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Major ISPs Threaten To Throttle Innovation and Slow Network Upgrades 286

Posted by Soulskill
from the doubling-down-on-being-jerks dept.
An anonymous reader writes "In a letter released on Tuesday and addressed to the FCC chairman, a group of the U.S.'s top ISPs have warned that if the FCC re-classifies the internet as telecommunications, then innovation would slow or halt and network upgrades would be unaffordable. 'Under Title II, new service offerings, options, and features would be delayed or altogether foregone. Consumers would face less choice, and a less adaptive and responsive Internet. An era of differentiation, innovation, and experimentation would be replaced with a series of 'Government may I?' requests from American entrepreneurs.' They add, 'even the potential threat of Title II had an investment-chilling effect by erasing approximately 10% of some ISPs' market cap.' Ars Technica highlights earlier doomsday predictions by AT&T. The FCC is scheduled to vote May 15 on the chairman's recent proposal encompassing this reclassification option that the ISPs vehemently oppose." Reader Bob9113 adds that a protest is planned for the same day by those who oppose the FCC's plans.
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Major ISPs Threaten To Throttle Innovation and Slow Network Upgrades

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  • by Anonymous Coward on Wednesday May 14, 2014 @08:05AM (#46997897)

    Sounds like a serious threat. Better cave.

  • Lies (Score:5, Insightful)

    by Squiddie (1942230) on Wednesday May 14, 2014 @08:05AM (#46997907)
    They weren't going to upgrade anything to begin with. Their strategy has so far been imposing limits and charging more. ISPs were never planning to innovate or upgrade.
  • Less choice? (Score:5, Insightful)

    by smooth wombat (796938) on Wednesday May 14, 2014 @08:09AM (#46997929) Homepage Journal
    Consumers would face less choice,

    How would that even be possible? We only have 4 main providers in the U.S. Are these folks saying that if they were reclassified they would start merging with one another?

    One can only hope they go through with this threat because the government would be able to step in and regulate them as a monopoly, forcing them apart like they did with AT&T and for a few years we'd once again have multiple ISPs to choose from.
  • Fine. (Score:5, Insightful)

    by jythie (914043) on Wednesday May 14, 2014 @08:13AM (#46997957)
    If these companies can not handle regulation, then others will step in.

    While people often talk about 'free markets' and 'regulations' like they are opposites, they really are not on the same scale. If a company can not adjust to regulation, then it probably can not adjust to shifts in market demand, supply chain changes, or price fluctuations.

    If these big ISPs can not adapt, then they will die.
  • Re:Less choice? (Score:5, Insightful)

    by Trepidity (597) <delirium-slashdot@@@hackish...org> on Wednesday May 14, 2014 @08:14AM (#46997959)

    And most areas don't even have as many as four providers. Everywhere I've lived in the U.S. has had two providers: the local cable monopoly, and the local phone monopoly.

  • by EmagGeek (574360) <gterich@@@aol...com> on Wednesday May 14, 2014 @08:22AM (#46998001) Journal

    Internet STARTED OUT as a "common carrier" service, which is how we were able to buy DSL service from a CLEC instead of the ILEC. Common carrier status was done away with about the time Verizon took a billion dollars from the taxpayer and started rolling out Fios.

    I used to buy DSL from a CLEC in Philadelphia that rode on top of Verizon's copper. When Fios rolled out, I remember discussing with the CLEC that they would not be able to serve me because Fios was not considered a common carrier, and Verizon did not have to sell capacity on its lines at a cut rate to competitive carriers.

    That CLEC exited consumer broadband shortly thereafter.

    Reclassifying modern broadband as a common carrier is absolutely going to create more competition and more choice for consumers. Yes, it will mean a tiny bit less profit for the majors, because they will have to sell capacity to CLECs again at a discount, but whatever.

    Honestly, and I'm hardly ever one to talk about nationalization, but the taxpayer has paid for almost all of the Internet infrastructure that has been laid out since about 2004. It should belong to them and be used for their benefit. If Verizon et al want to be considered media providers and not common carriers, then let them pay the taxpayer for access to the network that the taxpayers paid for. Yes, I know, socialism. So what? A lot of what we do is socialized, because it's better for everyone that way.

  • Re:Less choice? (Score:5, Insightful)

    by smooth wombat (796938) on Wednesday May 14, 2014 @08:22AM (#46998005) Homepage Journal

    I meant four total providers. For the entire country. Your experience is exactly what I have, and what most people have.

    In my case the two ISPs offer the same slow speeds at the exact same high price.

    Coincidence?

  • by LWATCDR (28044) on Wednesday May 14, 2014 @08:23AM (#46998007) Homepage Journal

    Maybe it is time for internet to be treated more like electricity as a "REGULATED UTILITY". That statement should scare the daylights out of ISPs. Sorry but you can only make a 20% profit and yes we will audit the daylights out of you and by the way, you owning media companies is a conflict of interest and you must sell them all off.

    The problem is the same one as the RIAA, MPAA, and Coal. All three have the Democrats in their back pockets because of the mostly liberal "artists" or in the case of coal the unions and they have the Republicans in the other pocket because of corporations and stock prices or in the case of coal you can throw in jobs in Republican areas.

    What is funny is that nobody likes the cable companies but they politically get their way.

  • by Mr D from 63 (3395377) on Wednesday May 14, 2014 @08:27AM (#46998033)

    even the potential threat of Title II had an investment-chilling effect by erasing approximately 10% of some ISPs' market cap

    Translation: Our investors know we stand to profit greatly from being able to control the flow of internet traffic in accordance with our company's best interest.

  • What innovation? (Score:5, Insightful)

    by gstoddart (321705) on Wednesday May 14, 2014 @08:27AM (#46998037) Homepage

    What innovations have the major ISPs come up with lately?

    Price gouging? Copying services developed by other people?

    Sorry, but these clowns have been charging more for less for a long time, and failing to invest in their own infrastructure. They don't innovate. They sit on their piles of money and make promises they'll never keep about how awesome their internet is, and then fight to ensure their local monopolies are protected.

    When they say this will stifle innovation, it sure can't be anything they're doing.

  • Re:Lies (Score:5, Insightful)

    by Mr D from 63 (3395377) on Wednesday May 14, 2014 @08:29AM (#46998049)
    They certainly lack any specific examples of what types of upgrades they are planning that would not happen.
  • by lagomorpha2 (1376475) on Wednesday May 14, 2014 @08:30AM (#46998055)

    Maybe it's time for antitrust regulation to be used against ISPs that have used predatory business practices to eliminate competition from smaller ISPs in their regions in order to maintain monopolies over the areas they service?

  • ISP is an ISP ... (Score:5, Insightful)

    by JasterBobaMereel (1102861) on Wednesday May 14, 2014 @08:32AM (#46998067)

    They provide a single service, an internet connection, continually reclassifying this depending on if it is Copper, Cable, Broadband, DSL, Fios ... etc is a red herring they provide an internet connection and nothing else ...

    They are already a common carrier, they just don't want the service they provide to be classified as this as it would introduce the possibility of competition into the market ...

  • Ok then... (Score:5, Insightful)

    by RotateLeftByte (797477) on Wednesday May 14, 2014 @08:41AM (#46998127)

    If that is the case then we will invalidate all those local laws you have somehow gotten enacted to stop competition in local areas.
    you know the ones that say it is illegal for the local government to give Comcast competition?
    The ones that strangle startups at birth keeping your defacto monopoly.
    How about a bit or 'real world' economics to sharpen your game then?
    See how you like that then?

  • "Threaten"? (Score:5, Insightful)

    by pla (258480) on Wednesday May 14, 2014 @08:42AM (#46998137) Journal
    US ISPs have steadfastly refused to provide adequate service outside major metropolitan areas for decades.

