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Study: Strong net neutrality rules could cost you $84 a year or more in new fees

( <a href="">tomborowski</a> )

It's no secret Americans hate the idea of abandoning net neutrality. Part of the fear is that if Comcast or Cox were allowed to start charging content companies for faster, smoother service, then smaller start-ups might find themselves at a disadvantage, while the larger firms could pass the costs of those deals onto their customers.

But a new study suggests that strong controls on Internet providers might force Americans to pay more for their Internet, anyway.

Internet service providers would be subject to more than $15 billion a year in new fees if the Federal Communications Commission decides to start regulating them with Title II of the Communications Act — the same tool the agency uses to police telephone service, according to Hal Singer and Robert Litan, two economists who support less-aggressive net neutrality rules. And those charges, they say, would inevitably be passed along to you.

Regulating broadband under Title II would allow federal, state and local governments to collect the same fees from ISPs that they already levy on phone companies. Among these are a "universal service" fee that was established decades ago to help ensure everyone in the country had access to telephone service.

In a paper published by the Progressive Policy Institute, Singer and Litan argue that these and other charges stemming from various state and local rules could add $84 or more to a U.S. household's yearly Internet bill.

"Although the state and federal governments collect these fees from broadband providers," Singer and Litan write, "history shows — and economic models of competitive markets predict — that the fees are passed along to customers, just as they are now on telecommunication services. So consumers’ Internet bills will soon have all those random charges tacked on at the end, much like they see on their phone bills."

The study is the latest effort by opponents of strong net neutrality rules to describe the potential economic fallout of regulating ISPs under Title II. Last month, telecom lobbyists argued to the FCC that aggressive regulation would slow down the pace of industry investment in network upgrades, to the tune of $45 billion over the next five years.

Consumer advocates Monday called the arguments "absurd" and a "fatally flawed rush-job." Other services that are regulated under Title II, such as commercial Ethernet, have seen a boom in investment despite living under a stringent regulatory regime, according to the public interest group Free Press.

The FCC is not expected to make a decision on how to regulate Internet service providers this year. Even if the agency opts for aggressive regulation, that doesn't guarantee that states and localities will raise the fees they charge, added Free Press policy director Matt Wood.

"I was unaware of the Federal Communications Commission's role in setting state tax policy," Wood said Monday. "If states have telecom fees in place, is it the FCC's job … to change those fees at the state level?"

Levying more fees on broadband companies might not be a bad thing, said Michael Weinberg, vice president of the consumer group Public Knowledge, especially if the money gets used to expand broadband access in underserved areas.

"If it made sense 20, 30, 50 years ago to say everyone should be connected to phone network," said Weinberg, "going forward, it makes sense to say everyone should be connected to the Internet."