The CEOs of 28 U.S. broadband providers and trade groups, including the four largest ISPs, have warned the U.S. Federal Communications Commission against reregulating broadband as a utility in an effort to protect net neutrality, saying reclassification of broadband would scare away investors.

In a letter to the FCC Tuesday, the CEOs of AT&T, Comcast, Verizon Communications and Time Warner Cable were among the executives calling on the agency to reject calls from some digital rights groups to reclassify broadband as a regulated, common-carrier telecom service. It is “questionable” whether the FCC has the legal authority to reclassify broadband, the CEOs wrote.

Reregulation of broadband “would impose great costs, allowing unprecedented government micromanagement of all aspects of the Internet economy,” the letter said. “It is a vision under which the FCC has plenary authority to regulate rates, terms and conditions, mandate wholesale access to broadband networks and intrude into the business of content delivery networks, transit providers, and connected devices.”

The reclassification of broadband as a regulated telecom service under Title II of the Telecommunications Act is “in fact a slippery slope that would provide the commission sweeping authority to regulate all Internet-based companies and offerings,” the letter added.

Big Cable versus consumer groups

In recent days, Free Press, Fight for the Future and other digital rights groups have renewed their calls for the FCC to reclassify broadband as a regulated service as an alternative to a net neutrality proposal from FCC Chairman Tom Wheeler that would allow broadband providers to engage in “commercially reasonable” traffic management.

“In recent days, we have witnessed a concerted publicity campaign by some advocacy groups seeking sweeping government regulation that conflates the need for an open Internet with the purported need to reclassify broadband Internet access services,” the CEO letter said. ”The future of the open Internet has nothing to do with Title II regulation, and Title II has nothing to do with the open Internet.”

While the digital rights groups want Title II regulation of broadband to prevent paid prioritization, or selective blocking, of Internet traffic by broadband providers, that section of the statute “does not discourage—let alone outlaw—paid prioritization models,” the letter from the CEOs said. “Dominant carriers operating under Title II have for generations been permitted to offer different pricing and different service quality to customers.”

The CEO letter appears, however, to define paid prioritization in a different way than many net neutrality advocates do. Most net neutrality advocates do not quarrel with the right of broadband providers to offer multiple speed tiers and pricing models, but many have raised fears that broadband providers will be able to selectively block or slow some Internet traffic, often because it competes with their own content.

“On Title II, it’s true that some forms of discrimination could be reasonable, and that price differentials for your own customers may be OK,” said Matt Wood, Free Press’ policy director. “ISPs now want the freedom to charge content providers new fees for accessing broadband customers.”

Bad for business?

The CEO letter suggested that past reclassification discussions have been bad for their businesses. The CEOs pointed to discussions at the FCC in 2009-10 to reclassify broadband as a telecom service. “The potential threat of Title II had an investment-chilling effect by erasing approximately 10 percent of some ISPs’ market cap” around the time of an FCC announcement to explore reclassification.

“Under Title II ... consumers would face less choice, and a less adaptive and responsive Internet,” the letter said. “An era of differentiation, innovation, and experimentation would be replaced with a series of ‘government may I?’ requests from American entrepreneurs. That cannot be, and must not become, the U.S. Internet of tomorrow.”

The broadband CEO assertions that Title II would hurt investment are “ludicrous,” Wood countered. “This is yet another straw man in the army of straw men that the ISPs send out.”

Since the FCC in 2005 voted to deregulate broadband, the investment by incumbent telecom-based broadband providers AT&T, Verizon and CenturyLink has stagnated, the group said. Since that time, the three carriers have cut tens of thousands of jobs, while revenues have jumped by tens of billions of dollars a year, said Free Press, citing reports the companies filed with the U.S. Securities and Exchange Commission.

“Under Title II, Bell company investment, jobs and revenues all increased,” Free Press said in a study on broadband investment. “After Title II was removed, jobs disappeared and investment declined, despite soaring revenues and record profits.”

Among the people signing the broadband CEO letter were executives with Cox Communications, FairPoint, CTIA, USTelecom and the National Cable and Telecommunications Association.