Consumer groups: FTC needs to watch telecom

The U.S. Federal Trade Commission (FTC) needs to step up its regulation of the telecommunications and broadband industries and reverse its current opposition to net neutrality rules, two consumer groups said Wednesday.

Representatives of the Consumers Union and the Consumer Federation of America criticized the FTC for a lack of focus on telecom and broadband issues while testifying before the U.S. Senate’s Interstate Commerce, Trade, and Tourism Subcommittee.

The FTC has “failed consumers badly” by insisting there is strong competition in the broadband space and therefore not in need of regulation, said Mark Cooper, director of the Consumer Federation of America. The U.S. has fallen from the world leader in Internet service a decade ago to lagging behind several countries in speed and price, he said.

“The cozy [broadband] duopoly in America dribbles out bandwidth at 10 to 20 times what other people pay in the world,” Cooper said. “Consumers pay too much for too little in this country.”

Cooper and Senator Byron Dorgan, a North Dakota Democrat and subcommittee chairman, both complained about an FTC report in June that questioned the need for net neutrality rules that would prohibit broadband providers from blocking or slowing Web content from competitors.

Dorgan noted that telecom providers had Internet content nondiscrimination rules in place until the U.S. Federal Communications Commission and the Supreme Court removed them in 2005. Without such rules, large broadband providers could block innovative new companies from reaching customers if they require e-commerce vendors to pay extra fees, he said.

“We won’t know what we miss, we won’t know what we squelch,” said Dorgan, who has sponsored a net neutrality bill. “What we built, we built with nondiscrimination regulations.”

But Deborah Platt Majoras, the FTC’s chairwoman, said the Internet is changing so fast that new regulations would have unintended consequences and could stop broadband providers from prioritizing traffic that consumers demand be faster, such as video downloads.

The FTC sees little evidence of Web content discrimination occurring, she said.

“No way is Verizon or any of these other companies powerful enough to disrupt the amount of consumer-generated content that’s out there,” Majoras said. “If they suddenly put a stop to that, there will be a hue and cry across this nation like no tomorrow, and they will lose a lot of customers.”

Majoras called on Congress to wait with net-neutrality regulations until there’s a problem with blocked content.

Dorgan disagreed. “I think both the lack of informed public policy and the lack of effective competition means we have one-twentieth the speed at twice the price of Internet service that many of our foreign competitors have,” he said. “My hope is that you’ll agree with me that rather than wait for bad things to happen, we might want to preserve the same nondiscrimination rules that we’ve always had.”

In addition to the net-neutrality debate, Chris Murray, senior counsel at Consumers Union, called on the FTC to keep a close eye on advertising for bundled telecom services, such as voice, data, and television service together. In some cases, advertising for bundled services has not reflected the real prices, Murray said.

In addition, broadband providers have cut off customers for using too much bandwidth without defining a limit on bandwidth. “If that’s not an unfair and deceptive practice, I don’t know what is,” Murray said.