Industry Trend Analysis - Weakening Net Neutrality Helps Operators, Not Consumers - JUNE 2017

BMI View: The net neutrality rules that were implemented during the Obama Administration did not come out of a vacuum, but instead against the real risk of operators pursuing unfair practices, and little competitive threat where users had no other choices. This is why we think that the removal of these rules will only benefit operators, and not consumers.

In line with our view, the new Republican-led FCC is pushing forward with its plan to roll back the Open Internet, or net neutrality, rules implemented under the last administration (see ' Privacy The First Step In Greater Regulatory Pushback ' , March 30 2017). The legislation was first implemented not through ideology but because of the structure of the US telecoms market; their weakening or removal will be pro-companies as opposed to pro-consumers.

It is important to note that the rules, which prioritised three major issues, known as Bright Line Rules, of no blocking, throttling and paid prioritisation, did not come out of a vacuum, but were instead responses to market conditions (see ' Lobbying And Competition Behind Net Neutrality Rules ' , February 27 2015). The 2007 Comcast case, where the cable players blocked certain types of traffic, such as peer-to-peer, led to the introduction of the first Open Internet Rules in 2010, which did not include mobile broadband. Those rules were rejected by the judiciary in 2014, which said the FCC did not have the authority under the classification of telecoms operators under Title I, as information services. This led the FCC to reclassify operators as common carriers under Title II, giving it the authority to impose the Open Internet Rules it re-introduced, now covering mobile broadband, in 2015. It is that reclassification the latest FCC proposal is looking to reverse.

No Impact On Investment
CAPEX (USDbn), 2013-2016
Source: BMI, Operators, Free Press

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