Opinion

Sprint says 'light touch' Title II won't kill ISPs

Sprint breaks from ISP pack, says reclassification under Title II won't kill investment

It looks like at least one major Internet service provider buys into the notion that reclassifying Internet service providers as utilities won't be the end of the world.

In a letter Friday to Federal Communications Commission Chairman Tom Wheeler, Sprint's chief technologist, Stephen Bye, said that his company did not believe that "a light touch application of Title II, including appropriate forbearance, would harm the continued investment in, and deployment of, mobile broadband services."

It's the first time that any major phone or cable TV company has expressed any kind of support for bringing broadband ISPs under Title II in order to preserve net neutrality. But Bye's letter also reflects the fact that Sprint is an underdog in the mobile market, and its concerns about net neutrality rules are different from those of the dominant mobile carriers (Verizon and AT&T).

In particular, Sprint is less worried about Title II scaring away investors than it is about rules that prevent it from offering innovative data packages that attract new customers. Some of the most zealous net neutrality advocates do, in fact, want to forbid such things as "zero rating," or the practice of exempting some services from data caps.

The proposed neutrality rule that Wheeler formally put out for comment last year wouldn't reclassify broadband as a "telecommunications service" subject to Title II of the federal Communications Act. Instead, it would use Section 706 of the act to bar ISPs from striking "commercially unreasonable" deals with websites, apps and services.

The commission held out the possibility of invoking Title II, however, if it found that Section 706 didn't provide the authority needed to stop ISPs from using their control over the "last mile" to interfere with their customers' choices. That now seems to be where the commission is heading, given Wheeler's comments at the Consumer Electronics Show in Las Vegas last week.

Title II generally bars telecommunications services from discriminating unreasonably among their customers, but it also imposes a huge number of specific mandates and restrictions, including price controls, privacy protections and equipment-sharing mandates. Wheeler has said that the FCC could exempt broadband from most of those requirements if it reclassified ISPs. Critics, however, argue that the commission would have trouble waiving those rules after declaring that the lack of competition in broadband justified regulating ISPs as utilities.

Bye's letter veers sharply from the line taken by other major ISPs, which have argued that bringing broadband access under Title II would dry up investment in networks, exacerbating congestion and stunting innovation. Those arguments ignore the history of the mobile phone market, Bye wrote, echoing what Wheeler said in Las Vegas.

"When first launched, the mobile market was a licensed duopoly," Bye wrote, referring to the FCC's initial practice of awarding spectrum to only two mobile phone companies per market. "This system was a failure, resulting in slow deployment, high prices and little innovation. "In 1993, Congress revised the Telecommunications Act to allow new carriers, including Sprint, to enter the market. This competition resulted in tremendous investment in the wireless industry, broader deployment, greater innovation, and falling prices. 

"It is absolutely true that this explosion of growth occurred under a light touch regulatory regime. Some net neutrality debaters appear to have forgotten, however, that this light touch regulatory regime emanated from Title II common carriage regulation," Bye wrote.

In other words, Bye is arguing that using Title II won't necessarily change the regulatory state of play for ISPs, if the rules the FCC adopts are essentially the same as the ones the commission adopted in 2010. Those rules were thrown out by a federal appeals court a year ago, which held that the commission had exceeded its authority under Section 706.

Julie Samuels of Engine, an advocacy group for tech start-ups, said Sprint's letter was a sign of the growing sentiment in favor of Title II-based neutrality rules.

"Every day it becomes more clear that some kind of real, enforceable net neutrality is going to happen and it's most likely going to include Title II authority," Samuels said in an e-mail. Noting the support among consumers for strong neutrality rules, she added, "I think Sprint is on to something here, and I think we'll see more big companies jump on this so-called bandwagon."

The details matter, though. Wheeler has said repeatedly that he's simply trying to restore the commission's 2010 rules, which prohibited ISPs from blocking or degrading the performance of legal sites and services, with one important exception. The 2010 rules exempted wireless data networks from the rule against throttling sites and services, with the exception of those that competed directly with the wireless company's own services. Wheeler isn't inclined to provide such a wide carve-out.

To Bye, it's crucial that the FCC apply less stringent rules to wireless broadband networks than it applies to wired ones.

"Sprint has always believed that competition, not regulation, will provide consumers the best mobile services at the lowest price," Bye wrote. "We urge the FCC and Congress not to be distracted by debates over Title II but to focus on competition by ensuring that any net neutrality regulations adopted recognize the unique network management challenges faced by mobile carriers and the need to allow mobile carriers the flexibility to design products and services to differentiate ourselves in the market."

Which brings us back to zero rating, limited data packages and the like. Sprint, T-Mobile and other mobile underdogs are trying to grab customers by offering something different from the standard mobile data plans, which give consumers buckets of gigabytes for a monthly fee. Virgin Mobile (a brand on Sprint's mobile network), for example, offers low-cost plans that allow access just to Facebook, Twitter, Pinterest or Instagram. And T-Mobile exempts Pandora, Spotify, Rdio and a long list of other online music services from its data caps.

Those aren't neutral offerings. The Virgin Mobile plans would violate a strict no-blocking rule, and T-Mobile's exemption for streaming music discriminates in favor of one type of content. Yet, because the blocking or discrimination is imposed at the customer's discretion, they seem more pro-competitive than anti-neutrality.

Wheeler himself emphasized the need for flexibility in the neutrality rules when he spoke at the Consumer Electronics Show. It's conceivable that AT&T could join Sprint in backing Title II-based rules that allowed prioritization directed by users, which AT&T specifically advocated last year.

The major ISPs' rhetoric to date against Title II doesn't leave much room for compromise. But then, Sprint has staked out lonely positions before, some -- and only some -- of which proved to be trendsetting. 

Follow Healey's intermittent Twitter feed: @jcahealey

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