The telecom industry is reacting strongly to the Executive Order on competition signed by President Joe Biden on Friday. In it, Biden challenges the industry for what the White House calls “unclear pricing, high fees and landlords’ restricting tenants’ choice of ISPs.”
The White House says the point of the changes is to promote competition in the economy, to lower prices for families, increase workers’ wages and promote innovation. The “lack of competition drives up prices for consumers. As fewer large players have controlled more of the market, mark-ups (charges over cost) have tripled,” notes the administration. The result is consumers are paying more for things like prescription drugs, hearing aids and broadband.
The Executive Order includes 72 initiatives by more than a dozen federal agencies to promptly tackle some of the most pressing competition problems across the economy. The orders will: “Save Americans money on their internet bills by banning excessive early termination fees, requiring clear disclosure of plan costs to facilitate comparison shopping, and ending landlord exclusivity arrangements that stick tenants with only a single internet option.”
The Order tackles four issues that it says limit competition, raise prices, and reduce choices for internet service, according to the Fact Sheet. More than 200 million Americans live in an area with only one or two reliable high-speed internet providers, leading to prices as much as five times higher in these markets compared to those markets with more options, according to the administration. It points to a related problem of landlords and ISPs signing exclusivity deals or “collusive arrangements that leave tenants with only one option.” The Order encourages the FCC to prevent ISPs from making deals with landlords that limit tenant choices.
The President also notes that comparison shopping is hard. The Order references a “Broadband Nutrition Label” developed under the Obama-Biden administration that provides basic information about internet service so consumers can compare options. The President pushes the FCC to revive the label and require providers to report prices and subscription rates to the agency.
If a consumer does find a better internet service deal, they may be unable to actually switch because of high early termination fees, according to the White House. In the order, the President encourages the Commission to limit “excessive early termination fees.”
The order also urges the Commission to restore “Net Neutrality” rules that required providers to treat all internet services equally, without blocking or slowing down service. It also encourages the Federal Trade Commission to issue rules against anti-competitive restrictions on using independent repair shops or doing DIY repairs to cell phones and other tech devices.
USTelecom blasted the Order, with President/CEO Jonathan Spalter saying: “Unfortunately, when it comes to its comments on broadband, context and facts are largely missing from the Executive Order’s fact sheet. In a year when the cost of most goods and services has been going up, the price of broadband – at all price points – went in the opposite direction.”
“The truth is: more Americans have less expensive, more reliable and better broadband service choices today than they did one year ago,” said Spalter. He likened the order to something “exhumed from a time capsule in an alternative universe.”
He also says the “whiff of rate regulation” referenced in the White House sheet is “concerning.” He notes that: “Washington shouldn’t be setting broadband prices in a competitive market with lots of consumer choice.”
“We are disappointed that the Executive Order rehashes misleading claims about the broadband marketplace, including the tired and disproven assertion that ISPs would block or throttle consumers from accessing the internet content of their choice,” said NCTA-the Internet & Television Association. “America’s broadband networks have been the nation’s most resilient and critical infrastructure during the pandemic, keeping our economy moving and enabling our citizens to learn, work and stay connected from the safety of their homes. As policymakers and industry share the goal of connecting every American to robust and reliable broadband service, we hope the Administration will put the rhetoric aside and focus on constructive solutions.”
The Wireless Internet Service Providers Association said it was generally encouraged by the EO. However, “a call for the FCC to impose utility-style regulation on ISPs, if adopted, will limit consumer choice and competition in the hardest-to-reach areas of our country,” said WISPA President/CEO Claude Aiken. “Local innovator ISPs have no reason to violate net neutrality principles, nor do they. But heavy-handed utility regulation would undermine the ability of these small innovators to compete in the marketplace, encouraging consolidation to more easily meet compliance obligations.”
Andrew Schwartzman, senior counselor at the Benton Institute for Broadband & Society, struck a different tone. “This is the right agenda, and I know it will garner broad popular support,” he said. “The headlines on the tech section will properly focus on net neutrality and antitrust enforcement. However, the President has also identified important but less visible issues that can have a huge impact on many people. I particularly like his emphasis on ending landlords limiting access to a choice of internet providers and on the abusive use of early termination fees to restrict customers from switching to get a better deal.”
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