March 16, 2011 7:53 PM
Today is the one year anniversary of the National Broadband Plan
. The Broadband Plan recommends, as a catalyst for broadband deployment, that the FCC undertake long-needed reform of its Universal Service Fund ("USF") and intercarrier compensation regimes. Last month, the FCC released a Notice of Proposed Rulemaking ("NPRM")
, proposing to reform both programs. Noticeably absent in either the National Broadband Plan or the USF/ICC NPRM is any defined ongoing role for the states in either the national goal of spurring broadband deployment, or under a reformed USF/ICC regime.
There is an important role for the states in a new, broadband-centric, regulatory system. But, to get there, the FCC has to put consumers at the forefront, considering that the purposes of its proposed reforms are to make high cost support more efficient, and further extend broadband into high cost areas. It is possible to accomplish both objectives, while giving the states a meaningful role.
The communications visionary (and "patron saint" of Wired Magazine
) Marshall McLuhan
, observed, "[m]ost of our assumptions have outlived their uselessness
." The assumption that the FCC should distribute money to carriers, based on the carrier's optimal utility
, in order to satisfy consumer demand
is an assumption that has outlived its uselessness.
How would a better plan work? First, get rid of the notion that state participation should be accomplished through state regulators. They, too, are trapped by assumptions that have outlived their uselessness. And, to be sure, the assumptions underlying the distribution of High Cost subsidies are useless--the FCC makes that case quite persuasively in its NPRM.
Consider this statement of Indiana Commissioner Larry Landis, on reforming the low income fund
, "[t]oo little attention has been paid to the financial health of the RLECs (and mid-size companies) and the importance of existing High Cost support
." Jt Bd Refferal Order, Sep. Stmt. of Commissioner Larry Landis
. This sentiment is antagonistic to nation's technological goals, and offers no solutions.
While, concern for the welfare of the rural consumer is important, rural consumers' rights are a part of the law, and not up for debate. On the other hand, no carrier has a right to be inefficient
and still be in business. So what's the answer?
I outline the long form here:Abstract_Managed Broadband Markets.doc
. The short answer, though, is to involve those parts of the state that are responsible to the NTIA
for spending the states' broadband mapping/BTOP money. Accountability and efficiency are built into their directives, plus they already have to report on their success. But these state agencies can contribute more.
There are no real "markets" for rural consumers in high cost parts of a state, but the state BTOP point-of-contact is a natural market maker. These agencies could function in the role of broadband development authorities. They already know where open access local and backhaul networks exist, and they could work with rural broadband providers (including ILEC, cable, wireless, and satellite providers) to put together efficiently sized demand RFPs and match them with bidding (or reverse-bidding) supply consortia.
But, what about the "financial health" of the rural carrier? Some, funded with the almost $40 billion or so in High Cost support since 1998 (Jt. Bd. 2010 Monitoring Rept
., Chart 3-1) will, no doubt, be efficient parts of any bidding consortium. If not, why must consumers care?
Much greater sums of competitive fiber investment--arguably more important to the health of a broadband economy--were not protected from market risk. During the "telecom bust" of the early 2000's, an estimated $2 trillion in stock market wealth was destroyed
as a result of over-investment. Is it foolish to think that RLECs, too, may have "over-invested"? It would be shocking if they didn't when, since the modern High Cost fund began dispersing subsidies, the "prime rate" for borrowing has been comfortably below
the RLECs government-protected rate of return of 11.25%. Why should the privately-owned, publicly-subsidized, rural LECs fare any differently from their privately-funded brethren?
States have an important role to play in the reform of the USF and stimulating broadband deployment. However, the FCC should update its assumptions about what state agencies they find most helpful to accomplishing the Commission's goals. The NTIA points of contact for broadband mapping/grant purposes are ideal. By playing the intermediary between "suppliers" of high-cap backhaul, and the most efficient aggregations of local demand, the state agencies could--using "real" markets--determine the most efficient way to bring the best broadband/voice service to the most consumers.