    Threatening not to do something they already don't do strikes me as a pretty damned weak threat.
  • by Anonymous Coward on Wednesday May 14, 2014 @08:46AM (#46998171)
    Chill out bro, they already are PRISM compliant.
  • Strategic Omission (Score:4, Insightful)

    by jbmartin6 (1232050) on Wednesday May 14, 2014 @08:47AM (#46998189)
    They are absolutely right, to an extent. Now hold on, hold on. What they of course carefully avoid mentioning is their sweetheart local monopoly deals. I don't think we need more government to solve the problem caused by government in the first place. If they want to shelter under the rubric of the advantages of a free market, let them have a free market and we'll see who innovates and competes. While they are profiting off government provided monopoly they can go pound sand.
  • by sandytaru (1158959) on Wednesday May 14, 2014 @08:56AM (#46998253) Journal
    There is no competition now! That's the whole problem. My choices are slow but steady DSL, fast but unreliable cable, or slow AND unreliable dish network. The cable companies and the phone companies have zilch incentive to upgrade their lines to better support their Internet-only customers, since their primary phone and television customers are happy and don't realize what awful Internet service we're getting compared to all the other developed countries on the planet. If I want better service where I live, I have to pay several thousand dollars to the cable folks to run business class fiber to my house, for which I'll pay several hundred dollars a month... and the service will STILL cut out every hour, based on what I saw of the business service when I did third party tech support in town. The DSL company won't even consider giving us the business class package since we're not in a commercially developed area.
  • by CreatureComfort (741652) on Wednesday May 14, 2014 @08:59AM (#46998291)
    Oh, I think 99% of everyone would agree that it is way past time, but where are you going to find a Federal DA willing to indict, who wouldn't also be immediately fired? Well, in reality, in today's day and age, he'd be framed for child porn or proved to be an islamo-mole and buried in gitmo.
  • by pr0t0 (216378) on Wednesday May 14, 2014 @09:02AM (#46998313)

    I’m going to open a big can of worms here, and I’ll admit up front that I haven’t fully thought it through. This more of a US-centric stream-of-consciousness kind of mind-dump.

    I’ve lately come to hate the US telco industry with the angry passion of a thousand fiery suns. They enjoy a monopoly or near-monopoly in most areas of the United States. They also have a legal responsibility to maximize value to their shareholders. In the absence of competition, maximizing service and quality to their customers runs counter to maximizing that shareholder value. Our natural instinct is to shout the mantra of “increase competition!”, but even in the areas where there is competition, we see very little competitive behavior.

    Why is that? Collusion? Well...maybe it’s because the Comcast CEO doesn’t have to pick up the phone and discretely call the AT&T CEO to find out what he’ll do if Comcast decides to lower rates and provide better service. He already knows it will start a price and service war that while benefiting the consumer, will hurt corporate profits. Nobody at this echelon wants to race to the bottom. All the big players have to do is find a happy medium of market share and slowly increase profits. The barriers to entry to be competitive/disruptive are enormous. It takes a Google to do it. Even if you could do it, you’d be forced to join the club and be a part of the same problem for the same reason the incumbant companies do.

    But telecom isn’t the only industry that operates in this manner, even when competitors are present. The average prices in automobiles, new homes, health care, etc. have all outpaced increases in wage at a rate of roughly 2-to-1 over the last 45 years. The increases should be in line with wage increases to guarantee sustainability. These are competitive markets, so why the disparity? The reasons are many and varied. There are some easily justified increases like safety, R&D, and environmental concerns; but there are also offsets like increases in efficiency, automation, logistics and transport, overseas labor, etc. More often than not, these companies report quarterly and annual profits that measure in the billions and frankly defy belief. Which brings me to that can of worms.

    There was a time when companies were reluctant to sell stock. They were literally selling a piece of their company to the public, and only did it because they needed the capital to bring new products and technologies to market. People bought stocks because they believed in that company, product, or technology; and handed over their money to help bring it to market and maybe make a little money in the process. Now, stocks are strictly investment vehicles for the buyer, and the seller often uses the capital to force stagnation instead of innovation. Look at Facebook. They are a titan in the tech industry, lighting cigars with $100 bills. Why the IPO? What new major advances in social media did the IPO make possible that they couldn’t make happen themselves? Likely none. But what it did do is allow Facebook to make some acquisitions. They are staying on top by removing the competition not rising to meet it.

