No. #Broadband access providers are not #publicutilities

Since the Federal Communications Commission’s release yesterday of its draft net neutrality rules and request for comments, open Internet proponents have been howling for public utility treatment of the information superhighway.  Rashad Robinson, executive director of civil rights group Color of Change, argued in The New York Times that classifying broadband providers as public utilities would ensure the promotion of net neutrality.

Julie Samuels, executive director at Engine, argues, also in The Times that,  “We can only achieve true network neutrality by reclassifying the Internet service as a public utility. Only this will ensure that we can protect and empower consumers, small businesses and the economy.”

The term, “public utility”, gets tossed around as if it is supposed to create some realm of fairness.  Too bad none of the advocates bother to share a definition of the word and make an argument that broadband service providers should be dumped into the box.  Based on the definition, broadband providers simply don’t fit, and that lack of fit hinges on the concept of necessity.

In general, a public utility is a business that provides an everyday necessity to the public at large.  Traditionally these necessities include, electricity, natural gas, and water and waste water services.  Typically a public utility is a monopoly, the creation of which may be natural but is sanctioned by a government authority via a license or some other charter.  It may be more efficient and less expensive from an infrastructure standpoint to allow one provider of a utility service in a given territory.

Telephone and cable companies typically are not included in the definition of public utility and while their licenses to operate are usually not exclusive, financial and technical barriers to entry may be substantial enough to keep potential entrants out of a market.

As part of an exclusive license to operate, monopolies subject themselves to regulation of their fees, rates, and other charges.  Under traditional rate regulation the process also involves evaluation of their assets to ensure that the assets claimed as necessary for generating services are doing just that.

As I mentioned earlier, whether we are looking at a utility depends on whether the service provided is necessary or a necessity for sustaining life.  Trying cooking without energy or water or bathing without water.  Would you want to go into surgery without electricity?  There would be a significant impact on health and life without a utility’s service.

Now, can you say the same for services provided by a broadband provider?  Yes, broadband services provide convenience and speed of delivery to market of digital products and services.  Without broadband I would not be able to digitally deliver this blog post, but does getting this message out have to rely on broadband or more importantly, would I be able to survive without broadband with no threat to my health or life?  Yes, I could survive.

To me this is the basic crucial element missing from the argument of net neutrality proponents.  Yes, saying that broadband is not necessary is damned near heresy for a lot of people, but we need to analyze broadband’s necessity in this way to understand its place as a utility; so that the noisiness of the public utility chant is properly pierced.  Just saying that broadband is used by 87% of the population everyday does not mean it’s a necessity for public utility purposes, not when there are alternatives, albeit slower and probably clunkier for doing the same thing.

In addition, the dynamism of broadband access and the glacier-like process of regulating a utility would collide and the glacier would win.  Imagine your broadband service provider wants to introduce a new service.  It may have to wait several weeks or months for regulatory approval, hoping that it passed the FCC’s reasonable network management criteria.

In addition to the FCC’s regulatory review, your provider may have to seek approval from several states before deploying the service through its territory, assuming the states decide to change their statutes in order to classify broadband access providers as a utility.  Most states currently don’t.

Shouting “public utility” from the rooftops is the easy part.  To classify a broadband provider as such is also poor policy.

About Alton Drew

Alton Drew brings a straight forward and insightful brand of political market intelligence. Alton Drew graduated from the Florida State University with a Bachelor of Science in economics and political science (1984); a Master of Public Administration (1993); and a Juris Doctor (1999). You can also follow Alton Drew on Twitter @altondrew.
This entry was posted in broadband, broadband access provider, Federal Communications Commission, Internet, net neutrality and tagged , , , . Bookmark the permalink.

2 Responses to No. #Broadband access providers are not #publicutilities

  1. kenski2013 says:

    I agree that broadband providers are not public utilities. We could survive without broadband. Life would be slower, commerce would be slower.

    That said, the question is, are broadband providers de facto a monopoly or oligopoly, and thus, have the power to restrict competition and raise prices? If so, this should be dealt with by reasonable regulation.

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