As a technology director for a public K-12 school, I'm very concerned about what I'm reading in the headline. But the "article" is an extremely biased report, citing just as equally biased an article, and neither article really gives me a clue as to what's going on here.
So, let's start at the source: Here is the actual FCC draft order specific to this change. Now, in the course of working on and completing E-Rate filings with the USAC to receive reimbursement for internet and network services for our school district, I've read a few 60-70 page FCC reports before. They're not fun, but they're necessary. That being said, I'm about 20 pages in, and already I'm disturbed. Here's why:
FCC reports that I've read in the past are boring, dry reads, but at least they're factual and unbiased. Not so with this one. Three sentences in, and we get this: "The FCC has historically subjected the provision of business data services by incumbent local exchange carriers (LECs) to price regulations." And the spin continues..."eases the regulatory burdens"; "spur entry, innovation and competition in the vibrant business data services market"; "competition is robust and vigorous in the markets." And this is still just the first page. The draft order is littered with biased political spin, something that has not been present in my reading of previous FCC draft orders. Because of this, I can't even depend on a government document to give me an unbiased report of the rationale behind the decision, nor can I depend on it to help me determine what the consequences of the decision will be. So, I'll have to create my own... here goes.
Local Exchange Carrier (LEC) price regulations have been there historically specifically to protect subscribers from LECs that had monopoly or near-monopoly controls over their service regions. Most regions throughout the United States historically were not served by competitive broadband providers. Recently, this has begun to change, where some communities now have competitive service providers come in, giving subscribers a choice. The FCC began to look into this issue back in 2012, before Trump. According to the report, "In December 2012, the Commission released the Data Collection Order FNPRM, to collect data, analyze how competition, “whether actual or potential, affects prices, controlling for all other factors that affect prices,” and “determine what barriers inhibit investment and delay competition, including regulatory barriers." By not controlling pricing, the FCC claims in its report that LECs will no longer be limited entry into a potential market, where capped rates would not allow for a sufficient recovery of the investment necessary to build into a new market area.
But, here's the flaw in their reasoning: trenching fiber costs a lot of money. A lot. If service provider A already has fiber, service provider B is not going to install fiber if it does not believe that it can earn back their investment in a reasonable amount of time. Even if prices are artificially inflated by provider A, just because they can, if provider B tries to compete and trenches their own fiber network, both A and B know that A can lower its rates to a competitive level to drive out provider B. So, B has no incentive to trench, leaving A with the monopoly.
The easiest solution: make internet a utility. It's silly to think that it's a smart idea to run multiple fiber lines to a building. (I should know; our school has two of them, and both are dark.) It would be just as silly to have multiple electric taps, or multiple water pipes. But, that's not happening anytime in the near future.
And as far as what affect this will have on the cost of internet access for schools? Not a whole lot. Because, with E-Rate, everyone is reimbursing schools for the cost increase. (The reimbursement percentages vary, but our district is at 70% reimbursement rate. So, if rates increase 25%, we only pay 7.5%, and taxpayers pay the rest.)