As Texas starts to dry out from the damage of Hurricane Harvey, another perfect storm is forming. In a strange twist of timing, Big Telecom may walk away from the storm with an unfair advantage that could hurt smaller, local providers in Houston—and drive up costs for consumers in the process.
Across the country, Big Telecom has gradually been retiring old copper lines—used to delivery home phone as well as broadband—and replacing them with modern infrastructure, like fiber optic cables. When a natural disaster like Harvey wipes out the old wires, it's a good excuse for the provider to do a widespread upgrade. But because the FCC is currently rolling back regulations that require large ISPs—usually called the incumbent provider—to give access to infrastructure to small ISPs, these upgrades could leave smaller providers in the lurch.
"Businesses some people rely on for their phone and internet service are going to go away," said Harold Feld, the senior vice president at digital-rights advocacy group Public Knowledge. "It also means that the number of competitors in the market is going to decrease and therefore the prices will go up."
Existing regulations require major ISPs to share basic access infrastructure with smaller competitors, known as competitive local exchange carriers or CLECs. But earlier this year, the FCC began the process of rolling those rules back. It proposed deregulating this specific area back in April. If the deregulation proceeds undeterred, Big Telecom could have a free pass to build new networks in Texas without having to share with any of the local competitors.
"Their networks are really interconnected," said Angie Kronenberg, the chief advocate and general counsel for Incompas, a trade association for CLECs, referring to the relationship between CLECs and incumbent providers in Houston. Incompas is suing the FCC over the move to deregulate the 2015 decision.
Kronenberg told me small, local ISPs have their own infrastructure in some areas, but lease from incumbents in others. In Houston and the surrounding area, there are multiple CLECs. They depend on the access to the Big Telecom system, and not only provide choice for consumers but also help keep costs affordable by providing competition. If the FCC rolls back the 2015 rule, and Big Telecom starts replacing the system wiped out in the storm, these businesses will be SOL.
"This is the part that's too early to tell: how much will incumbents repair versus how much they will replace?" Kronenberg said, adding that if they choose to replace and the FCC continues its deregulation, it will very likely have an impact on price.
"There will be no price controls," Kronenberg said.
Right now, both incumbents and local competitors are just focused on getting their customers back online in the short term. A spokesperson for AT&T told me some wireline infrastructure is still out of service, and it's working with emergency management to get everyone back up and running. The spokesperson wouldn't comment on long-term plans to repair or upgrade the system.
In the months to come, Houston will serve as an important case study in the costs of FCC deregulation colliding with a literal hurricane.
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