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Will Congress Let ISPs Charge Whatever They Want?

By Daniel B. Kline - Jan 15, 2016 at 2:35PM

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A new bill would remove a layer of consumer protection.

Republicans in Congress have advanced a bill that could take the power to protect the public from unreasonable broadband price hikes away from the Federal Communications Commission.

The aptly titled H.R. 2666 would specifically prevent the federal agency from regulating the rates charged for broadband Internet service. That would remove a powerful arrow from the FCC's quiver and allow Internet service providers to impose data caps, raise price, and create surcharges without any fear of regulatory reprisal.

Since the FCC reclassified broadband as a common carrier service when it imposed net neutrality rules, the agency has not regulated rates or required providers to ask permission before raising them. The current rules, however, do allow for consumers to complain to the FCC, which rules on a case-by-case basis whether pricing is unjust or unreasonable.

Republicans who support the bill argue that it simply puts into law a promise made by President Barack Obama and FCC Chairman Tom Wheeler that the ISPs won't face a return of the type of rate regulation usually applied to phone service, Ars Technica reported. But in today's hearing, U.S. Rep. Greg Walde, an Oregon Republican who co-sponsored the bill, wants to not just prevent regulation, but forbid the FCC from responding to consumer complaints that broadband bills are too high.

"Rate regulation by after-the-fact second-guessing is rate regulation nonetheless," Walden said, Ars reported. "We should assure that the specter of rate regulation of broadband is off the table permanently."

What does the bill say?
Whereas Congress tends to be wordy in its approach to anything, this entire bill comes in at just over 100 words, the meat of which are:

Notwithstanding any other provision of law, the Federal Communications Commission may not regulate the rates charged for broadband Internet access service (as defined in the rules adopted in the Report and Order on Remand, Declaratory Ruling, and Order that was adopted by the Commission on February 26, 2015.

There's not a lot of room for ambiguity there. If the bill passes, the FCC would lose its ability to step in when consumers think they've been hit by an unfair price increase.

There are some concerns
As you might imagine, consumer advocates and Democrats have concerns over removing the FCC from the process entirely. In some ways, it's a question of both sides not trusting the other. Republicans believe that no matter what Obama and Wheeler say about not imposing rate regulation, they might do so in the future. Conversely, Democrats do not trust the market to regulate itself.

Both sides are right. Letting Wheeler or future FCC bosses determine what constitutes a fair rate increase should be a concern for Republicans. Similarly, Democrats should be worried about the FCC losing the ability to step in during an extreme situation.

Wheeler. Image source: FCC's Twitter feed. 

For example, what if Comcast (CMCSA -1.11%) or Time Warner Cable (NYSE: TWC) decide to impose data caps in poor neighborhoods only? That's an extreme example, which is almost certainly illegal for other reasons, but this bill would stop the FCC from stepping in should that happen. It would also, in theory, let Comcast or TWC (not to pick on them, but they tend to be at the center of any horrifying ISP practices) charge more for Internet only in neighborhoods that can afford it, with the FCC powerless to help.

What should happen here?
It does seem a bit odd that Congress is taking action to stop the FCC from maybe, possibly treating ISPs unfairly in the future while doing nothing to protect consumers. This is happening at a time when Comcast has begun implementing data caps in some markets that could essentially add an Internet surcharge to people who opt to drop its cable service.

There is more history of ISPs mistreating consumers than there is of the FCC being unfair to big industry. This bill would remove consumer protection power from the FCC without allowing for another agency or regulatory board to pick it up.

The FCC should not have unchecked power, but companies like Comcast should most certainly have at least the possibility of regulation stopping them from treating people poorly. It seems like there is a logical compromise here that stops the FCC from acting unfairly, but also gives the public some redress in the case of unfair billing practices.

Daniel Kline has no position in any stocks mentioned. He is confused as to why 100-calories cans of soda have now shrunk to 90-calorie cans. The Motley Fool has no position in any of the stocks mentioned. 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.

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