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Draft bill regulating high-speed Internet would stymie competition

November 8, 2005

Draft Bill Regulating High-Speed Internet Would Stymie Competition;
Prevent Consumers from Freely Accessing Web Content

Groups applaud municipal broadband protections; but bill heads in wrong direction

(WASHINGTON, D.C.) – A new House bill to “modernize” regulation of high-speed Internet would help ensure that cities could offer residents community Internet services, but does nothing to stop major cable and phone companies from controlling high-speed Internet markets – even allowing them to prevent their own customers from freely accessing content on the Web, consumer groups said today.
“Consumers have suffered for years under laws that allow cable companies to continually hike prices and prevent competition. Unfortunately, this bill will effectively do the same for Internet services,” said Gene Kimmelman, senior director of public policy for Consumers Union.
Kimmelman testified today before the House Energy and Commerce Subcommittee on behalf of CU and Consumer Federation of America on a draft of broadband Internet legislation. The groups applauded the panel for prohibiting federal preemption of cities and towns interested in offering their residents affordable municipal broadband services. But they said the bill overall “heads in exactly the wrong direction.”
Most notably, for the high speed networks that will become the dominant means of communications in the 21st Century, the bill effectively repeals 70 years of protections under the Communications Act. It relieves major broadband providers of the obligation to provide connections at just and reasonable rates, terms and conditions, and hands over unprecedented power to broadband providers to prevent their own customers from freely accessing content on the Internet and to use applications and devices of their choice.
“This bill effectively lets a broadband company tell its customers what they can access on the Internet via their lines, or what devices they can use, such as Internet phones,” said Mark Cooper, research director for CFA. “It’s like letting the telephone company tell someone they can’t attach a competitor’s fax machine to their phone line because it uses too much capacity. The telephone and cable companies can get away with untold anti-competitive and anti-consumer mischief under this type of standard.”
“This will hamper competition, stifle innovation, and do little to promote affordable access by all consumers to advanced Internet services,” Kimmelman added.
The bill also:
• Preempts cities and towns from requiring new video entrants to provide services to all consumers in a franchise area.
• Federalizes all consumer protection standards and enforcement; narrowly limits the types of standards that FCC must set, leaving out critical existing consumer protections; preempts states from setting their own standards; and prevents states from taking final enforcement action for violation of even minimal federal standards.
• Provides minimal federal remedies and cumbersome complaint processes for consumers and competitors mistreated by the major broadband providers, requiring the injured party to initiate a complaint with FCC, bear the burden of proof, and suffer through a lengthy complaint process, while service is being denied.
To read the complete testimony, go to www.HearUsNow.org
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Susan Herold, CU, 202-462-6262;

Mark Cooper, CFA, 301-384-2204