Op-eds and Articles

USA Today: Old rules make Internet more expensive

By and / 12.12.2014

If the Federal Communications Commission (FCC) votes to “reclassify” the Internet as a public utility, U.S. consumers will have to dig deeper into their pockets to pay for access to the Internet.

How deep? By our estimates, broadband subscribers would have to pay about $70 annually in additional state and local fees. When you add it all up, reclassification could add a whopping $15 billion in new user fees to consumer bills.

At issue is whether Internet service providers (ISPs) — telco and cable companies — should be regulated as public utilities under Title II of the Communications Act of 1934. Activists pushing for this approach — echoed recently by President Obama — claim it is the only way to protect “net neutrality.” Critics argue that there are better ways to ensure an open Internet without subjecting ISPs to archaic regulations designed for the old Ma Bell telephone monopoly.

Missing from this debate until now is any serious assessment of what Title II regulation would cost broadband consumers. So we ran the numbers and discovered there is nothing but bad news on this front. Once Internet access service is labeled a “telecommunications service” under Title II, consumer broadband services could become subject to a whole host of new taxes and fees.

Although these fees are paid by broadband providers, history shows — and economic models of competitive markets predict — that these charges are passed along to customers, just as they are now on your phone bill.

The Internet Tax Freedom Act pending in Congress might limit the impact of some of these taxes and fees, but not all of them. And while the FCC has the power to limit the amount of the federal Universal Service Fee, recent history shows the FCC is more likely to increase USF than reduce it. Perhaps most telling — even the staunchest defenders of Title II acknowledge that various federal and state authorities could impose billions in new charges if broadband is reclassified as a utility.

Continue reading at USA Today.