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Thursday, July 22, 2010

FCC & Free Press - Send Lawyers, Guns and Money to Regulate the Internet
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Praise the Lord and pass the ammunition.

So goes the FCC's stacked "706 Report" on broadband this week, which said that Americans aren't getting broadband in a "reasonable and timely basis," the first negative conclusion since the report's inception.

Using the standard developed in the National Broadband Plan (NBP) - which recommends "that every household in America have access to affordable broadband service offering actual download (i.e., to the customer) speeds of at least 4 Mbps and actual upload (i.e., from the customer) speeds of at least 1 Mbps" - the Commission determined that by this benchmark "broadband remains unavailable to approximately 14 to 24 million Americans." (Not that 14 - 24 million Americans don't have high-speed access, as has erroneously been reported.)

The FCC is building its war chest so that it can justify Lilliputian Internet regulation of network providers. Through a number of recent proceedings, statements and reports - e.g., the Open Internet NPRM, Cellular Competition Report, and "Third Way" NOI - the 706 Report traffics in the same meme: network providers just aren't doing their job, so they must be coerced or shamed into proper "compliance."

Not uncharacteristically, The Free Press heralded the new, rather dour (and now redundant) broadband assessment. Said the lugubrious, special interest lobbyists - "Now that the FCC has taken the first step of acknowledging America's broadband problem, we hope that it will advance policies to reverse this decline though the promotion of real competition and true consumer choice."

I'm not sure what the Free Press means by saying that a "decline" has occurred. Even the FCC doesn't say that. It seems to me, however, that the delta that they loosely allude to occurred when the FCC definition got lifted - raised from the previous 200 Kbps standard to the new 4/1Mbps standard - allowing the Commission to "realize" 14 - 24 million Americans who don't have high-speed Internet access.

In FCC Commissioner Robert McDowell's estimation, the number of people who don't have access to the high-speed Internet is closer to 7 million - certainly a large number, but not what the majority, through its new standard, arrives at.

Seemingly for him, the FCC's new numbers miss the point anyway.

"Instead of focusing on the great strides that America has made in broadband deployment, as the Act requires, this Report emphasizes subscribership," notes McDowell. "Collecting granular data, including subscribership numbers, is important. But, subscribership data does not equate to the 'availability' of broadband, which is what Congress requires the Commission to assess under Section 706. 'Deployment' and 'subscribership' are two distinct concepts with different attributes and areas for improvement. Our task is to focus on Congress' explicit directive to analyze deployment progress for purposes of the Section 706 Report."

Indeed, subscribership and deployment are distinctly different matters.

The Department of Justice noted this difference when it offered its comments on the NBP back in January. Stated the DOJ then:

Broadband services are one part of a wider information technology ecosystem that ultimately delivers value to consumers. Other important elements of the ecosystem are the content and applications available, the devices that consumers use to receive, process, and display that content and those applications, and consumers' familiarity with and skill in using computers and the Internet [so-called complimentary inputs]...Recognizing the roles played by complementary inputs is very important for the purpose of evaluating broadband adoption patterns. Relatively low adoption rates for a given group may reflect the relative absence of these complementary inputs, rather than a problem inherent in the supply of broadband services themselves..." (emphasis added)

Some people just choose not to subscribe. Imagine that.

Others, through their choice, live in far-off places that are hard to reach with any technology (or roads, for that matter). That represents the bulk of the 7 million who lack access. For sure - it's a supply-side matter worth talking about, but one which should be addressed through reform of the Universal Service Fund and other more narrow relief.

Because these people aren't connected, however, doesn't mean that, well, the whole system stinks. It doesn't. It's the best system in the free world.

In her dissenting statement, FCC Commissioner Meredith Baker couldn't disagree more with the K Street fiction that we have a "broadband problem." Seeing the glass pretty close to full, she notes:

By every possible metric, wired, wireless, and satellite companies continue to pour billions of dollars into our nation's broadband network. From 2003 to 2009, under a consistent minimal regulatory framework, broadband providers have invested $27 billion annually in networks and infrastructure. Each year networks go further and faster. The National Broadband Plan found that 95 percent of the U.S. population has access to a 4 Mbps/1 Mbps terrestrial broadband service, and 80 percent have choice of broadband offerings...Broadband infrastructure deployment and investment are a remarkable and continuing success story, and I am troubled by giving such significant efforts a failing grade.

