Markets
VZ

Hate Your Internet Service Provider? You Should Have Feb. 26 Circled on Your Calendar

FSS Chairman Tom Wheeler first tipped his hand on Title II at the Consumer Electronics Show. Source: Screenshot

The Federal Communications Commission has set its sights on Internet service providers. In a nutshell, Chairman Tom Wheeler plans to introduce a number of proposals at the agency's Feb. 26 meeting that are not pleasing to the Internet providers.

The proposal that has drawn the most attention is Wheeler's plan to use Title II of the Telecommunications Act to regulate ISPs as utilities. This type of regulatory control might change how your Internet service provider acts, but unfortunately it's unlikely to lead to greater ISP choice.

A second Wheeler proposal, though, could lead to greater competition, something the ISPs perhaps oppose even more than they do regulation under Title II.

What Wheeler is proposing

The FCC is drafting a decision to intervene against state laws in Tennessee and North Carolina that limit Internet access operated and sold by cities, a senior FCC official told The Washington Post . The draft is expected to be handed out to commissioners prior to public meeting on Feb. 26, where it would be voted on.

"If approved, the FCC would find that the states have erected barriers to the timely and reasonable deployment of high-speed Internet access in Chattanooga, Tenn. and Wilson, N.C.," according to the Post .

The new proposal, if approved, would eliminate state laws that stop the cities from building competitors to Comcast , Time Warner Cable , Verizon , and others. The Post cited a number of ways laws are used to keep city-run ISPs from competing:

  • Tennessee has passed rules forbidding cities from building high-capacity networks beyond a certain geographic area.
  • Publicly run broadband in North Carolina may not offer service at prices below what a private carrier offers.

Roughly 20 states have similar laws, according to the paper, and overturning these rules in Tennessee and North Carolina would pave the way for cities in other states to have their laws changed. A FCC decision in favor of municipalities would bring more choice at least for some consumers, along with the possibility of lower prices.

Can the FCC do this?

The FCC has broad , but vague, powers under Section 706 of the Communications Act to promote the deployment of broadband in the United States. Using those powers, the FCC can determine the state laws represent a barrier to its mission to ensure "advanced telecommunications capability [i.e., broadband or high-speed access] is being deployed to all Americans in a reasonable and timely fashion."

But some Republicans in Congress and some right-leaning members of the FCC itself question whether the agency can intervene between a state and the cities under its jurisdiction. A bill sponsored by Senate Commerce Committee Chairman John Thune, a South Dakota Republican, and Michigan Republican Fred Upton, who chairs the House Energy and Commerce Committee, would restrict the FCC's authority under Section 706, preventing the agency from using that portion of the law as a regulatory tool for broadband.

Will it happen?

Wheeler has shown a surprising willingness to take on the ISPs, and he is likely to push a decision through that challenges the laws in Tennessee and North Carolina. Congress is unlikely to act fast enough to pass the Thune/Upton bill before the FCC takes action. In addition, President Barack Obama would likely veto the bill if it passes.

FCC action, however, would likely set off a flood of legal proceedings. Thune and Upton, who have been critics of Wheeler on Title II, will likely try to get a bill passed, and other cities will use the FCC decision to seek to overturn rules restricting them from competing with ISPs.

There will be no quick resolution to this issue, but Wheeler has set the ball in motion to end laws that benefit the ISPs at the expense of American citizens.

1 great stock to buy for 2015 and beyond

2015 is shaping up to be another great year for stocks. But if you want to make sure that 2015 is your best investing year ever, you need to know where to start. That's why The Motley Fool's chief investment officer just published a brand-new research report that reveals his top stock for the year ahead. To get the full story on this year's stock -- completely free -- simply click here .

The article Hate Your Internet Service Provider? You Should Have Feb. 26 Circled on Your Calendar originally appeared on Fool.com.

Daniel Kline has no position in any stocks mentioned. He wonders if Chairman Wheeler's friends call him "Wheels." The Motley Fool recommends Verizon Communications. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

Copyright © 1995 - 2015 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

VZ CMCSA

Other Topics

Stocks