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.
Sounds like an industry lobbyist mandate to me.
While the US regulatory oversight has been lowered year after year, in the name of “free markets”, the truth of the matter is the incumbent, of which I am sure your association represents, failed their leadership roles and stifled competition for market share.
The result ? the US has lost its global lead in broadband.(and by default, innovation and job growth)
Our invention, lost by special interest influence on the regulatory process all under the guise of , and in the name of “free markets”
We all know by now, broadband is not a truly free market.
Its deployment is and has been hampered by incumbents balance sheet concerns and teams of high priced lawyers, paid to navigate the laws and halls of congress.
We need creative destruction of old models and institutions to allow innovative deployment and innovation to occur – this will create many jobs.
And because of all the special interest groups, mucking the waters, the only way that will happen, is with regulatory intervention.
Let freedom ring!
Here is a good example of unchecked incumbent “free market” broadband behaviors.
http://www.govtech.com/technology/Municipal-Broadband-Networks-Outlawed-North-Carolina.html
A close look at the definitions in Section 1302 (which supercedes and replaces Section 706) shows that “advanced telecommunications capability” doesn’t refer to the Internet at all. It refers to “switched” (not packet-based) telecommunications services, like ISDN. How can the FCC claim regulatory power over the Net via a statute which doesn’t even apply to the Internet?
Dave, I’ll try to post tomorrow about why fiber isn’t being built out by telcos (economics). I’m not sure to which incumbent you refer? Cable? Insofar as the regulatory process goes, it’s made deployment harder. Net neutrality shifts revenue (and thus infrastructure investment incentives) from service providers to edge providers. Ironically, edge provider profits and market caps (e.g., Google and Apple) are much higher than infrastructure providers. Edge providers are the ones profiting the most from broadband, but they don’t build retail networks. They just use them.
Good points Fred and Agreed, but this is only more the reason to conclude that broadband service is a right of, and for, the good of the commons, and not for-private entities.
Edge providers have creatively destructed old, entrenched, non innovative industry, and put a whole new generation to work. Scary, but thats how it works.
Hopefully voters will someday get the fact that without basic BB service, they will be locked out of the information game, job race, chance to educate/improve themselves/families. This is already happening with digital divide/rural issues.
Just as the private roadways were built -and gave way to public owned right of ways ( and now toll ways), but governed (and regulated) by law. Broadband should be everyones right to information and knowledge.
Trying to privatize this common right of way (information) ultimately will challenge our free speech, and the core of our freedoms …all in the name of secular profit.
And I believe in this case, trading near term privatized gain, for future common gains, will have proven to be a recipe for societal/ economic failure.