The FCC just got a new chairman, Ajit Pai. I got to hear him talk at a recent consumer advisory meeting and I have to admit, he charmed me – at least at first. I got excited when he told us that he wanted to close the digital divide between “those who can use cutting-edge communications services and those who do not.” This is crucial because broadband is essential for professional success. Just ask the laid off coal miners in Kentucky who became software coders, or any student that has to upload a homework assignment to Blackboard.com.
According to Pai, the way to improve internet adoption is by giving every consumer “affordable choices in a competitive marketplace.” I agree, but his vision for improving competition is completely backwards and looks like a handout to industry interests. Especially since he just removed a requirement that would make Charter compete with other high speed internet providers in 1 million locations. At this rate, Pai is looking more like a corporate sellout than a consumer advocate.
For many of us, the only competition we see is internet service providers (ISPs) competing to see how much they can overcharge and underdeliver. These companies make an estimated 97 cents in profit for every dollar they charge, and routinely go out of their way to avoid competing in the same areas. As a result, nearly 80% of Americans only have one choice for high speed internet. So, if you can afford it, you’ll pay up. For low-income folks, many of them from communities of color, this isn’t an option.
This lack of choice and competition means Comcast, the most hated company in America, can get away with made up “fees,” or even changing their customer names to “A**hole Brown” and “Super B*tch.” Don’t even get me started on data caps, which Comcast’s own leaked memos say have nothing to do with managing network congestion and everything to do with price gouging “fairness.”
More choice means the cost and quality of internet access improves. Where Google Fiber competes, companies like AT&T dramatically cut prices. In Sweden, customers have as many as 19 different internet providers fighting for their business. The result is that Swedes generally pay only $40 a month for unlimited 100 Mbps internet. In comparison, $45 in Los Angeles would get you internet from AT&T that is five times slower with a tiny 250GB data cap. While the Swedish model isn’t perfect, more competition means lower prices and less likelihood that companies will put in unnecessary data caps or sell our information to advertisers.
So, given that we both want competition, why do I think Pai will be bad for consumers? It’s because he’s going about it in the wrong order. Under Pai, the FCC is hard at work removing regulations that are designed to protect us from the monopoly power these broadband companies have. So far he’s removed rules that would keep ISPs honest and transparent about bogus charges on your bill, rules to protect net neutrality, or help lower income folks afford internet access (since the ISPs aren’t exactly fighting each other to lower prices).
The rules Pai removed are not huge barriers to competition; instead they represent important safeguards given the current lack of choice and competition in the broadband market. If Pai wants to strip away our consumer protections he should first make sure we have meaningful choice between internet providers. That way we could switch if our ISP decided to call us a “super b*tch.”