Teletruth On The FCC

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Teletruth On The FCC

I received this today.


Teletruth ALERT, Wednesday, August 17th, 2005

FCC to Kill Thousands of ISPs with 8 Year-Old Data!
Garbage-In, Kill-Competitors-Out.

The FCC, on August 5th 2005, put out a press release "FCC Eliminates Mandated Sharing Requirement on Incumbents' Wireline Broadband Internet Access Services". (link to release below). What this means is that the local Bell phone companies no longer have to resell certain parts of their networks to Internet Service Providers (ISPs) - It is the "Re-regulation" of the Internet.

How many ISPs will be put out of business? How does this help innovation in the US when you kill off thousands of innovative companies?

But that's only part of the story.

In 2004 Teletruth, with the National Internet Alliance (NIA), filed a "Data Quality Act" as well as a "Regulatory Flexibility Act" complaint in conjunction with the FCC's competition (unbundling) proceedings.  Teletruth found that the FCC's statistics pertaining to ISPs was created in 1997!
-That's 8 years old!  That's before the Bell companies were providing DSL service.

This next paragraph is the FCC's definition of the ISP market from the Triennial Review dated August 2004  - Notice that it is using data that was created in 1997!

"Internet Service Providers. The SBA has developed a small business size standard for Internet Service Providers. This category comprises establishments "primarily engaged in providing direct access through telecommunications networks to computer-held information compiled or published by others. Under the SBA size standard, such a business is small if it has average annual receipts of $21 million or less. According to Census Bureau data for 1997, there were 2,751 firms in this category that operated for the entire year. Of these, 2,659 firms had annual receipts of under $10 million, and an additional 67 firms had receipts of between $10 million and $24,999,999. Thus, under this size standard, the great majority of firms can be considered small entities."

We objected to this ancient data being used because critical decisions about the future of the Internet Service Providers, much less America's broadband deployment and economy are at stake.

Would you or your company use 1997 data to determine a current business decision? (stop laughing.)

However, the FCC responded, claiming that 1997 data is the latest they can use in 2005!

"We also reject TeleTruth's argument that the Commission violates the RFA by relying on outdated 1997 Census Bureau data to identify the number of ISPs potentially affected by our final rules in the IRFA. The 1997 Census Bureau data were and still are the most current data available. According to TeleTruth, data compiled by both the SBA and Boardwatch/ISP-Planet, an ISP-focused periodical, indicate that the number of ISPs is close to 7,000, rather than the 2,751 ISPs identified by the IRFA. Although TeleTruth cites to higher numbers, the Census Bureau has not released the more recent (2002) results for telecommunications providers or for ISPs. Thus, the IRFA in this proceeding and this FRFA appropriately rely on the most up-to-date 1997 Census Bureau data and therefore comply with the RFA."

NOTE: The "RFA" refers to a required Regulatory Flexibility Act, which is an act designed to make sure that small businesses have direct input into the FCC's decision making process and that the FCC's decisions do not unduly harm them.  The "IRFA" and "FRFA" are "Initial Regulatory Flexibility Act Analysis" and "Final Regulatory Flexibility Analysis". These analyses are supposed examine the impact their decisions will have on small businesses.

What this says, in English, is that the FCC's entire data being used in the current broadband and competition proceedings was based on 1997 Census Data.

And when we pointed out to the FCC that more research, done by other sources, including the Small Business Administration's (SBA) Office Of Advocacy, had updated data, the FCC rejected this information.

"Thus, in this case, the SBA has relied on a size standard based on the number of employees working for an enterprise, rather than relying on its own revenue-based standard for firms. We do not believe that case-by-base departure from the SBA revenue-based approach to categorizing ISPs would be appropriate."

To make it worse, the FCC states that its rulings only indirectly impact ISPs.

"First, we reject TeleTruth's contention that the Commission fails to assess the impact of its unbundling rules on small Internet Service Providers (ISPs), and that this failure violates the RFA. Although we understand that our rules will have an economic impact in many sectors of the economy, including the ISP market, the RFA only requires the Commission to consider the impact on entities directly subject to our rules. The RFA is not applicable to ISPs because, as we previously noted, ISPs are only indirectly affected by our unbundling actions."

What garbage, to use a technical term.

The FCC has taken it upon itself to destroy small competitors. Virtually every broadband ruling has been a nail in the coffin of the ISPs, the small innovative companies that brought America to the Internet, not the phone companies.

The FCC claims it doesn't regulate ISPs, but in fact, every action on broadband has a direct impact on the ISPs. For example, the FCC does regulate broadband. It controls the regulation on DSL, as it has been deemed an  "interstate" product. The FCC has also put most  competitive broadband companies (D-LECs) out of business, the companies that the ISPs worked with to secure competitive broadband services.

In this decision, it is clear that the FCC has now pushed the ISPs off of the public switched networks, networks that were funded by customers through phone rates.

And worse, it is doing it with stone age data.  The FCC now says it's OK to use 8-year-old data for decisions in 2005 that will harm thousands of companies, not to mention millions of customers. - How many companies have already been put out of business because of 'reregulation' of the public switched networks?

No wonder the FCC's lack of understanding helped in creating the Telecom and Internet crash in 2000. They were using data from before the Telecommunication Act of 1996 and the Internet was established.

And this FCC decision doesn't simply impact the ISPs. Every dial up customer now has to stop using their own current ISP to switch to either a Bell company or cable company if they want a faster connection. -This is not competition. This is creating a duopoly through bad data.

Next Step:

Everyone, not simply Teletruth, should be outraged and ask the Congressional Small Business Committees and the Small Business Administration Office of Advocacy to stop the FCC from the wholesale destruction of an entire industry --- with 8 year old data!

For more info contact:

Bruce Kushnick, Teletruth, Tom Allibone, Teletruth, 1-800-FYI-AUDIT

Permanent link to this document

*      FCC's ISP Announcement  (doc.)
*      The FCC Response to Teletruth/NIA Complaint
*      The FCC's Original Unbundling Order  (doc.)
*      Teletruth's original filing
*      Other Materials about the Regulatory Flexibility Act and the Data
Quality Act.

*      More Garbage Pail Statistics from the FCC on Broadband
*      National Internet Alliance
*      Washington Bureau for ISP Advocacy, (another interested ISP group).

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