Archive for May, 2011

  

I Say Tomato and You Say Tomato, but We Don’t Mean the Same Thing

Updated on May 27th, 2011

I blogged yesterday about the FCC’s new conclusion in its seventh 706 report that “availability” and “deployment” mean “adoption” in addition to physical access to the Internet. But did anyone notice that the FCC’s National Broadband Plan used the word “availability” as the header for its section discussing physical deployment and the words “adoption and utilization” as the header for its section discussing, well, “adoption”?

The American Recovery and Reinvestment Act (ARRA) (pdf available here) required the FCC to develop a National Broadband Plan that contained “an evaluation of the status of deployment of broadband service,” which the FCC thought was synonymous with “availability” and did not include “adoption.” (Emphasis added.) But now the FCC has decided that the words “availability” and “deployment” do include “adoption” as used in Section 706. Did Congress intend that “deployment” mean something different in Section 706 than in the ARRA? What do you think?

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The Fiber-To-The-Premises Dream

Updated on May 27th, 2011

The web lit up this week with stories about the FCC’s Seventh Report on the availability of broadband capability to Americans. (A pdf of the report is available here. See Ars Technica here for a typical story.) Commenters have repeated the same old complaints about slow speeds and slow deployment. It reminds me of commenters in the FCC’s national broadband plan proceeding who demanded minimum broadband throughput of 100 mbps. Some commenters imply that broadband service providers are “evil” for not deploying fiber-to-the-premises (FTTP). Other commenters think government should build fiber networks. Neither is very realistic.

The performance of Verizon’s FIOS service demonstrates that the business case for deploying FTTP just isn’t very attractive. Verizon apparently invested $23 billion in FIOS. Unfortunately for Verizon, it appears it’s losing money on that investment. Although Verizon denies losing money on FIOS, it has stopped investing in it. Despite its very high throughput and reliability, consumers aren’t subscribing to FIOS in large numbers, and only a small portion of Verizon’s revenue comes from FIOS. The vast majority of Verizon’s revenue and subscribers come from Verizon’s wireless business. Let’s take a look at the numbers from Verizon’s Q1 2011 earnings results. Read the rest of this entry »

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The FCC’s New Interpretation of Section 706(b) Opens a Pandora’s Box of Internet Regulation

Updated on May 26th, 2011

D.A. Jack McCoy: “I hear Pandora’s box slowly creaking open.” Law and Order (1990)

Last Friday the FCC released its Seventh Report on the availability of broadband capability to Americans. (A pdf of the report is available here.) For the second time the FCC found “that broadband is not being deployed in a reasonable and timely fashion to all Americans.” (Report at ¶ 1.)

This is not surprising. As I’ve noted before, the FCC is now using its reports to pursue a more regulatory agenda. The FCC’s rationale, however, is very surprising. Its new interpretation of Section 706 is so broad it empowers the FCC to regulate virtually every aspect of broadband and the Internet.

Its new interpretation of Section 706 is so broad it empowers the FCC to regulate virtually every aspect of broadband and the Internet.

The relevant statute (section 706(b)) requires the FCC to determine whether broadband is being “deployed” to all Americans in reasonable and timely fashion. The FCC complied with that statutory mandate by analyzing actual deployment. The FCC concluded that, because broadband is not currently deployed to all Americans and there may be areas where there is no commercial business case to do so, broadband is not being deployed in a reasonable and timely fashion to all Americans.

The FCC should have stopped there. Whether or not one agrees with the FCC’s conclusion, the FCC had complied with its statutory duty based solely on the extent of actual broadband deployment. There was nothing more the FCC was required to do, and more importantly, nothing more it should do.

But the FCC did not stop there. It separately analyzed whether broadband is “available” to all Americans. Section 706(b) does say the FCC must “initiate a notice of inquiry concerning the ‘availability’ of advanced telecommunications capability to all Americans.” When this phrase is read in context, however, it’s obvious that “availability” is synonymous with “deployment.” But the FCC heard the lid of Pandora’s box creeping open and concluded that “availability” and “deployment” are broader than physical deployment.