April 20, 2010 5:09 PM
You must be thinking, "[w]hat's this guy thinking (smoking?)?" I mean, a lot has happened in the last month or so--mainly the FCC's release of its long-awaited National Broadband Plan (on March 16th) and the D.C. Circuit's "Comcast" decision, released on April 5th--and I've had exactly nothing to say . . . at least not on this blog. But while I was busy not blogging, the domestication of the dog continued, unabated, and other people had lots of smart things to say--which takes the pressure off me.
Before I can defend the title of this post, I have to lay out "the status quo." For this, I am going to borrow from, and corrupt, a perfectly appropriate analogy used by Tom Tauke of Verizon in a March 24th speech. In this speech, Tauke ("Mr. Tauke", as I like to call him) opens with the wonderfully evocative image of the Winchester Mystery House in San Jose, CA--a house that started as a small farmhouse, but underwent 24/7 construction over 38 years to become a Victorian mansion that appears to have been built upon pure caprice.
To the outside observer, the construction served no practical purpose, with a hallway ending in a second story door that opened to a dead drop down, steps that lead nowhere, and other architectural anomalies. Mr. Tauke uses the Winchester House as an analogy to the evolution of regulatory statutes that are stuck in a technology-specific past, and thus appear to have no practical purpose in a world where multiple technologies, devices, and applications are all used in a similar manner--to provide consumers with access to a primarily (and trending exclusively) Internet-based, communications network.
As I said, I LOVE the Winchester House as a starting point, but, not being nearly as diplomatic and classy as Mr. Tauke, I'll take a little artistic license, add a little context, hurt a few feelings, and generally "keep it real." First, if you didn't click the Winchester House link above, you wouldn't get the full context from the Tauke speech, because, though the Winchester House is exactly as described in the speech, it only appears to have no practical purpose--but it's purpose was never to produce an object of pragmatism, or even of art or architecture. Resale value was the last thing the owner was looking to produce.
You see, the owner was the heiress of the Winchester rifle fortune. After her husband and daughter died young, and in relatively quick succession, Mrs. Winchester was told by a medium that her husband and daughter had their lives claimed by the vengeful souls of those whose lives were cut short by the invention which had made her rich. The medium advised Mrs. Winchester that if she never completed her house, she would somehow appease the spirits, and would not suffer the same premature death as her husband and daughter. Said differently, the construction of the Winchester House, while motivated by fear and superstition, was the purpose of the construction of the Winchester House. The owner wasn't moving, wasn't looking for resale value, and "completion" in any pragmatic sense of the word was, in the mind of the owner, a little scary--in that it would cause her sudden death at the hands of angry supernatural beings.
With this context in mind, it isn't too hard (even if it is a little mean) to say that the FCC and its many Notices of Proposed Rulemakings ("NPRMs")--through which it attempts to implement the directives of Congress, including some of the central recommendations in the National Broadband Plan are not a dissimilar comparison to Mrs. Winchester and the Winchester Mystery House, and are a very apt analogy to the status quo. The Commission, motivated by political fears and superstition--fears inspired by the political power of Congress, made superstitious by the contradictory, twin fears of not appearing responsive--on the one hand--and of looking foolish, or alienating the politically powerful by being responsive, but getting the "wrong" answer.
This is the status quo. It has always been the status quo. For example, Congress could not have been more clear in the Telecommunications Act of 1996 that it wanted the Commission to eliminate all implicit subsidies to high cost carriers, and to have all contributions to the Universal Service Fund made explicit. Fourteen years later, the Commission has yet to complete this relatively simple directive, despite releasing numerous unfinished NPRMs during that time. But guess what? Docket No. 96-45, the original USF Reform NPRM, is still going strong . . . despite the continuous construction of numerous issue-specific orders/remands/FNPRMs and "area code splits" (new dockets created to account for specific issues).
