Commisso Weighs In on 'Monstrous' Title II Decision

Tells C-SPAN Decision Affects His Ability to Invest
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Mediacom CEO Rocco Commisso said the Federal Communications Commission's new Open Internet regulations will cause uncertainty, except in the legal community, where he suggested they would be able to afford more vacations given the legal work the rules will prompt. He promised to fight what he called "monstrous" reregulation of his business.

Commisso was being interviewed Feb. 26 (the day of the FCC Title II vote) for C-SPAN's Communicators series (he is a C-SPAN board member). Small and medium-sized cable operators were in Washington this week for the American Cable Association summit.

Commisso said the rules will hurt his ability to raise money at a reasonable cost, though he said he had no doubt it would raise prices for consumers due to new taxes and local regulatory fees. He said he had spent over $7 billion under one set of rules, and that changing the rules was an uncalled for government intrusion into an engine of innovation to the benefit of Silicon Valley players, and the big guys, not the garage innovators. "This is to benefit companies that are already very big."

Commisso said that over the last four years, Mediacom had over a billion dollars in capital expenditures to continue to double and triple its speeds, and Commisso took the company private so that is his money. So, he is concerned that if he can't make a return on that investment, he won't be able to continue to invest.

But that speed increase could ironically work against Mediacom, Commisso suggested. The FCC has signaled that the new definition of high-speed broadband is 25 Mbps, which FCC Chairman Tom Wheeler has said is table stakes in the multi-device, broadband-streaming household. "The government is trying to prove by redefining [broadband speeds] that we are a monopoly...I invested the money and have the fastest speeds in the markets that I operate, and because I have the fastest speeds, I'm a monopoly."

Commissso said he was not proud to admit it, but he had lost 650,000 video customers in the last dozen years. "When somebody calls me a monopolist, maybe they should look at the facts. Monopolies don't lose customers, but I have."

He also pointed out that the President went to Iowa (where Mediacom is a prominent player), to visit a municipal broadband provider--in the run-up to the State of the Union address. "President Obama went to a monopoly to talk about I'm a monopoly. Tell me where that makes sense."

The Cedar Falls Utility competes with Commisso in the market. "It is a municipal utility that was put in place way before I got in the state of Iowa that had a monopoly with water, sewer, electric, gas, and they used that monopoly status to go out and compete with a private enterprise."

"How fair is it for the President to pick and choose what side he wants to appease to." He said his people were upset that they didn't even get a mention when the President came to Cedar Falls to talk about the importance of broadband.

Commisso says that he doesn't understand what he has done that would prompt the FCC to reclassify his broadband service under Title II regs.

He said he has spent a lot to insure that smaller areas get the same kind of service as bigger cities. He added that he does not cherrypick areas to provide service as some others do--he mentioned Google by name.

At this week's summit, American Cable Association chairman Bob Gessner expressed similar sentiments about getting branded an evil gatekeeper by the FCC when ACA members had been investing in cable and phone and broadband to provide innovation and competition in the market.

Asked why he did not believe FCC Chairman Tom Wheeler when he said there would no new taxes or fees, Commisso said the no tariff or rate regulation promises are only on "day one."

Republican commissioners who dissented from the Feb. 26 vote on Title II have hinted that the order language is vague about whether the same would hold on day two. He also pointed out that anyone can bring a lawsuit (under a general conduct standard that allows class actions suits for alleged violations).

"The fact that there is no rate regulation may be true today, but not necessarily true tomorrow," he said. "Once this monstrous regulatory scheme is put into place...we don't know what the next commission is going to do." He said he had no certainty that if he made investments he would be able to get a return on them.

Commisso says he is a very strong proponent of no paid prioritization, no throttling, no fast or slow lanes, which he says has been the way the Internet has been operating for the past couple of decades, and which has allowed the top four 'net content companies to have $280 billion dollars in cash on their balance sheet, and the top four ISPs--Comcast, Time Warner, AT&T and Verizon--to have $260 billion of debt. "How is it possible if this thing has been so bad, that they have managed to accumulate $280 billion of cash, and the guys who are "ripping off" them have $260 billion in debt."

Commisso said the consumer has not gotten a truthful picture of the effort to essentially "reregulate the entire Internet."

Some economists have argued that paid prioritization is not necessarily a bad thing. Commisso said that ISPs had lost that argument and agreed not to do it, but that in a different world "I would say, 'yes, people should pay for what they use and people should pay for the money they get out of the network they utilize."

Commisso said that, for example, he had spent $800 per customer in capital expenditures over the past four years, while Netflix had spent less than $6 dollars. He said Netflix had been able to get its 50 million customers by zeroing out its distribution costs.

As to how he will fight the rules, Commisso said that would be through supporting legislation, likely through a lawsuit (either his own suit or an industry-led suit), and maybe through a change in administration. He said the best solution would be for Congress to decide.

Commisso said that it was not only Free Press and Public Knowledge that fought in the public interest. He said his customers are also the public and they will eventually find out that "someone in Washington wants to make their bills go up."

He said those bills go up primarily because programmers are charging more. "It's a question of screwing the consumer so somebody else in Silicon Valley can bring the dough in [that $280 billion cash he referred to earlier]."

Commisso put in a plug for program unbundling as a way to address that price to the consumer.