coountry will consequently stay under the old cap.

Some Democrats are not happy about this move by the FCC:

Many politicians have talked in recent months "about protecting our nation's small businesses -- the backbone of the American economy," said Commissioner Mignon Clyburn, a Democrat. "Yet it is these very businesses -- the mom-and-pop hardware store, the family-owned wireless provider, and the small rural hospital, that just drew the short straw."

Instead of looking out for "millions of little guys," the Republican majority at the FCC has sided with the interests of huge telecom providers, she added. Clyburn predicted "immediate price hikes," especially in rural areas.

"Just where does the buck stop? At the wallets of every American consumer," she said.

Can you guess who thinks this is a good idea?

"Price regulation—that is, the government setting the rates, terms, and conditions for special access services—is seductive," FCC Chairman Ajit Pai, a former Verizon lawyer, said. "Who can possibly resist the promise of forcing prices lower right now? But in reality, price regulation threatens competition and investment."

My emphasis. Yup. Just in case you missed that one in the flurry-ish wave of appointments, Trump put a former Verizon counsel in charge of the FCC. But before you get too mad(der) at Trump, note that one reason you may have missed this appointment is because Pai left Verizon in 2003, went to work at the Department of Justice for a few years, and then started working at the FCC in 2007. In 2011, Obama nominated him for the Republican commissioner spot on the FCC and the Senate approved him unanimously. So while Pai keeps getting "Trump-appointed" appended to his name, all Trump did this time was just continue a bipartisan institutional process that has been going on for a while. Now we have Pai, spearheading the attack on net neutrality and this BPS thing.

Will this ultimately make internet access more expensive for your school? Probably. Then again, the intense free market competition may drive your costs relentlessly down (if you are among the 24% of BDS customers in a two-server market). Because, see, price competition really kicks in when providers are free to charge more. Because... wait-- are we saying that because they weren't free to charge more before, they couldn't compete by charging less? I could swear that's not how the free market is actually supposed to work.

1 comment:

  1. I must have missed the repeal of the Sherman Act and the Clayton Act. These guys seemed to have missed their enactment into law.