At last week's Senate hearing on the National Broadband Plan, Chairman Genachowski seemed to be quite proud of the fact that, as part of implementing the National Broadband Plan, his Commission had scheduled releasing NPRM's on Universal Service Reform (contribution and distribution) and Intercarrier Compensation Reform for sometime during the 4th quarter of this year. Chairman Rockefeller seemed less happy--in his opening remarks (about 22 mins into the hearing)--he berates the Commission for its "recommendations" to numerous other agencies, and the fact that the Broadband Report says "Congress should" 139 times. Chairman Rockefeller also said that simply asking for comments is not enough. But, hey, dispensing the fear is part of his job, right?
So, how does the April 5th Comcast decision preserve the status quo? I mean, at first glance, and second glance, the Comcast decision was all about "Net Neutrality" policies. All the smart guys say so. Don't believe me? Read Hank Hultquist's posts 1 , 2, and Harold Feld's post on the decision--and be sure to click on all the links (read them all over 5 or 6 hours and then you'll know everything there is to know about Comcast, Net Neutrality, and the history of broadband Internet access service classifications).
But, who cares about Net Neutrality, right? The FCC will figure it out (Genachowski at 48, 69, and 108 mins into hearing) and preserve the "status quo" of the "open" Internet. But wait, there's more. Despite the FCC's confidence in its ability to ensure the safety of the open Internet, regretably, the Comcast decision has caused the FCC to rethink critical parts of their Broadband Plan. Even Chairman Rockefeller relents, and recognizes this tragedy (at just the 27 minute mark). The FCC's General Counsel agrees, and, by the 113 minute mark of the Senate hearing, so did Chairman Genachowski.
The thing I just can't reconcile, though, is that--even though the FCC has NEVER classified VoIP as a Title I or Title II service--the Commission has had no problems imposing public safety, and Universal Service contribution obligations on VoIP service providers. A more cynical person might say Comcast has become just another excuse to continue construction . . . because getting it right is more important than getting it done.
Fear, superstition, and action for the sake of preserving existence . . . so what did Comcast change? It doesn't look like much, except maybe making the Winchester Mystery House a little less mysterious . . .
[End Note: I watched last Wednesday's Senate Oversight Hearing at least 3 times (my penance for not blogging in six weeks). At times, it seemed the Senators were a little harsh on the FCC (albeit, in a theatrical, "Kobuki", "bad cop" kind of way). The House Hearing on the National Broadband Plan on March 25th was, in contrast, a virtual love-fest. On the issue of the National Broadband Plan, I think Congress gave the FCC too broad a mandate to criticize a good faith effort. If they wanted a "real" work plan (See Senator Begich's very good questions around the 88 minute mark), they should have specifically asked for what they wanted. Finally, I really hope the FCC doesn't let Comcast become an excuse, or some other sort of bugaboo, that hinders the expeditious resolution of some badly needed repairs that will set the foundation for further broadband deployment.]
March 9, 2010 5:21 PM
"Another flaw in the human character is that everybody wants to build and nobody wants to do maintenance." Kurt Vonnegut, Hocus Pocus, 1990.
With respect to the Hocus Pocus quote above, the late Kurt Vonnegut could just have easily said the same thing about what humans want to read and write about. No one wants to read about maintenance, but everyone wants to read about big events and big plans [like Mike Shanahan coming to town, or the National Broadband Plan]. Maintenance is only interesting when it doesn't get done, and the failure to do maintenance causes something bad to happen.
As a result of this quirk of human nature, when it comes to speculation/predictions/pontification on the National Broadband Plan, the Plan is the thing. The maintenance on the rusting-for-too-long Universal Service Fund and the related intercarrier compensation system are afterthoughts, and haven't received a ton of attention among FCC watchers, and reporters. The shame is that the FCC's publicly-stated intent to do this maintenance is a REALLY BIG DEAL.