Why would the FCC adopt such a tortured construction of an unambiguous statute? The answer is in the FCC’s analysis. The FCC’s analysis of availability focuses primarily on adoption rates, which the FCC uses as a proxy for availability (presumably because the statute doesn’t use the word “adoption”). Defining adoption rates as an issue over which the FCC has jurisdiction, rather than merely physical deployment, gives the FCC an opportunity to regulate virtually every aspect of broadband, including prices and service quality.

That opportunity derives from the last sentence of Section 706(b), which says that, if the FCC finds broadband deployment is not reasonable and timely, “it shall take immediate action to accelerate deployment of such capability by removing barriers to infrastructure investment and by promoting competition in the telecommunications market.”

There are a lot more “barriers to infrastructure investment” for the FCC to “remove” once adoption rates are read into the statute. According to the FCC, removing barriers to infrastructure investment now “requires the Commission to identify and help reduce potential obstacles to deployment, competition, and adoption.” (Emphasis added.) The FCC’s new list of barriers based on these criteria is astonishing in its scope. It includes: (1) costs and delays in building out networks and offering service; (2) low broadband service quality; (3) lack of affordability of broadband (i.e., broadband prices); (4) consumers’ lack of access to computers and other broadband devices; (5) lack of relevance of broadband for some consumers; (6) poor digital literacy; and (7) privacy concerns.

This set of issues is so broad it’s hard to see any limitation at all on the FCC’s jurisdiction over broadband. With its new interpretation of Section 706(b), the Commission has in a single stroke gone from an agency that had little to no authority over broadband to an agency that can regulate broadband in every particular. The FCC has fully lifted the lid off the Pandora’s box of Internet regulation. It’s now up to the courts or Congress to close it.

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Waiting for a Spectrum Inventory Is a Distraction, Not a Plan

Updated on May 10th, 2011

Mahad: Okay, you go and create a distraction.

Mila: Then what?

Mahad: By then I should have the second half of the plan figured out.

Skyland (2005)

Two weeks ago NAB released a paper claiming there is no spectrum crisis (pdf here). Even though the paper lacks any relevant, quantifiable analysis, it somehow continues to get cited in articles and in Congress. Yesterday even an IEEE publication stooped to parroting NAB’s unsupported claims (see article here). According to the IEEE blog, the crux of NAB’s argument is the lack of a “spectrum inventory.” Waiting to make more spectrum available while conducting a lengthy “spectrum inventory” is a distraction, not a plan.

Broadcasters are keen to focus on the spectrum use of others to distract Congress from the broadcasters’ own Achilles heel: broadcasters use the largest amount of the most valuable spectrum to serve only about ten percent of the population. As I’ve blogged before, broadcasters primarily use their spectrum to take advantage of government subsidized must carry rights. Without must carry rights, most broadcasters would quickly be out of business and would no longer have any use for their spectrum at all. Using spectrum to access a government subsidy is hardly an efficient use of spectrum.

It’s not surprising that the broadcasters would rather have the government look at the spectrum use of others rather than the broadcasters’ own. The problem for NAB is that we already have more than enough information to know that the broadcast spectrum must be made available for mobile use if America is serious about satisfying consumer demand for mobile services. Here’s what we know already:

  • The broadcast spectrum is the only large, contiguous block of spectrum in the prime frequencies for mobile use.
  • Mobile use is exploding now and will exhaust currently available mobile spectrum.
  • Broadcasters can be repacked at the expense of mobile providers without harm to the services broadcasters already offer (especially given that the vast majority of their profits are the result of must carry rights rather than spectrum use).
  • The broadcasters’ current services are a paragon of inefficient spectrum use.

Given what we know already, we don’t need any additional information from a spectrum inventory to move forward on incentive auctions now. No matter how inefficient other spectrum users may be, we already know they don’t have a large, contiguous block of spectrum in prime mobile frequencies that can be made available quickly and at no cost to consumers. The broadcasters do. That’s why Congress should focus on incentive auction legislation now rather than NAB’s groundless distractions.

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