FCC Extends, Expands Small ISP Enhanced Transparency Waiver

Smaller ISPs will continue to get a break from increased reporting requirements related to the FCC's network neutrality rules.

The FCC has adopted an item that extends the Open Internet order's enhanced transparency rules waiver to smaller operators by five years and increases the eligibility for that waiver from ISPs with 100,000 subs or fewer to those with 250,000 or fewer.

The item frees smaller providers' resources that can be used to operate, improve and build out broadband, the Consumer and Governmental Affairs Bureau said, so advances the goal of broadband deployment.

The vote was 2-1 along party lines.

The American Cable Association had pushed hard for extending the waiver and expanding eligibility, arguing that the additional compliance costs of enhanced reporting was a particular, disproportionate, hardship on smaller systems, so the vote was a big victory for that group.

The enhanced reporting requirements for all ISPs kicked in Jan. 17 after the smaller system waiver was allowed to expire in December, but the FCC under chairman Ajit Pai had signaled the commission would not take any action in the gap between that trigger and the commission's planned move to extend and expand the waiver.

Pai said they were unnecessary, onerous and burdensome requirements that impose unnecessary costs. He said he had offered a compromise that was turned down by Democratic commissioner Mignon Clyburn.

He said ISPs should spend limited capital building out broadband, not "hiring lawyers and accountants to fill out unnecessary paperwork demanded by Washington, D.C.

Clyburn was not happy with the bump-up of the trigger to 250,000 subs and strongly dissented from the item.

She has supported extending the exemption but not at the increased 250,000 level. She said she had tried to compromise on the item but said she "could not compromise on having consumers clearly know the price they pay for service, what below-the-line fees are charged, and what data allowances apply to their broadband service."

"In an ongoing quest to dismantle basic consumer protections for broadband services, the majority has decided to exempt billion dollar public companies from being transparent with consumers," she said at the meeting.

"This represents yet another in a series of steps being taken to jettison pro-consumer initiatives, and we should not stand silent as consumer protections 'go gentle into that good night.'"

She pointed out that the item excludes smaller subsidiaries of larger holding companies.

She also said the change to the expanded 250,000-sub trigger was never explained.

That figure does, however, square with the figure in compromise legislation extending and expanding the waiver that has already passed the House.

Two of the FCC's members had already voted to extend the waiver and up the trigger, but that came on circulation, rather than at a public meeting. Clyburn did not vote the item, and with only three members, the item could not be adopted until it was voted on at a public meeting by all three.

Commissioner Michael O'Rielly called it a sensible and justifiable exemption and called the 250,000-sub trigger reasonable, though smaller than he would have liked.

He pointed out that legislation with that trigger had passed by voice vote in the House, which means there was nary a discouraging word. He admitted that House passage does not make law but said it does signal 250,000 was a reasonable number. He called it far from giving big companies a new exemption.

He said that smaller ISPs rightfully object to heavy-handed reporting requirements.

"ACA applauds the FCC for reinstating, extending, and expanding the small Internet service provider (ISP) exemption from the open internet enhanced transparency requirements," said ACA president Matt Polka. "The FCC's action was clearly warranted. As ACA and others demonstrated – and as a bipartisan group of Members of Congress found – application of these requirements to small ISPs would impose unreasonable costs on them while providing little, if any, benefit for end users and edge providers. ACA thanks Chairman Pai and Commissioner O'Rielly for acting so swiftly to remove the uncertainty small ISPs have lived under for the past two months. ACA also thanks Commissioner Clyburn, who understood the burdens the enhanced requirements imposed on small ISPs and who worked diligently since last fall to try to fashion a consensus solution."

"[w]e are pleased the commission adopted an order exempting small companies from enhanced transparency reporting requirements which will allow providers to channel crucial resources to maintaining and building rural broadband networks, and serving more customers," said US Telecom.

Sen. Ed Markey (D-Mass.) opposed expanding the trigger to 250,000 subs, saying it would result in some 9 million subs not getting access to important information.

“Small businesses, students, entrepreneurs, and anyone else who relies on the internet should have access to the most basic and fundamental information about the broadband service for which they pay,” said Markey. “But by granting this carve out for the broadband industry, the FCC has made pricing and performance information less accessible to small businesses and consumers. Consumers deserve truth in pricing information. Instead of allowing ISPs to hide pricing information, the FCC should promote transparency so subscribers have all the background they need to make educated decisions about their broadband service.”

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.