Thursday, February 17, 2005 - The Progress & Freedom Foundation Blog

FCC on Wireless Broadband and Must Carry: No Lame Ducks Here

Lest loyal readers suspect that PFF has been so distracted by our attendance at far-flung conferences that we have overlooked happenings here in DC, I would note several FCC actions last week. These may be some of the agency's last actions before Chairman Powell takes his scheduled bow sometime next month.

The agency fell short of its own expectations in its ongoing effort to reform the tortured scheme by which carriers currently compensate each other for exchanging voice and data traffic between networks. This portends further delay in eliminating some of the Rube Goldberg-like complexity that continues to plague both traditional phone competition and universal service issues, as well as more recent concerns such as the deployment of Internet voice and broadband. Almost to make up for this disappointment, the agency managed to adopt a slew of consumer-oriented items regarding such issues as the national do-not-call registry, slamming and fees for changing long distance providers and rules to facilitate mobile satellite service to consumers and public safety officials.

But the more interesting actions last week concerned (1) the Commission's recommendations on how to promote the availability of wireless broadband access; and (2) the Commission's decision to mandate only one channel of digital programming on cable systems (so-called digital "must carry"). Taken together, these two actions reflect an ongoing commitment to promoting consumer choice in the digital environment.

The recommendations of the FCC's wireless broadband task force are the easier of the two to explain as promoting consumer choice. The Task Force proposed a variety of voluntary industry and agency enforcement actions, along with several steps to reduce or eliminate impediments to wireless broadband deployment in the Commission's own rules. In so doing, the Task Force offered a blueprint for future action much like that proposed by the Spectrum Policy Task Force, in this case hastening both the build-out of advanced wireless networks and the transition of digital television spectrum for public safety uses. Of particular note is the proposal to shield wireless broadband from future regulation, either by classifying it as an interstate service subject to federal (and not state) jurisdiction, or by classifying it as an unregulated "information service" under the Communications Act. This approach, of course, tracks that used by the FCC (incrementally) to craft a minimally-regulated environment for Internet voice service in the and Vonage decisions.

Somewhat less obvious is the beneficial impact of last week's "must carry" decision on consumer choice. Most concretely, the decision means that broadcasters are guaranteed only one channel on the local cable system, even if the broadcaster uses digital compression techniques to squeeze more streams of programming out of its allowed spectrum. But as Chairman Powell indicated, broadcasters remain free to negotiate carriage on the cable system. This places pressure on broadcasters to make these other streams of programming at least as attractive to consumers as independent cable programmers' offerings, which don't enjoy any "must carry" privilege. Conversely, cable operators should face incentives to carry multiple, attractive broadcast channels voluntarily to the extent doing so will make the operator's service more valuable to subscribers. The winner in this incentive scheme is the cable subscriber -- those 85% or so of American households that, in light of the FCC's must carry decision, will be more likely to be able to choose from programming they find desirable.

The consumer also wins in the sense that the FCC's decision simultaneously rejects broadcasters' uphill legal argument that Congress meant to require cable operators to carry five or more channels from local broadcasters when it instructed operators to carry broadcasters' "primary video." Litigation over this non-intuitive reading of the statute could have delayed further the digital TV transition -- a fate the Commission wisely avoided by positioning itself to receive deference if its decision is appealed. After all, it seems unlikely that a court would find it unreasonable for the agency to conclude that carrying a broadcaster's "primary video" means carrying only one channel, as opposed to a half-dozen.

Thus, both the Task Force recommendations and the digital "must carry" decision lean decidedly in favor of expanding consumer choices for high-value digital content and services. Not a new tune for this Commission, but one the agency will apparently keep singing, even as it prepares for new leadership. And given the numerous other actions taken last week, the refrain in the FCC's song, at least for now, may be: "No lame ducks here."

posted by Kyle Dixon @ 11:05 PM | Broadband , Cable , Communications