by Eben Griger
Back in April, the Federal Communications Commission passed a vote that took away price limits for Internet Service Providers that service rural customers. Specifically, customers “within a half mile of a location served by a competitive provider.”
Say your internet is provided by Company A, and Company A is charging you $50 a month for highspeed internet. Because you can only get Company A’s internet, they aren’t allowed to charge you any more than $50. Now, Company B moves in and starts providing internet to your neighbors, but because you walked under a ladder or saw a black cat, Company B stops just short of providing internet to you. Previously, Company A couldn’t charge you more because you still have no choice but to use their internet. But under the FCC’s new ruling, Company A can charge you whatever they want, just because you’re close to Company B.
Naturally, groups like the Consumer Federation of America and Public Knowledge (who are also fighting the Sinclair-Tribune merger) took this ruling to the US Court of Appeals, citing lack of competition and no real consumer benefit.
In their defense, the FCC claimed that potential competition is still competition, so “market power” would regulate prices and there is no need for price caps (sort of like how potentially winning the lottery is the same thing as actually winning, so might as well buy that boat now). They also said that ISPs “are commonly willing to extend their existing network out approximately a half mile,” though that’s commonly not the case.
In that same defense though, the FCC also acknowledged that it is unreasonable to expect prices to drop immediately but rather in the next few years and that current regulated prices are most likely better than what market prices will be.
The fate of the FCC’s new rules will hinge on a future court decision.
Image: Max Pixel