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ACA Calls On FCC To Adopt Balanced Open Internet Rules

Trade Group Says Rules Must Protect Threats From The Edge

PITTSBURGH, July 22, 2014 - The American Cable Association urged the Federal Communications Commission to take a balanced approach regarding new Open Internet rules by adopting rules that prevent discrimination and blocking from "edge" providers.  ACA asked the FCC to prohibit Internet content, applications and services providers from engaging in blocking and discrimination against broadband Internet access service providers that would be regarded as serious violations of Net Neutrality principles if engaged in by broadband access providers.

"These so-called ‘edge' providers have the incentive and ability to limit access to their content in a commercially unreasonable manner, thereby undermining the intent of the Open Internet rules.  These concerns are not merely hypothetical," ACA President and CEO Matthew M. Polka said, referring to online blackouts waged by CBS in 2013 and Viacom in early April and still on-going against Cable ONE and a dozen other ACA member companies.

ACA's call for a new and holistic regulatory approach to protecting the consumer Internet experience was set forth in comments filed July 17 with the FCC. In the wake of the D.C. Circuit's ruling in the Verizon case, the FCC has focused its attention on adopting new Open Internet rules that are once again directed exclusively at broadband access providers. ACA, however, is calling on the FCC to broaden the focus to include edge providers.  Specifically, ACA asked the FCC to recognize that popular search engines, social networks, online retailers, and online video providers fall within the agency's regulatory authority under Section 706 of the Telecommunications Act of 1996, and may be subject to regulation deeming blocking and commercially unreasonable discrimination unlawful.

In support of its approach, the trade group submitted to the FCC a commissioned paper called The Mistake of One-Sided Open Internet Policy by Dr. William Lehr, a telecommunications and Internet industry economist and policy analyst with the Massachusetts Institute of Technology.  In Dr. Lehr's judgment, rules focusing solely on broadband access providers have the potential to misidentify the source of a threat to Internet openness or mis-target potential remedies. As a result, it would, in Dr. Lehr's view, be a mistake to adopt one-sided rules targeting the network management behavior of broadband Internet access providers.

Section 706 charges the FCC with accelerating broadband deployment by removing barriers to entry and competition in telecommunications markets.  In its Verizon decision, the D.C. Circuit accepted the FCC's premise that an open Internet enables a "virtuous circle" or cycle of innovation at the edge of the Internet, leading to consumer demand for broadband services and to investment in and deployment of broadband networks.  The court further accepted the FCC's justification that it may regulate the economic relationship between broadband access providers and edge providers under Section 706 to ensure that broadband access providers themselves do not constitute "barriers" to broadband deployment.  In its comments, ACA stated that the FCC has authority under Sec. 706 to regulate edge providers to protect the same "virtuous circle" of Internet innovation by preventing harmful blocking and commercially unreasonable behavior on the part of edge providers.

"Edge providers that offer popular content to end users of the Internet can severely threaten the overall value of broadband access services by limiting access to their content in a commercially unreasonable manner.  This can break the Open Internet's ‘virtuous circle.'  Decreases in consumer demand for broadband services will lead to decreases in investment and deployment of broadband networks," Polka said.

With regard to the bedrock issue of regulatory classification, the FCC more than a decade ago ruled that cable modem providers are information service providers, a category with minimal regulatory mandates under Title I of the Act. The agency expressly rejected classifying them as common carrier telecommunications service providers under Title II. In 2005, the U.S. Supreme Court upheld this classification in the Brand X case, on which the FCC later relied to extend the information service classification to host of other broadband access technologies.

In its comments, ACA urged the FCC to refrain from reclassifying broadband Internet access service as a Title II common carrier service, saying the "light touch" approach to broadband has been highly successful and that there is no demonstrable need to alter it.

ACA stressed that reclassification under Title II would substantially increase regulatory burdens, substantially raise costs, and adversely impact broadband prices and deployment.  The result would be significantly increased FCC filing and reporting requirements, and a plethora of related compliance burdens, including those associated with regulatory assessments, including Universal Service Fund contributions. Providers will also face the prospect of immediate rate increases for their pole attachments, the likelihood of attempts by state and local governments to impose service regulation and fees, and the prospect of increased state taxation burdens.

"Departing from a ‘light touch' policy approach, risks foisting on smaller providers increased regulatory burdens and costs that will impair their ability to maintain and expand their broadband Internet offerings," Polka said. "ACA counsels the FCC to stay this course and refrain from reclassifying broadband Internet services, in whole or part, for the sole purpose of subjecting providers to extensive economic regulation as Title II common carriers."

ACA also expressed concern with the FCC's proposal to adopt additional disclosure requirements for broadband Internet service providers, saying current transparency rules have worked well and that there is no evidence that "enhancements" to the transparency rules would be beneficial relative to the burden.

Based upon recent feedback from ACA members, there are no indications that either end users or edge providers have found the disclosures to be inadequate or inaccurate. In fact, ACA members have neither received complaints nor even inquiries from end users or edge providers seeking additional information beyond that disclosed under the existing rule.

"This strongly suggests that there are neither problems with the current rule nor need for new costly and burdensome enhancements imposed across the industry as a whole," Polka said.

About the American Cable Association: Based in Pittsburgh, the American Cable Association is a trade organization representing nearly 850 smaller and medium-sized, independent cable companies who provide broadband services for nearly 7 million cable subscribers primarily located in rural and smaller suburban markets across America. Through active participation in the regulatory and legislative process in Washington, D.C., ACA's members work together to advance the interests of their customers and ensure the future competitiveness and viability of their business. For more information, visit http://www.americancable.org/

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