According to Baker, universal broadband availability is the goal of section 706. But it's not an exercise of the perfect being the enemy of the good. Though work remains, she states "[n]owhere in section 706 does it require that goal to be reached definitively in 2010. Rather, the question is whether network providers continue to make demonstrable progress towards that goal. All evidence suggests that answer be made in the affirmative."

The majority Commissioners obviously hold a different point of view. They stress that if the Commission finds broadband isn't getting out in a reasonable and timely manner as per statute, it must "take immediate action" to accelerate deployment. The "must" part is kind of humorous - respect for the statute / Congressional authority being a new habit for the rogue Commission. That noted, the "must take immediate action" concerns Commissioner McDowell greatly.

"The plain language of Section 706 was written with a deregulatory bent," says McDowell, "but I am concerned that regulating with a light touch is not what this current Report will be used for in the future...As a result of proceedings recently initiated by the Commission - such as the Notice of Inquiry asking whether the Commission should regulate 21st Century broadband Internet access services under old common carrier rules - I question whether this Report will be used to justify additional regulation, contrary to the Act's goal of 'removing barriers to infrastructure investment.'"

You bet it will.

This is where the FCC will read-out the "removing barriers" part of 706 (not to mention Section 230, too) and read-in its "wireless light" model for Internet regulation, which adds - instead of subtracts - rules, contrary to the actual wireless light model, and Sections 230 and 706 of the Telecom Act. No matter. They have all the ammunition they need, having manufactured it on K Street, the Free Press and at the FCC beehive off of I-395.

Americans are an unfortunate lot, they surmise. They must suffer through the Blackberry, iPhone, iPad, iTunes, Pandora, Yahoo, Weather.com, MSN, AOL, CNet reviews, Kindle, Google, the 1080p Internet, YouTube, Amazon, Vimeo, FiOS, U-Verse, X-Box Live, Comcast, P2P, the Cloud, Telemedicine, Telecommuting, Teleconferencing, government 2.0, distance learning, blogs, podcasts and vlogs, and every school and library hooked to the Internet, etc. Geesh. They even have to endure the humiliating services of thousands of telephone, cellphone, 3G, soon-to-be 4G, cable, satellite, BPL, and tens-of-thouands of private establishments offering (free wi-fi) Internet connectivity. Who knows what other deprivations the rapid advance of technology will bring?

Man, it absolutely sucks here.

Says the anti-business Free Press - "Woo-Hoo! We asked, and the Lord delivered. Thanks, FCC (wink, nod) for that ammunition. Here come the good 'ole days of monopoly telephone regulation. Goodbye corporate America!"

The FCC's and Free Press' ammunition are useless blanks. For all their lawyers, guns and money - they couldn't hit the side of a barn if they tried. America's got it pretty darned good. An unregulated Internet has hit the bull's-eye, putting lead on the target without the stultifying crush of rules and regulations.

Imagine that.

Sadly, the FCC and Free Press can't.

posted by Mike Wendy @ 10:20 AM | Broadband , Capitalism , Capitol Hill , Communications , Innovation , Internet , Net Neutrality , Regulation , Software , The FCC , Universal Service , Wireless , Wireline

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With its new "4 Mbps up/1 Mbps down" requirement (which was never firmly stated to be a new definition of "broadband" in the Broadband Plan, by the way), the FCC has attempted to create an illusion that we are losing the game by moving the goal posts. (It's increased the length of the playing field by a factor of 20, in fact.)

What's more, because the FCC has done nothing to deal with the problem of "special access" price gouging, 4 Mbps could cost $400 or more to the broadband provider AT WHOLESALE, making it an unreasonable requirement.

In short, the FCC appears to be intentionally creating a definition that requires unnecessary capacity and is financially untenable. Then, by inaction on "special access," the Commission is KEEPING it financially untenable, so that it can be used to support claims that broadband providers aren't doing their jobs and therefore must be regulated.

Posted by: Brett Glass at July 22, 2010 5:11 PM

Brett, interesting observations. the first - the lack of notice - is one that I intend to look into. i have to see if this was noticed in the 706 NOI. If it wasn't noticed, the definition - and its resulting spin - doesn't seem cool.

Posted by: Mike Wendy at July 23, 2010 9:02 AM

Mike, yes: the interesting thing about the FCC's redefinition of broadband is that it was not done as an official ruling or order. It therefore likely violates the APA. I've been surprised that no one has challenged it.

Posted by: Brett Glass at July 23, 2010 5:51 PM

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