ISPs with 250,000 or fewer subscribers won’t have to follow rules that require greater disclosures about fees and data caps after a vote today by the Federal Communications Commission.
The FCC’s Republican majority approved the change to help small providers avoid “onerous reporting obligations” included in the 2015 net neutrality order, they said. But by setting the threshold at 250,000 subscribers and exempting small ISPs owned by larger companies, the FCC is effectively “exempt[ing] billion-dollar public companies” from rules that can be complied with in mere hours each year, said Mignon Clyburn, the FCC’s only Democrat.
The commission’s 2015 order temporarily exempted ISPs with 100,000 or fewer subscribers from the so-called enhanced transparency requirements, but that exemption expired in December 2016. Clyburn said she would support reinstating the exemption for ISPs with 100,000 or fewer subscribers, but she dissented from today’s order.
The 250,000-subscriber exemption won’t apply to the top broadband providers such as Comcast, Charter, AT&T, Verizon, and others. But it will exempt many ISPs owned by conglomerates, Clyburn said.
“Many of the nation’s largest broadband providers are actually holding companies, comprised of many smaller operating companies,” Clyburn said. “So what today’s Order does is exempt these companies’ affiliates that have under 250,000 connections by declining to aggregate the connection count at the holding company level.”
The original exemption for ISPs with 100,000 or fewer subscribers was applied to the aggregated total of subscribers “across all affiliates,” so that small ISPs owned by big holding companies wouldn’t be exempt. That changed today, according to Clyburn.
9.7 million subscribers deprived of information
The White House’s Office of Management and Budget found that complying with the transparency rule enhancements “would take each broadband provider 6.8 hours annually,” Clyburn said. The exemption will withhold important information about prices, including promotional rates, fees, and surcharges from about 9.7 million subscribers, Sen. Edward Markey (D-Mass.) said today.
The enhanced transparency rules expand upon rules first implemented in 2010. To comply with the enhanced rules, home Internet providers and cellular carriers must make public disclosures that include the following:
- Price—the full monthly service charge. Any promotional rates should be clearly noted as such, specify the duration of the promotional period, and note the full monthly service charge the consumer will incur after the expiration of the promotional period.
- Other fees—all additional one-time and/or recurring fees and/or surcharges the consumer may incur either to initiate, maintain, or discontinue service, including the name, definition, and cost of each additional fee. These may include modem rental fees, installation fees, service charges, and early termination fees, among others.
- Data caps and allowances—any data caps or allowances that are a part of the plan the consumer is purchasing, as well as the consequences of exceeding the cap or allowance (e.g., additional charges, loss of service for the remainder of the billing cycle).
The new rules also require ISPs to disclose more information about network performance, including packet loss statistics.
Pai said he offered a compromise to Clyburn, but he declined to say what his proposed compromise included. A spokesperson for Clyburn toldthat the compromise would have required all ISPs of any size to report “commercial terms” such as prices, fees, and data caps publicly. But it also would have made ISPs with as many as 500,000 subscribers exempt from other requirements. That means many more ISPs would have been able to avoid reporting network performance statistics that can help customers assess whether a network will be reliable.
“Commissioner Clyburn could simply not support a proposal that would have potentially left millions of additional consumers without transparency protections,” the spokesperson said.
Before the vote, Clyburn made a plea to ISPs: “If you and your companies have the resources, then do the right thing, be transparent with consumers about what prices you charge, what fees you assess, what data caps you impose, and your network performance practices. Your customers, I am confident, will thank you.”
Pai: Exemption will spur broadband deployment
Pai argued that requiring ISPs to “devote scarce resources” to filling out paperwork instead of deploying broadband is “not in the interest of the consumer.”
“Our decision today will help the country’s smaller providers… better serve their communities,” Pai said. “I firmly believe that these ISPs should spend their limited capital building out better broadband to rural America, not hiring lawyers and accountants to fill out unnecessary paperwork demanded by Washington, DC. With this action, the small businesses that are critical to injecting competition into the broadband marketplace will be better able to do just that.”
Pai also supports overturning the FCC’s net neutrality order, which could wipe out the transparency requirements for providers of all sizes.
The FCC did take action to boost broadband deployment today in two bipartisan votes. One vote will provide $453 million in annual support to carriers over ten years to expand and improve 4G LTE mobile coverage in rural and tribal areas. This is a continuation of the FCC’s Mobility Fund, which was created in 2011. The money will be distributed in an auction-style format to boost coverage “where the market can’t sustain or extend service absent government support.”
The FCC today also voted on rules for an upcoming reverse auction that will provide a total of nearly $2 billion over 10 years to expand home Internet service in rural areas.
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