    Maximize shareholder value. That phrase is used to justify: higher prices, lower service, lower quality parts, environmental damage, damage to the long-term future of our nation, and general unethical corporate behavior (skimming, fleecing, shell corporations, tax loophole exploits). I’m not opposed to making money as a shareholder. But that money isn’t made out of thin air, and it doesn’t come from the seller. It comes from the American public. We pay that. When you get your dividend check or sell your stocks for a fat profit, that money came from me, from your neighbors, from your family and friends, from anyone that ever bought a product or service from that company. You paid for it too.

    Similar to the underlying storyline in the movie The Matrix, I’m of the ever-increasing opinion tha

  • Re:Less choice? (Score:4, Insightful)

    by CreatureComfort (741652) on Wednesday May 14, 2014 @09:11AM (#46998387)
    This is called collusion... exactly the opposite of competitive business practices.

    It is impossible that two entities can have so exactly the same input costs, maintenance costs, future investment costs, defined profit margins, and internal (in)efficiencies that they end up with exactly the same offerings at exactly the same price. Either one of them is at rock bottom, and the other is making artificially high profits, or they both are making artificially high profits.

    Neither competitor really wants to put the other out of business and face the scrutiny of monopoly. As long as they collude to keep both in business, then they can each point at the other as "the bad guy".

    Oh, and by the way, since we're colluding anyways, why settle for one just scraping by... we might as well make certain were both VERY comfortable, as long as we can keep real competition locked out.
  • Re:Less choice? (Score:5, Insightful)

    by mjtaylor24601 (820998) on Wednesday May 14, 2014 @09:35AM (#46998563)

    Nobody can afford to run a dozen different wires to your house. Infrastructure is fucking EXPENSIVE.

    So you're saying the limited physical space to run wires and the huge upfront capital costs make for a natural monopoly? Good, then you must agree that the argument that regulating the market incumbents as a monopoly will reduce new entrants to the market is complete bullsh#@t because new entrants effectively can't enter the market anyway. Glad we're all on the same page.

  • by Chris Mattern (191822) on Wednesday May 14, 2014 @09:55AM (#46998725)

    It's amazing how a comedy from the 70's can be used allegorically...

    Not when that comedy is Blazing Saddles. Thinking of it as "just a comedy" is to seriously underestimate it.

  • US ISPs = mafia (Score:5, Insightful)

    by jeffasselin (566598) <cormacolinde@@@gmail...com> on Wednesday May 14, 2014 @10:08AM (#46998817) Journal

    That's a nice Internet you got there. Would be a shame if anything happened to it.

  • by spire3661 (1038968) on Wednesday May 14, 2014 @10:38AM (#46999037) Journal
    The water pipe to my house doesnt need to be replaced because it was sized properly from day one. The only people with properly sized internet connections in the US are the ones with fiber to the house.
  • Re:Lies (Score:2, Insightful)

    by Anonymous Coward on Wednesday May 14, 2014 @10:40AM (#46999059)

    But here's the rub, they've already had over $200 billion of tax payers' money to do so. As well as exclusivity of areas granted by the local governments.

  • Re: Fine. (Score:5, Insightful)

    by Jason Levine (196982) on Wednesday May 14, 2014 @10:43AM (#46999071)

    That and the entrenched ISPs threaten anyone who dares to challenge their business models. Exhibit A would be municipal broadband in areas without any broadband access. Town residents get together and say "the ISPs won't serve us so we'll make our own broadband." The ISPs step in with lawyers calling it "unfair competition." Of course, it isn't competition because they aren't serving those areas, but in the event they decide to maybe probably look into serving those areas at some point in the future, it might be competition. And they can't have even the whiff of competition. That's not allowed.

  • Re:Less choice? (Score:4, Insightful)

    by danomac (1032160) on Wednesday May 14, 2014 @01:39PM (#47000907)

    And this is why any one business should not own infrastructure, it should be publically owned and maintained.

Reality must take precedence over public relations, for Mother Nature cannot be fooled. -- R.P. Feynman

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