Broadband

Chairman Julius Genachowski of the Federal Communications Commission spoke of the need to reduce subsidies for traditional wireline telephone service last week, as well as a perceived need for his agency to use the savings to subsidize broadband services (see the press release and the text of the speech).
Genachowski is absolutely correct about the need for reforming universal service and intercarrier compensation. Unfortunately, his determination to reform telephone subsidies is not for the purpose of generating consumer savings, but about redirecting resources currently at his disposal for the purpose of gaining some measure of control over unregulated broadband networks. Though cleverly disguised, this is actually a third major attempt to (slowly) impose public utility regulation on broadband service providers.

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Julius Genachowski is in a hurry.
The chairman of the Federal Communications Commission is arguing that the commission must act quickly to “restore the longstanding deregulatory–as opposed to ‘no-regulatory’ or ‘over-regulatory’–compact” that governed broadband Internet access services prior to a recent court decision. Such an approach is urgently needed to “restore the status quo,” he claims.
If the FCC cannot regulate the Internet, it may die. The telephone and television industries are declining, whereas communications industries which the FCC monitors to some extent but does not regulate, e.g., the Internet backbone, broadband Internet access and wireless, are thriving.
Genacowski’s plan would reclassify broadband as a “telecommunications” service subject to blunt, onerous, industrial-era regulation under Title II of the Communications Act of 1934 — which governs common carriers — and then forbear from enforcing most of Title II’s heavy-handed provisions.
Broadband services haven’t been subject to Title II regulation for several years, so reclassification would not restore the status quo. It would harken back to a bygone era.

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The U.S. Court of Appeals for the D.C. Circuit ruled that the authority the FCC used to regulate Internet access providers is very limited. The ruling is obviously a victory for broadband Internet access providers. But it is also a victory for the rest of us. As the court noted, the legal interpretation the FCC fought to defend “would virtually free the Commission from its congressional tether.” In Comcast v. FCC, the court said it was okay for Comcast to discriminate against peer-to-peer file sharing as necessary to manage scarce network capacity. The opinion was written by Judge David S. Tatel, a Clinton nominee. The question before the court was whether the FCC has any jurisdiction to regulate Internet access Read More ›

The National Broadband Plan is going to take a while to digest. The following recommendations are included in the description of how the FCC plans to subsidize broadband — which may be necessary if it frightens away private investment with network neutrality regulation which deprives private investors of a fair return on their capital: RECOMMENDATION 8.2: The FCC should create the Connect America Fund (CAF). (p. 145-46) RECOMMENDATION 8.3: The FCC should create the Mobility Fund. (p. 146) RECOMMENDATION 8.4: The FCC should design new USF funds in a tax-efficient manner to minimize the size of the gap. (p. 146) RECOMMENDATION 8.6: The FCC should take action to shift up to $15.5 billion over the next decade from the current Read More ›

Tom Tauke, a top Verizon executive: In my view, the current statute is badly out of date. Now is the time to focus on updating the law affecting the Internet. To fulfill broadband’s potential it’s time for Congress to take a fresh look at our nation’s communications policy framework. Tauke’s top recommendations include: A behavioral advertising policy that requires an easy to use process for affirmative consent from a user before that user can be tracked on-line should apply to all players engaged in behavioral advertising, regardless of where they sit in the space and what technology is used. Competitive subsidies that are technologically neutral and targeted solely for the benefit of consumers, not corporate intermediaries, would be one alternative Read More ›

The Washington Post’s reaction to the National Broadband Plan that was deemed approved and issued with fanfare by the FCC this week: BY THE Federal Communications Commission’s own account, broadband use in the United States has exploded over the past decade * * * * So it is curious that the FCC’s newly released National Broadband Plan faults the market for failing to “bring the power and promise of broadband to us all” — in reality, some 7 million households unable to get broadband because it is not offered in their areas. Such an assessment — and the call for government intervention to subsidize service for rural or poor communities — is premature, at best. * * * * it Read More ›

<a href=http://www.iltechpartner.org/beta/wp-content/uploads/ITP_ILBCC_ILHCC-Study.pdf We have completed a new paper examining the need for regulatory reform in Illinois for the Illinois Technology Partnership. Illinois was one of the first states to take the first step in permitting competition in the local telephone market. But it failed finish the job. In 1985, the Illinois General Assembly declared that “competition should be pursued as a substitute for regulation,” delivering new technologies, improved service quality, choice among telecommunications providers and ultimately lower prices for consumers. The goal of the 1985 act, which was to open the market to competition, has been achieved, but not the task of ensuring that consumers will reap the full benefits of competition — which requires eliminating legacy regulation that is Read More ›

Although Congress directed the FCC to allow broadcasters to offer “ancillary or supplementary services on designated frequencies as may be consistent with the public interest, convenience, and necessity,” it obviously hasn’t worked. A column by Holman W. Jenkins, Jr. offers some clues: Ask the media bankers and investors at a recent FCC roundtable. To a man and woman, they said the FCC’s stringent ownership rules have only cut broadcasters off from the capital to remake their businesses for the digital age. And now, as Jenkins further notes, it’s no secret that planning is underway at the FCC to coax broadcasters into voluntarily relinquishing some of their spectrum so it can be assigned for mobile voice and broadband services. Obviously the Read More ›

A study by Larry F. Darby, Joseph P. Fuhr, Jr., and Stephen B. Pociask of the American Consumer Institute concludes: Historical data suggest that for every $1 billion in revenue, “core” network companies provided 2,329 jobs, while non-network “edge” companies provided 1,199 (about half as many). This indicates that Net Neutrality rules that reduce revenues and growth for network companies, and transfer benefits (revenue or growth prospects) to non-network companies, are a barrier to job creation. Read the study here.

While the FCC considers whether to impose nondiscrimination and transparency regulation to all forms of broadband Internet access, Public Knowledge is proposing to subject broadband services to the same pervasive, overlapping, heavy-handed regulatory framework as century-old telephone service (see this and this) — a framework which a former FCC chairman during the Clinton Administration described as a hopeless “morass.”
PK is worried the U.S. Court of Appeals for the D.C. Circuit might rule in a pending case that the FCC doesn’t have jurisdiction to regulate broadband. The group also is fretting over a recent observation by AT&T that, “with each passing day, more and more communications service migrate to broadband and IP-based services,” leaving the public switched telephone network (“PSTN”) and plain old telephone service (“POTS”) we all grew up with “as relics of a by-gone era.”

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