Shentel COO, Calling ISP Service a Utility, May Give Net Neutrality Advocates a Talking Point

Spokespeople for the two said that they weren't saying they favor Title II, only that fast web is like a utility as a service, not as a regulated product. The context was a C-SPAN interview, put online Friday, on difficulties of smaller cable ISPs providing video service, too.

"Consumer voice service has largely gone the way of cellular, or Voice over IP these days, so that’s been a declining category," said Chief Operating Officer David Heimbach of Shentel, with some 70,000 video customers in three states. "And video is following suit." Broadband is "up there as a utility together with things like electricity and one could even argue the cellular phone," he said on The Communicators of the "vital" product: "The demand there and the really ever-increasing consumption of over-the-top video has really supported our ability to still get a decent rate of return” on invested capital.

Whether fast web service is akin to a utility, said ACA CEO Matt Polka, "remains to be seen as technology develops." Net neutrality rules have "a dramatic impact on the ability of our members to obtain financing to provide more broadband in smaller communities," he said. "Let’s work together on a bipartisan solution to solve this net neutrality debate," Polka said later on the show, noting he supports FCC policies that let ISPs "invest, innovate and deploy" while protecting consumers: "We want to see that continue."

ACA is against blocking, throttling, discrimination and paid prioritization, Polka noted. "It is in our business interests to help facilitate that. But we have to find a bipartisan solution. I remain hopeful that we can find that." Communicators host Peter Slen noted that C-SPAN is an ACA member.

'Colloquial' Meaning

Heimbach used utility "in a colloquial sense to describe how demand for the service has become so ubiquitous, particularly given the trend in OTT streaming," emailed an ACA spokesperson. The group's "view is that broadband should not be treated as a common carrier, regulated utility service," the representative added.

Shentel's COO largely agreed with Polka's net neutrality remarks. "The industry has largely self-governed around this out of the fact that we have to compete," Heimbach said: "If we took a proactive posture in the marketplace and say, 'Hey, we are trying to monetize your data" and such, "the consumer would vote with their feet. They would choose to buy service from someone who wouldn’t do those things." The market "has governed this issue and will continue to govern this issue," Heimbach added.

Shentel doesn't mind if broadband customers get their subscription video elsewhere, the executive said when Slen asked what the company's response would be to customers wanting to get Amazon, Netflix or the like and not cable. "I would say, go with God and do that. And the reason for that is we would love to still be your broadband provider of choice," Heimbach replied. "We don't make a lot of money selling video, and for some subscribers, we don’t make any money at all, depending on what tier you subscribe to."

"It’s entirely possible that there is a point in time in the future where we have to make that tough decision" to stop selling pay TV, Heimbach said, though he can't predict when or if that will happens. "It’s still a cash flow positive business." Industry "peers ... have made that decision" already, he added.

Stakeholders React

Free State Foundation President Randolph May doesn't "like to hear cable operators or any other broadband providers refer to broadband as a ‘utility’ because that’s the lingo used by those who want to impose Title II regulation," he emailed. "I’d prefer to see those that oppose Title II utility-like regulation not wrongly characterize broadband as a utility.” FSF backs Title I.

It seems Heimbach meant that broadband is "something everyone needs, which as an economist I interpret as something people tend to value highly," emailed Technology Policy Institute President Scott Wallsten. "Generally, 'public utility' seems to mean services people cannot live without. I'm not sure broadband qualifies." For policy, the utility term "means something that must be available to everyone then whatever the service is has to be coupled with price and/or service regulation," he added. "And for the most part you can't do that without Title II."

In email responses to queries about the executive's utility comment, Title II proponents agreed with Heimbach.

Open Technology Institute Senior Policy Counsel Josh Stager concurs with the COO, Stager said via a spokesperson for OTI, part of New America. "When a service is that vital, it is entirely reasonable to expect the government to ensure that every American has access to it in an equitable and nondiscriminatory manner. That's why regulation exists." OTI backs Title II.

Polka was right that ISPs provide a transmission service, said Georgetown University Law Center Institute for Public Representation's Andrew Schwartzman. So Title II applies here, Schwartzman emailed. "It is obvious everywhere but in DC that broadband is a utility. It is ubiquitous, essential and uses public rights of way."

ISPs are "talking out of both sides of their mouths" here, said Free Press General Counsel Matt Wood. "They know that they provide an essential service, whether we label it a utility or not. Who in the world anymore, if they have the means, would choose to live in a place without fast internet connections?"