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 The network you are connected to, however, might be overloaded from too many users, or use outdated hardware, and as a result you might only get 10 Mbps at best.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.