Last week, a DC-based, self-described, "public interest" lobbying group--the Free Press-sent a letter to the Chairmen and Ranking Members of the House Energy and Commerce Committee and the Subcommittee on Communications, Technology, and the Internet. The gist of the letter was to complain that some announced broadband Internet pricing trials by, primarily, Time Warner Cable ("TWC") and AT&T are anti-consumer, and should be investigated by Congress. The Free Press letter criticizes pricing trials that impose higher charges on relatively high-usage customers than on relatively low-usage customers.
Before I comment, I have to make some disclosures. First, AT&T is a consulting client of mine, so readers should evaluate these comments entirely on their merits and not on the basis of any other authority a reader might assign to my comments [recommended advice for all posts, anyway]. Second, I genuinely have a lot of respect for the mission that Free Press is trying to advance. They work really hard (for little pay) to promote what they consider to be in the best interests of the public, and they are phenomenally successful at getting attention for their causes. So, I really don't want to bash them as an organization [though I admit the quote marks around "public interest" were a little mean].
Nonetheless, given Free Press's success at garnering the limited attention of public officials, they should not get a "free pass" on logically inconsistent, fact-free, and shoddily-reasoned rhetoric. This is especially true when the purpose of that rhetoric is to consume public resources to impose costs on private parties, and, on the basis of this "faith-based" reasoning, potentially inhibit broadband penetration to the many, in favor of the broadband usage habits of the few. The Free Press must explain their position in cogent terms, not just that they don't think it's fair for people who want to use more shared resources to have to pay more.
What big consumer wouldn't? With a family of six, I hate paying for six seats on an airplane when I take my family on a vacation that requires air travel. I would much rather just pay for "air transport", and let some business pick up the additional costs associated with my family (but I doubt there really are any additional costs--together, even with luggage, we probably come in at less than 1,000 pounds--which is nothing compared to the weight of the whole airplane). Nonetheless, this is a complaint, not a policy argument.
After diligently not poring over the many ( no doubt, well thought out) Comments submitted Monday to the NTIA in response to its request for comments on its implementation of the Broadband Technology Opportunities Program, and casually perusing the FCC's Notice of Inquiry ("NOI") regarding a "National Broadband Plan", I can now tell you the answer to who gets the $7.2 billion in broadband funds. The winner is . . . the same firms who now take the majority of the USF high cost/low income fund: the rural LECs and their progeny.
How do I know? Because the politics haven't changed, and when big, entrenched interests are at stake, the status quo is the safest course of action. When I say the "winners" are the "rural LECs", I mean no disrespect at all toward the firms that I generically paint with that label; it's just a shorthand way of referring to the firms that are currently subsidized via the USF high cost fund. My only point is that firms respond to incentives, and firms that currently benefit under the status quo will continue to prosper, because it seems unlikely that the regulation-related incentives will even be clarified any time soon, much less changed in a way designed to promote financially-risky broadband deployment. Said differently, for all the questions the FCC asks in its NOI, the key to the success of the broadband stimulus grants (or any other broadband plan) hinges on the one key question that the Commission declined to ask, much less address: the jurisdictional classification of VoIP.
In my previous post, I recommended a "first things first" approach to distributing grant money--arguing that we can't get where we want to go without a map; a broadband treasure map, to be specific. A map, though, is only part of the journey. Before a map is helpful, we need to take inventory of where we are right now. To this end, yesterday, the FCC released a Notice of Inquiry ("NOI") soliciting public comments and asking questions pertaining to the agency's obligation to develop a National Broadband Plan as required under the American Reinvestment and Recovery Act ("ARRA"). An NOI, though, is not exactly the fastest way to collect information. On the other hand, in all fairness, the NOI approach was the prudent way to go for Acting Chairman Copps, given that the Commission's longer-term leadership has not yet arrived at the Commission. Therefore, since the "first things" (in the "first things first" approach) are unlikely to be completed before the ARRA requires the first of the grant money to be distributed, I figured the NTIA and the RUS might be able to use some unsolicited advice on how to get the initial grants distributed quickly and safely.
I say this because whenever I've seen officials from the agencies charged with administering the $7.2 Billion in broadband-related grants under the ARRA, they just look a little stressed. And who could blame them? The ARRA requires them to distribute an unprecedented amount of money in a short period of time, while maximizing the economic development effect of the broadband funds, meeting other goals (e.g., open networks), and, all the while, protecting the taxpayer funds (and their own reputations) from the 3 Deadly Sins of Waste, Fraud, and Abuse. Piece of cake, right?
OK, I've got to stop chasing my tail, and I promise this will be my last blog (for at least a little while) on the subject of the subscription TV-cable programmer price spiral. Maybe it's just the natural insecurity of a new blogger, but I feel compelled to point out whenever someone with even more experience as a reporter is reporting on something I've noticed, which--in case you haven't been reading is my completely-consumer (I'm a telecom guy, remember) fixation on subscription TV prices. This past Friday, April 3d, Rob Pegoraro of the Washington Post wrote an on-line article, on the propagation of "included" channels and the unstoppable increase in subscription TV prices (the same article was printed in the Sunday, April 5th print edition of the post). Mr. Pegoraro made an observation, also from last week's Cable Show, that prices for subscription TV bundles were going higher--across the board--whether the provider be cable, telco, or satellite. His article makes some of the same observations that I have made, in a general sense, but he makes others, that are even more concise and compelling. You might have to register for the Post article, but it's short, and worth the read. However, his conclusions, and hoped-for solutions, are largely the same that surfaced in my March 24th post.
So, for those of you that don't want to set up a Post account, I'll copy the last three paragraphs of Mr. Pegoraro's article (from the on-line version, with active links), that describe the problem-solution dichotomy in a more succinct manner than I have managed to do so far: