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Biden Launches Potential Broadband Regulatory Blitz

Bidensigns
President signs competition executive order as agency heads, and acting hears, look on (Image credit: C-SPAN)

In a sweeping executive order being signed Friday (July 9), the Biden Administration says it is taking on corporate consolidation that has driven up prices for various goods and services including internet, arguing that "inadequate competition holds back economic growth and innovation."

Biden, in preparation for signing the order, said consumers are hit by high prices due to a lack of competition for internet access. The President said he was a proud capitalist, but that without competition, capitalism is exploitation and means forcing consumers to accept a bad deal for things they can't go without.

Also Read: White House Paints Depressing Portrait of U.S. Broadband

Among those attending the signing ceremony were acting FCC Chairwomanr Jessica Rosenworcel and FTC chair Lina Khan.

“Our economy thrives on competition," said Rosenworcel in a statement following the signing. "It is the reason the United States is home to some of the most dynamic companies in the world. I welcome this effort by the President to enhance competition in the American economy and in the nation’s communications sector.”

“We must ensure that the merger guidelines reflect current economic realities and empirical learning and that they guide enforcers to review mergers with the skepticism the law demands," said Khan and acting Justice Antitrust Division head Richard Powers. "The current guidelines deserve a hard look to determine whether they are overly permissive. We plan soon to jointly launch a review of our merger guidelines with the goal of updating them to reflect a rigorous analytical approach consistent with applicable law.”

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The order includes urging the banning of early termination fees and mandating cost disclosures and encouraging the FCC and Federal Trade Commission to take a host of actions--the President cannot mandate action from those independent agencies. The White House is also encouraging the FCC to restore net neutrality rules.

With the appointment of a Big Tech critic as head of the Federal Trade Commission and broadband funding efforts that suggest broadband speeds are inadequate and prices are excessive and that that is part of the reason for the digital divide, the new Administration has been laying the groundwork for a crackdown.

Suggesting that his Administration would "supercharge" antitrust enforcement as did Franklin Roosevelt's administration in the 1930's, the President said the order represented a whole of government approach charging more than a dozen agencies with tackling "the most pressing competition problems," including with internet service.

"No more abusive actions by monopolies or bad mergers that lead to layoffs and high prices," the President said. And there was a warning for government agencies. "I expect the federal agencies, and they know this, to help restore competition."

Among the bullet points the White House summarized from the order was: "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."

Also Read: Biden Budget Says Broadband Is Too Expensive

The order "calls on" Justice and the FTC, which divvy up merger reviews--to vigorously enforce antitrust laws and encourages them to challenge "bad mergers" approved under prior administrations.

The order attempts to take on what it says are the four main issues that "limit competition, raise prices, and reduce choices for internet service--1) high termination fees; 2) lack of competition among broadband providers; 3) lack of price transparency;  4) "companies discriminatorily slowing down internet access."

It lays out the following game plan:

"Lack of competition among broadband providers: More than 200 million U.S. residents live in an area with only one or two reliable high-speed internet providers, leading to prices as much five times higher in these markets than in markets with more options. A related problem is landlords and internet service providers entering exclusivity deals or collusive arrangements that leave tenants with only one option. This impacts low-income and marginalized neighborhoods, because landlord-ISP arrangements can effectively block out broadband infrastructure expansion by new providers.

"In the Order, the President encourages the FCC to: Prevent ISPs from making deals with landlords that limit tenants’ choices.

"Lack of price transparency: Even where consumers have options, comparison shopping is hard. According to the Federal Communications Commission (FCC), actual prices paid for broadband services can be 40% higher than advertised. During the Obama-Biden Administration, the FCC began developing a “Broadband Nutrition Label”—a simple label that provides basic information about the internet service offered so people can compare options. The Trump Administration FCC abandoned those plans.

"In the Order, the President encourages the FCC to: Revive the 'Broadband Nutrition Label' and require providers to report prices and subscription rates to the FCC.

"High termination fees: If a consumer does find a better internet service deal, they may be unable to actually switch because of high early termination fees—on average nearly $200—charged by internet providers.

"In the Order, the President encourages the FCC to: Limit excessive early termination fees.

Companies discriminatorily slowing down internet access: Big providers can use their power to discriminatorily block or slow down online services. The Obama-Biden Administration’s FCC adopted “Net Neutrality” rules that required these companies to treat all internet services equally, but this was undone in 2017.

"In the Order, the President encourages the FCC to: Restore Net Neutrality rules undone by the prior administration."

For that to happen, the President will need to name a third Democratic commissioner to the FCC who agrees with that position, as do the two sitting Democratic commissioners currently in a 2-2 political tie with the Republicans commissioners neither of whom would be expected to vote to restore the rules.

There is a separate section on Big Tech that says the administration will provide greater scrutiny of mergers involving dominant internet platforms, including "the acquisition of nascent competitors, serial mergers, the accumulation of data, competition by “free” products, and the effect on user privacy."

Big Tech, rather than serving consumers, is consuming their competitors, the President said in preparation for signing the order. 

The President also wants new rules on surveillance and the accumulation of data by Big Tech and specific new rules from the FTC, which has traditionally been an enforcement agency rather than a rulemaking one, that bar "unfair methods of competition on internet marketplaces." The FTC is already empowered via its Sec. 5 authority to go after unfair competition practices generally.

"It is the policy of my Administration," the order reads, "to enforce the antitrust laws to meet the challenges posed by new industries and technologies, including the rise of the dominant Internet platforms, especially as they stem from serial mergers, the acquisition of nascent competitors, the aggregation of data, unfair competition in attention markets, the surveillance of users, and the presence of network effects."

Democrats in Congress have long been pushing for more muscular FTC oversight of Big Tech, but there are plenty of Republican Big Tech critics as well.

Big Tech critic and Republican FCC Commissioner Brendan Carr had big issues with the order, though he applauded targeting tech companies.

“While I welcome the Executive Order’s goal of addressing the concentration of corporate power in Silicon Valley," he said in a statement, "the Order’s FCC provisions represent a big gift to Big Tech.

“It embraces a backwards-looking, Obama-era approach to Internet regulation—one that would give the lobbyists at Google, Facebook, and Amazon the regulatory protections and price controls they’ve long sought while doing nothing to address Silicon Valley’s threats to free speech and an open Internet."

Carr voted to repeal the "Obama-era approach" net neutrality rules against blocking, throttling and anti-competitive paid prioritization.