To my mind, the Commission deserves more credit for tackling the maintenance (if this is, in fact part of the Plan) than any--forgive the characterization--"pie in the sky" plans. Why, you may ask? Because--to me--these are the boring-but-thankless (not to mention impossibly complex and politically contentious) chores that the Commission must succeed in addressing as a predicate to creating a regulatory climate that will stimulate investment by carriers (regardless of technology), customers, content, and applications service providers.
Moreover, this Commission can really clear away a lot of rust in the next two years, and the rest will take care of itself. Any part of the plan that can be accomplished, in a self-executing way, by mid-2013 is realistic, parts that become effective by 2017 extend into the "optimistic", but still possible. Anything that's supposed to happen past 2017 should probably be taken out of the Broadband Plan, and put into a special "Broadband Prophecy" section, and phrased in Nostradamus-style quatrains.
Back to the point, though, let's look at one really overlooked area of "rust removal"--Universal Service Contribution Reform--and see why it's so important to a plan designed to increase broadband deployment.
The "Broadband Gap" Will Only Widen Without USF Contribution Reform. I've heard some pretty reliable sources speculate that the "Contribution Factor" (the percent of the interstate telecom services revenue that consumers must pay to the Fund) for the second quarter will exceed 15%. This number should be announced this week or next week (I would guess the night of Friday, the 12th). If true, this would represent an almost 40% increase over last year's second quarter figure of 11.3%. Moreover, at the current rate of increase, it would not be surprising to see the factor approach 20% by the end of the year. What does this mean?
Well, let's say you want a "bundled" local/long-distance plan with unlimited long-distance calling. You live in a big-city suburb, and you want to use a facilities-based competitor to the incumbent LEC. Here is a typical price schedule for "phone only" for the VA suburbs of DC. Thus, a 15% contribution factor means that the customer is paying an additional $54 to $72 per year (depending on whether the customer commits to a 1 year contract) over and above the charges it pays to the carrier. Either way, the telephone service customer is paying well over $400/ year simply for phone service.
On the other hand, if the customer had access to broadband, the customer could purchase the lowest speed broadband service for only a little more, and then pay about $20 per year for VoIP service using magicJack®. If the broadband customer has no privacy concerns, they could get service for next to nothing with Google Voice.
Nonetheless, according to the Commission, those customers that are least likely to purchase broadband will continue to be subject to increasing monthly costs for basic telephone service. These customers are those least likely to buy broadband--the poor, the elderly, and the uneducated. (See, p. 82).
It's difficult to conceptualize that the lack of doing USF "maintenance" on the contribution side--to take account of the many, relatively affluent, customers that have already adopted broadband service--can act as a regressive "tax" on those least capable of shouldering this burden. Yet, increasingly, without contribution reform (without "maintenance") this is what those buying POTS ("plain old telephone service") every month are facing.
Contribution reform can be completely accomplished within Chairman Genachowski's tenure, and, if he plans it and follows through, it will be one of the most successful, and (probably) most under-appreciated, things he can do as a Chairman. If contribution reform is announced as part of the plan--and part of the plan that gets implemented most quickly--the Chairman and the Commission staff deserve a lot more gratitude than they will get in the popular press. But, if it helps, I'll grant permission to "crack open a cold Bud Light" to the righteous razors of rust . . . .
January 6, 2010 11:27 PM
Confusing, huh? Sounds like a movie idea . . . for a really bad movie; but that's what happened recently with an AT&T filing in response to the 25th Public Notice in the National Broadband Plan proceeding
. The Commission asked for public comments on a very important, and very forward-thinking topic: how should the Commission plan for the inexorable obsolescence of the Public Switched Telephone Network ("PSTN").
