On the heels of Obama's surprise support of Title II-based net neutrality rules last month, we noted that the broadband industry's anti-Title II talking points (primarily that it will kill network investment and sector innovation) not only were just plain wrong, they were getting more than a little stale. That's a problem for the industry given the increasingly bi-partisan support of real net neutrality rules and the groundswell of SOPA-esque activism in support of Title II. As such, the industry's vast think tank apparatus quickly got to work on new talking points to combat net neutrality rules that actually might do something.
The first product of this renewed effort is this study by the AT&T-funded Progressive Policy Institute. The study's central thesis is that if Title II net neutrality regulations are passed, the nation will be awash in $15 billion in various new Federal and State taxes and fees:
"We have calculated that the average annual increase in state and local fees levied on U.S. wireline and wireless broadband subscribers will be $67 and $72, respectively. And the annual increase in federal fees per household will be roughly $17. When you add it all up, reclassification could add a whopping $15 billion in new user fees on top of the planned $1.5 billion extra to fund the E-Rate program. The higher fees would come on top of the adverse impact on consumers of less investment and slower innovation that would result from reclassification."
Like a well-oiled machine, the cable, phone and broadband industry got to work pushing its study across all the major news outlets over the last week. AT&T CEO Randall Stephenson quickly took to NBC (skip to 1:05) to claim the average household broadband bill would increase by $19 a month under Title II (note amusingly that he got the study numbers his own company helped pay for wrong). The cable industry also not-so-subtly took to using this graphic in ads proclaiming Title II will result in vicious price hikes for everyone:
You'll probably be surprised to learn that the broadband industry had to resort to conflation, data cherry picking and a parade of worst-case scenarios to get these numbers. On the state level, Internet access has long received a Congressional exemption that's set to expire December 11 -- an issue totally unrelated to the Title II push. Congress can make sure the exemption is extended, keeping state sales taxes far away from broadband access. If they don't, again, it has nothing to do with Title II. Realize this, and nearly all of the PPI's estimate of $15 billion in new taxes as a direct result of Title II goes up in smoke right out of the gate.
In an e-mail conversation about the study I had with Free Press Research Director Derek Turner, Turner argues that PPI is also predicting a very worst-case scenario on Federal taxation that's simply not going to happen:
"The FCC could decide to forbear from requiring federal USF contributions for one. And whether or not the FCC does that, adding broadband into the USF mix wouldn't impact the overall size of the fund. That is, if broadband revenues were assessed but the fund size stayed constant, consumers would pay on broadband but, as a result, they'd pay less on their other services like wireless and wired voice. PPI asserts that consumers would pay more on aggregate than they do now (i.e. by adding broadband to the mix, their numbers imply that the burden for the fund will shift towards consumers from businesses), but the report out today offers no explanation of why the contribution percentage would tilt that way."
Of course the pretense that the broadband industry cares about how much your bills increase is also laughable, given the industry spends a large part of each day trying to figure out creative ways to pad your bill. This includes rate hikes, usage caps and a wide variety of fees imposed below the line to jack up the advertised rate post sale. These fees range from entirely bogus, non-government mandated "regulatory recovery fees" (pure-profit fees imposed to offset ambiguous government regulation despite a decade of deregulation) to new "broadcast TV fees" that simply bury a portion of programming costs below the line. They're all a variety of false advertising, but they highlight how the biggest increases to below-the-line charges and fees are coming from the industry itself.
The reality the broadband industry doesn't want to acknowledge is that very little changes for it under Title II if carriers aren't engaged in bad behavior. The broadband industry is fighting Title II solely to protect potential revenues generated from abusing uncompetitive markets. That this self-serving behavior is being dressed up as concern about the size of your broadband bill is the industry's best comedic work to date. Perhaps this slightly edited (by Mike) version of the NCTA ad is a bit more accurate:
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