Comcast's Pledge to Behave Without Open-Web Rules Draws Doubters
Comcast's Pledge to Behave Without Open-Web Rules Draws Doubters
(Bloomberg) -- Broadband provider Comcast Corp. spent years fighting regulations that bar it from charging high-volume internet companies more to speed their content along.
Yet the cable company is adamant that it won’t do that once those net-neutrality rules are lifted by U.S. regulators later this week.
“Any reporting that we are preparing to offer paid prioritization is absolutely false and inaccurate,” Sena Fitzmaurice, a Comcast spokeswoman, said in an email.
As the Republican-led Federal Communications Commission prepares to lift Obama-era rules enforcing "net neutrality," the pledges from Comcast and other internet-service providers to not take advantage of the newfound freedom by charging content providers extra for "fast lanes" is being greeted with skepticism.
Internet service providers “want to do paid prioritization,” Tom Wheeler, who passed the rules in 2015 when he served as the FCC’s Democratic chairman, said in an interview.
He and others point to the recent disappearance from Comcast’s website of a pledge not to create fast lanes. “Something like this is no happenstance,” Wheeler said.
With a vote on Dec. 14, the FCC is set to let broadband providers such as Comcast and AT&T Inc. block or slow internet traffic and offer fast lanes for websites that pay more. It’s a win for internet service providers who say the utility-style regulation has slowed investment and discouraged innovation. They’ve lobbied and litigated against the rules yet still forecast little change in their operations.
Skeptics raise the specter of an internet driven more by deep pockets than bright ideas, with established businesses buying even more dominance. For instance, broadband providers could slow the likes of Netflix Inc. or Dish Network Corp.’s Sling TV, or charge the streaming video companies fees that startups couldn’t afford.
The repeal push comes from FCC Chairman Ajit Pai, who was named by President Donald Trump, and has won support from the other two members of the agency’s Republican majority, ensuring passage. Pai has said another agency, the Federal Trade Commission, will protect competition and consumers, and the agencies plan to work together.
"It’s naive not to recognize the incentives,” said Dane Jasper, chief executive officer of Sonic, a Santa Rosa, California-based provider of internet service to about 100,000 residential customers in California.
Jasper said companies such as AT&T, which owns DirecTV, and Comcast, which owns NBC, have a motive to discourage customers from using the likes of Netflix, Amazon.com Inc.’s Prime video, Dish’s Sling TV or Sony Inc.’s PlayStation Vue.
Jasper in an interview identified another incentive that could work to damp competition: If large broadband companies can extract a fee from the likes of Netflix, the internet service providers can lower the monthly fee charged to consumers. Companies the size of Sonic don’t have the leverage to demand a fee from content providers, leaving them without leeway to lower prices to compete, he said.
“I’m going to be forced to offer the service for more,” Jasper said.
A trade group of broadband providers including AT&T and Comcast pledged last week to not block or slow web traffic and otherwise avoid “unfair discrimination against lawful traffic online,” according to a statement. The group, Broadband for America, also represents companies including the largest wireless carrier Verizon Communications Inc.
Comcast changed the language about its web practices that is posted on a corporate page in late April, as Pai was announcing his intention to gut the Obama-era rules. The altered wording was reported earlier by the online publication Ars Technica.
Last month after Pai announced details, the company’s Senior Executive Vice President David Cohen wrote in a blog post: “Comcast’s commitment to our customers remains the same: we do not and will not block, throttle, or discriminate against lawful content and we will be transparent with our customers about these policies.”
Other carriers made similar pledges.
“From a customer perspective, I don’t see much changing,” John Stephens, AT&T’s chief financial officer, told investors at a conference Dec. 5. “We believe in not blocking or advantaging one’s website over others, that’s not what we do.”
At Verizon, spokesman Rich Young said that “our internet customers will continue to be able to go where they want and do what they want online.”
The companies don’t need to offer fast lanes because networks are delivering all types of data so quickly that even users who wait in line behind others suffer only a negligible delay, said Roger Entner, an analyst with Recon Analytics LLC.
Paid prioritization would amount to “somebody paying money for nothing,” Entner said.
Broadband providers won’t assemble packages of favored web channels, excluding others, because consumers won’t accept “a walled garden,” Entner said. “It’s a non-starter in markets where there’s competition.”
About 61 percent of Americans don’t have a choice of competing fixed-line broadband providers, according to the FCC.
Selling Capacity
Still, web companies express apprehension about broadband providers’ plans.
“They want to sell special capability and have people pay for it. And those who can’t pay for it will lack the same access,” Ed Black, president of the Computer & Communications Industry Association, said in an interview. “There will be innumerable ways to do that, sometimes shrouded, sometimes defended as technically efficient.”
Members of Black’s Washington-based trade group include Alphabet Inc.’s Google, Amazon.com, Dish Network and online ride hailing service Uber Technologies Inc.
Black mocked pledges of good behavior.
"‘Oh, we’re not going to do anything!’" Black said. “Then why did you make it the most unbelievably high priority -- millions in lobbying, millions in PR campaigns?"
Several analysts said they expect few changes before Pai’s rules relaxation has been tested in court. A challenge is all but inevitable, and it’s not certain federal courts will accept the Republicans overturning a rule passed less than three years ago by Democrats.
"I’d be surprised if they did anything until a court rules," said Blair Levin, a former FCC official under Democrats. “They haven’t told Wall Street how they could make money, and usually companies are not shy about that.”
“This is a bad thing for the entire internet ecosystem,” David Schaeffer, chief executive officer of Cogent Communications Holdings Inc., which provides links between companies and data networks, told investors Dec. 4.
“What these rules will allow companies to do is, choose whether or not for their end users, they will have adequate connections. We think that’s a bad idea,” Schaeffer said.
To contact the reporters on this story: Todd Shields in Washington at tshields3@bloomberg.net, Scott Moritz in New York at smoritz6@bloomberg.net.
To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net, Mark Drajem
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