The simple fact of the matter is that, due to broadband availability and adoption patterns, increasing availability of mobile VoIP apps, and (morbidly) the dying off of PSTN customers--and the fact that younger customers, with broadband access, are opting for VoIP solutions. Fortunately, the Commission acted on its own data, and recognized that the costs of the PSTN are being born by a smaller, and smaller group of consumers all the time, and the consumers that lack VoIP as an alternative (because they have not adopted broadband) are those least able to afford these increasing costs--the less-educated, the poor, the elderly, and minorities
. (See, p. 82). The Commission is to be applauded for recognizing a trend, and trying to plan in advance in order to avoid a potentially disastrous crisis in advance.
Among those filing comments in this proceeding, AT&T recognized the problem was as grave as the Commission suspected, and they responded to the Commission's request for comments with all the gravity with which the Commission solicited the comments. Critics may call AT&T's comments melodramatic, but, judging from the attention they received (even if it was misplaced), I'd say AT&T did a good job of calling public attention to the Commission's very timely concern. AT&T's policy blog
explains their position a lot more succinctly than I could, and the posts contain good links to AT&T's actual comments. If readers are interested, I would strongly encourage them to read these two posts--the first
, and the second
Bottom line: AT&T isn't seeking to turn off the PSTN, so there's no need for panic. Hysteria isn't good, but (this time) it can have a good outcome if it brings more awareness to an urgent problem--the need for the Commission to reform USF contributions and distributions, and Intercarrier Compensation Reform, before the network becomes a network for broadband "haves, and have-nots."
January 5, 2010 5:42 PM
[Note: Yesterday, the Department of Justice, Antitrust Division ("DoJ") filed an ex parte presentation in the National Broadband Plan proceeding, which focused on ways to increase the number of broadband service offerings and broadband competitors. Most public attention has been focused on the DoJ's spectrum recommendations, which are largely designed to promote further spectrum availability. One controversial recommendation, which was heavily caveated by the Department, was that there may be situations where the highest bidder for spectrum may not provide the most valuable use for the spectrum. In other words, in an auction model for scarce, but essential, inputs, the hypothetical monopolist is always willing to pay the highest price in order to keep supply off the market. The facts that would support such a theory as a basis for foreclosing carriers from spectrum auctions are not present now, or even imminent. For example, the largest spectrum holder in the country is a new entrant, Clearwire, and the biggest "winner" in the 700 MHz auction--Verizon--spent almost $10 billion on spectrum that it knew would be subject to an "open access" requirement. Therefore, given the attention that this one aspect of the DoJ filing has attracted, this post will not discuss the Department's spectrum recommendations.]
For a long time, opponents of "Net Neutrality" (however they chose to interpret the concept at the time) have argued that, conceptually, Net Neutrality was at odds with the national policy goal of increasing broadband deployment and penetration. The typical argument against Net Neutrality was as general, and loosely-defined, as the concept of Net Neutrality. A good example of the Net-Neutrality-Broadband Policy tradeoff is this 2004 paper
by Professor Christopher Yoo
for the Progress and Freedom Foundation
. This is old news, and not surprising coming from a pro-business group like PFF. So, why bring up an old argument?
Well, because "Net Neutrality" is no longer an amorphous, generalized, mean-what-you-want-it-to-mean, concept. No, the FCC has now given Net Neutrality a very specific meaning in its NPRM and proposed rules
. This is what makes yesterday's ex parte filing
by the Antitrust Division of the Department of Justice
("the DoJ") in the FCC's Broadband Plan proceeding so interesting. The DoJ's ex parte is interesting for several reasons, but the main one is that it highlights the tension between the goals of the Broadband Plan (as seen through the "consumer welfare" eyes of the DoJ) and the policy and proposed rules set forth in the Net Neutrality NPRM.
Continue reading A House Divided? The Broadband Plan vs. Net Neutrality
September 25, 2009 4:13 PM
I have to confess, I haven't been following the Commission's major initiative: the development of the National Broadband Plan. Why? I guess I'm just skeptical about the ability of the regulator (or any other central planner) to anticipate innovation, much less promote it. From what I've seen, the best the government can do is to try to enforce the rules that exist, on the one hand, and, on the other, to eliminate rules that hinder healthy growth in commerce. The idea of the government "creating" a "broadband plan" and then seriously expecting private firms to cooperate is just something I don't think I've ever witnessed--outside of an economy with much deeper government participation in the marketplace than we have here in the U.S.
