FCC Sets Deadline For Small ISPs To Adhere To New Transparency Rules

When the Rules Of The Open Internet took effect a few weeks ago, the FCC granted smaller ISPs a reprieve from adhering to the latest transparency rules. This was expected to be a temporary measure, but the FCC is now debating if this should be permanent, and to that end the group is now taking comments on the decision. Excluding smaller ISPs from these transparency rules might help the companies, but it would likely be bad for consumers.

The transparency rules laid out in the Open Internet legislation are probably the most comprehensive and radical transparency rulings in the history of the Internet. They require that ISPs disclose information on their network management practices, terms of service, and the performance of their network.

Before this rule went into effect, an ISP might sell you a broadband service plan with a stated 25 Mbps of bandwidth. The network you are connected to, however, might be overloaded from too many users, or use outdated hardware, and as a result you might only get 10 Mbps at best. And even if the network can handle the stated speed, the company might throttle you back to reduce total load on the network, or for other reasons.

ISPs technically didn't have to tell you if either of these scenarios were happening in the past, but now they do. The FCC felt that without providing this information, customers were not able to make an informed decision about their services.

However, the FCC didn't state why smaller ISPs were spared from becoming transparent while larger ISPs were forced to. This is purely speculative, but it is possible that forcing smaller ISPs to adhere to the new transparency regulations would hamper their ability to compete.

What we do know for sure is that unless all ISPs are transparent, consumers of broadband services can't make a completely informed decision. The FCC still wants competition in the private sector to provide broadband service, however, so it is a complicated issue. If they decide to make everyone be transparent, and it hurts small ISPs, then the FCC will look like it is against the private sector more than it already is.

In addition, if competition decreases from smaller players in the Internet service business, and they're forced to exit the market, then customers might find their already limited selection of broadband services shrink to a single choice. It would likely encourage the growth of municipal broadband service, but that would take time.

Not enforcing transparency rules across the board, however, might anger the larger ISPs. Because the ISPs are still trying to fight against the Open Internet in an attempt to get the legislation revoked, they might be able to use this unfair treatment by the FCC to their advantage. If the FCC does enforce transparency, and smaller ISPs go out of business, the ISPs could use that against the FCC, too.

Clearly, this is a complicated matter with grave consequences if the wrong decision is made, which is likely the reason the FCC is taking so long to debate the issue. The final decision will come in several months, after comments are taken and the issue is sufficiently debated.

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Michael Justin Allen Sexton is a Contributing Writer for Tom's Hardware US. He covers hardware component news, specializing in CPUs and motherboards.
  • knowom
    Why can't we see municipal broadband services act as a middle man to aid in the growth of the private sector to a point where they can compete on their own effectively?
  • Warsaw
    I don't really understand how being transparent would hurt or harm small ISP's? What is the reasoning behind this? I believe that the more upfront and the more you communicate with your customers the better they will stand behind you. If my small ISP promised me 100 Mbps and had to throw me down to 50 Mbps due to unforeseen circumstances but they had a plan of fixing it in a certain time frame I can't really be upset about that.

    Currently as we stand ISP's DO NOT communicate that anyways and you still get throttled or hampered however they please. I'm sure most are all for more competition and there are a decent amount of people that will try and support the small guys.
  • rhysiam
    Unless I'm missing something your title doesn't match the article: "FCC sets deadline...", but the article is about the FCC debating about whether or not to set a deadline. They haven't set a deadline at all and in fact, according to the article itself, may never do so.
  • WFang
    @Warsaw, depending on the exact details, it would harm small ISP's because it takes logging, monitoring (which they likely do) but adds on requirements of distilling and filtering this information and disseminating that in a format that makes sense to the average joe. This takes work. Then you'll likely have additional overhead for confused consumers calling in, adding hours to the help-desk services. I don't think we are talking 'huge costs', but it might be additional straws that can really make it hard for a new up and coming company to get off the ground. Also, many times, software and services exists to help automate or facilitate such things, but also many times such software cost too much for the smallest companies that can benefit from them, leaving them the choice of trying to do it manually (labor intensive) trying to develop in-house tools (risky and potentially very expensive) etc. -all that said, I don't know the details of the regulation, so if the reporting is not required to be dynamic information (e.g. daily updates or something) and more of a 'this service can be throttled' one-liner in the contract.. then the cost becomes more of an opportunity cost.. the small guy can't afford to purchase sufficient over provisioning capacity to guarantee all its customers max speed all the time, so they have to put that line in their marketing, the larger guys can afford to over provision and don't need that line... guess who the consumer will pick every time? :P Also, I'm not at all taking a position on right/wrong on this matter. I know not nearly enough about it.. but I do know enough to see many ways that such things could harm small fish trying to start/grow.
  • surphninja
    The assumption is that smaller ISPs need to be able to exaggerate what they deliver in order to compete. Couldn't they just offer superior services? Or at least adequate services at lower rates?
  • Joker41NAM
    I don't think this author lives in the US. He seems to think that competition already exists. How many of the people reading this article do you think have multiple choices for broadband? I sure don't...and I'm not paying the $140/mo that single choice costs.
  • Daniel Ladishew
    Google has shown that it is possible to provide a superior service to most major ISPs in the small regional context. The problem is that most small companies or startups don't have the capital Google has to bring that product to market. That being said, I would be very willing to pay more for a small locally based service with real people to talk to and better speeds and/or service, than get a product that has been averaged out to the lowest common denominator of profit/customer by a larger ISP.
  • IInuyasha74
    I don't think this author lives in the US. He seems to think that competition already exists. How many of the people reading this article do you think have multiple choices for broadband? I sure don't...and I'm not paying the $140/mo that single choice costs.

    Actually, I do live in the US. I live in Ohio. I know that competition isn't really occuring between ISPs right now, as I have written in my other FCC related articles. However, the FCC is trying to foster competition between them, so knocking players out of the game doesn't help achieve that.

    As for how many have multiple broadband services available, most of the nation has two options. Typically a local company, and then a large nation wide company like Comcast. Some areas only have one option, but it varies from town to town.
  • stevenrix
    Smaller ISPs do not have the financial backbone to compete with bigger ISPs, that is simple. Smaller ISPs have been bought out by larger ISPs or went out of business after the end of the modem and the beginning of the DSL era, that happened 15 years ago.

  • Vestin
    The assumption is that smaller ISPs need to be able to exaggerate what they deliver in order to compete.
    This kinda sounds like debating whether only those who need to should be allowed to wear push-up bras.