CenturyLink, Frontier, TDS and others remain divided on new net neutrality rules

CenturyLink (NYSE: CTL), Frontier Communications and TDS, three telcos that have a long heritage of serving Tier 2 and Tier 3 markets, are taking diverging paths on what they think about the FCC's passing of new rules to reclassify broadband service under Title II of the 1934 Communications Act and Section 706 of the 1996 Telecommunications Act.

Serving as the third largest ILEC that serves a mix of both large metros down to rural markets, CenturyLink has taken a similar stance as its larger ILEC brothers AT&T (NYSE: T) and Verizon (NYSE: VZ), saying that the new order could have achieved its goals without a new source of regulation.  

"CenturyLink is very concerned about the impact of regulating the Internet as a utility under a 1930s regulatory regime that has no place in the 21st century economy," said Steve Davis, EVP for public policy and government relations for CenturyLink, in a prepared statement. "We agree with the basic principles of an open Internet and believe the FCC could have prohibited the blocking or degrading of lawful content—something CenturyLink has never done—without stifling innovation."

Davis added that they will "work with Congress to pass net neutrality legislation that protects consumers and doesn't smother the growth engine of our economy with obsolete regulations."

Being a hybrid ILEC and cable operator, TDS Telecom takes an interesting position with the net neutrality debate. Among its chief concern is that the regulator won't impose new fees on existing broadband providers as part of the new order.

"The FCC has stated unequivocally they will not impose new fees on existing broadband service providers as part of this Order," said Drew Petersen, vice president of external affairs and corporate communications at TDS Telecom, in a statement. "On behalf of our customers, TDS hopes they keep their word."

At the same time, Petersen cited concern that the regulations could also raise pole attachment rates for cable operators. TDS has been enhancing its presence in the cable market by purchasing a number of regional providers including Bend and Baja Broadband.

"In addition, we hope pole attachment rates for our cable operations are not negatively impacted by this series of decisions by the FCC," Petersen said. "By imposing a Title II regulatory classification regime on cable operators, the pole attachment rate we currently pay could double. Yes, double the cost to provide the same service tomorrow that we offer today—to deliver high-speed broadband Internet services."

Taking a divergent point from the crowd is Frontier Communications.

During a conference call announcing its $10.5 billion acquisition of Verizon's assets in three states, Frontier CEO Maggie Wilderotter said she's comfortable with "Title 2" regulation since the company already operates under those rules in the markets it serves today.

"From what we understand what Title II regulation is the banning paid prioritization and banning blocking and throttling of lawful content and services," Wilderotter said. "What it isn't is there's no rate regulation that's being offered up here in the proposal for Title II, no tariffing and no last mile unbundling so we're not forced to open up our networks to competitors."

Meanwhile, NTCA, an advocacy group for rural telcos, said that the new rules will bring some consistency to its member telcos.

"We have consistently supported a specific focus on regulating the underlying transmission of data on all networks—last-mile, middle mile, whatever—pursuant to Title II," wrote Shirley Bloomfield, CEO of NTCA, in a blog post. "This is an approach that moves away from 'regulatory silos,' and it would stop the self-classification and arbitrage of services that have tied the communications industry in knots for far too long," Bloomfield wrote. "We still support that approach as our recent filings show. This is how small carriers like those in NTCA's membership have operated for years, and Title II regulation specifically of underlying transmission has actually been helpful in enabling, rather than hindering, investment by providing regulatory certainty."

A group of municipal broadband providers, which also won a victory for municipal broadband when the FCC preempted state laws restricting the expansion of networks, have also spoken out against Title II reclassification.

Prior to the vote on Thursday, 43 municipal providers said in a letter to the FCC that they should not be lumped in with the rest of the rabble because they have no "incentive to harm the openness of the Internet." 

"As smaller ISPs, we do not have an incentive to harm the openness of the Internet," the group wrote in a letter to the FCC. "All of the undersigned face competition from one or more wireline ISPs, and we compete hard to attract and serve customers who would depart to our competitors if we engage in any business practices that interfere with their Internet experience."

For more:
- see CenturyLink's statement
- see TDS' statement
- NTCA has this blog post

Special report: Complete coverage: Net neutrality for wireless and wireline carriers

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