So, I haven't been following along mostly because I can't figure out why this regulator-driven plan would be any more successful than any other "plan" from any other central planner. In fact, one thing about the "fact gathering" for the Plan makes me wonder whether this is even what Congress had in mind when they asked the FCC to come up with a "Plan." Specifically, the methodology for "creating" the "plan" seems--from the panels the Commission is holding--exclusively, and excessively, focused on factors beyond the Commission's ability to influence.
But, given the Agenda for the next FCC meeting on September 29th (progress on "the Plan"), I decided to take a gander at what the FCC has been looking at to develop the National Broadband Plan. A cursory glance at the Broadband.gov web site displays a profound lack of introspection into how the Commission's current policies are influencing--for better or worse--broadband deployment. In the previous post, I noted the IUB decision earlier this week, finding "traffic pumping" to be a violation of the traffic pumpers' tariffs.
Given that access charge revenue is only available for originating or terminating circuit-switched calls, any regulatory scheme that allows access charges to artificially expand is tantamount to paying carriers not to deploy broadband and not to switch to an all-IP format. Yet the Commission sees no sense of urgency to reform intercarrier compensation, and is even entertaining a Petition to Preempt the IUB decision.
Similarly, higher USF "taxes" limit the amount of funds available to carriers who have yet to deploy broadband, and the "squeeze" gets tighter every quarter, as the contribution factor inexorably increases. Expanding the contribution factor, or more closely scrutinizing subsidized services are issues that have simply faded from the Commission's screen--and I mean this literally. Under "strategic goals" at the FCC web site (on the left hand side of the screen), Universal Service and Intercarrier Compensation are two issues that are nowhere to be found.
Is it me, or would a good look in the mirror, help the Commission better assess the influences of its current policies, so that--if necessary--the FCC could change the things that are easiest to change? It's kind of like looking at a "muscle magazine" and designing an exercise/diet/fitness program, dreaming about how big and buff you're going to get . . . all the while, conveniently ignoring that you're smoking two packs a day and drinking a six-pack every night. Wouldn't you want to know if you could reach your goals faster, just by getting out of your own way?
September 24, 2009 3:31 PM
[Note: I want to clarify from the outset what I mean by "intercarrier compensation." Used generically, the term "intercarrier compensation" can refer to any charges between carriers for handling traffic. Accepting another carrier's traffic can (but doesn't need to) involve two functions: 1) the charge to transport traffic from the point of interconnection to the last aggregation/switching point in the terminating carrier's network, and 2) the cost to "terminate" (switch and deliver) that traffic to its destination. In the world of exchange access, there are many carriers and carrier combinations that can usually transport traffic to the terminating carrier's last point of aggregation. Said differently, there is a vibrant and competitive market for wholesale transport, so in our context "intercarrier compensation" will only be used to refer to the "pure" terminating function--from the last point of switching on the terminating carrier's network."]
Intercarrier compensation is, perhaps, the most un-understood (not mis-understood), and urgent, telecom policy issue requiring the Commission's attention. But, I've kind of done it to death, so I'll try to make this my last "pure" post on this subject. Nonetheless, the Commission's persistent refusal to solve the obvious problems with the design of the intercarrier compensation system make this an issue that pervades, pollutes, and corrupts almost every subsequent telecommunications policy initiative; and, unless corrected, the National Broadband Plan will be no exception.
The subject of intercarrier compensation is devilishly complicated to understand, but the correct policy--the answer, the "way", the "tao"--is beautiful in its intellectual simplicity. The "tao"--as always--is comprised of the "yin" and the "yang." So, rather than skipping (or Skype-ing) to the tao, it is more enlightening to work backwards, and introduce the yin and the yang of intercarrier compensation, why they must exist in proportion, what can happen when they go out of proportion, and then come to the policy solution that will best promote harmony. In the last post, we discussed the internal tension between certain "free" services. These "free" services are all the result of attempts to exploit quirks in the intercarrier compensation system--a system that places different prices on the same function (traffic termination) based entirely on how that traffic is classified. What was not discussed was how these internal tensions can coexist within one carrier.
Continue reading The Tao of Intercarrier Compensation
July 2, 2009 11:24 PM
At today's open meeting, the FCC gave an update on its process for developing a National Broadband Plan. The Commission's explanation of the development of a National Broadband Plan, and the benefits that such a plan promises, upon implementation, was truly inspirational. . . and a very befitting way to kick off the Fourth of July weekend. The only thing that could have made the presentation more inspiring would have been the addition of Lee Greenwood's, "Proud To Be An American" as a background track.
All kidding aside, though, the prospect of a National Broadband Plan is an exciting proposition, and has, naturally enough, led to a lot of excited and ambitious "castles in the air" type conjecture (though not in the pejorative sense of the expression). Seriously, I'm impressed by the way Chairman Genachowski is going about developing a broadband plan. He couldn't do better with his choice of a person to shepherd the plan along--Blair Levin. I wasn't able to find Blair's bio on the Commission web site, but, if you're reading this, I shouldn't have to. Blair is one of those few people that, if you've been around the telecom policy world for any time at all, even if you don't know him, you know he knows what's going on--and probably understands the implications a lot better than you! At least this is the case when the "you" is me, anyway.
The other thing Chairman Genachowski--with less than a week on the job--got right was the "broadband.gov" web site to allow a lot of transparency into the development of the broadband plan, and to allow for maximum inclusion of ideas by all concerned parties. Finally, on the web site, I'd like to draw the reader's attention to the excellent presentation by Blair Levin on the process that has already been developed to begin the iterative process of creating a National Broadband Plan. So, I am kind've encouraged that the Commission is not looking at the broadband plan as a totally "green field" project that can be undertaken without regard to first fixing existing problems. Still, this being Washington, nobody gets a free ride--except for, like, on their birthday, or political appointment day, or some other special occasion.
Continue reading The FCC's Broadband Plan: Is the Grass Greener in a "Green Field" or a "Brown Field"?
May 14, 2009 7:41 AM
Saul Hansell had a great post on May 8th, that is well worth reading if you are one of the many parties struggling to come up with comments to file on June 8th in the FCC's National Broadband Plan proceeding. In fact, the last paragraph/sentence of the post provides what, with very little (if any) editing, could be the first sentence in a compelling set of comments. Indeed, it is too bad the FCC didn't start its request for suggestions for big plans with such a simple, commonsense, and obvious premise. Mr. Hansell concludes:
"What good will it do for the F.C.C. to come up with a spiffy new plan to get faster cheaper broadband to more people if the phone companies fail and millions of people won't be able to dial 911 in an emergency?"
To really understand what he is talking about, I strongly encourage reading the post. For too long, telecom industry "insiders"--what you might call the FCC's constituents--have been whistling past the graveyard, assuming that the FCC has all the tools it needs to keep any type of company/industry in business if it really deems that company's services to be in the "public interest." The "tools" of which I am referring are the implicit and explicit subsidies of intercarrier compensation (what companies--telephone, cable, or wireless--pay each other to deliver voice calls to the party being called) and the Universal Service Fund, which all users pay into in order to ensure (theoretically) that all Americans have access to telephone service. Mr. Hansell understatedly characterizes these interrelated mechanisms as "inscrutably complex." They are all that, and a bag of chips.
Continue reading [Go] Back to [Get to] the Future: The Foundation of a National Broadband Plan
April 16, 2009 5:32 PM
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.
Continue reading Broadband Grant Derby: And the Winner Is . . . The Rural LEC! (Unless . . .)