Obama flat wrong, at odds with FCC in framing telecom infrastructure as competitive market

Municipal Broadband Battles | Al Jazeera America: Amid concerns in some markets that big telecoms and cable companies are providing service that is too slow and too expensive, some cities are starting their own Internet services, spending millions of dollars to bring super-high-speed, or gigabit, Internet service to their communities through a new fiber-optic infrastructure. Proponents call it the single most important piece of infrastructure of the 21st century, attracting businesses, bolstering education and raising property values.

President Barack Obama has declared community broadband, as it’s called, a key to economic prosperity. “Today I’m making my administration’s position clear on community broadband. I’m saying I’m on the side of competition,” he said. (Emphasis added)

The problem with the president's framing telecom infrastructure as a competitive market is he's just flat out wrong. It can never be a truly competitive market with many sellers and choices for consumers due to the high cost of deploying fiber to the premise infrastructure. Those high costs have kept telcos and cablecos from upgrading their legacy infrastructures and building out fiber to all customer premises in their service territories to replace the outdated metallic cables designed for voice telephone and cable TV service of decades past. Instead, they've built limited fiber to the premise in selected high density "footprints" and redlined countless American neighborhoods, leaving many still on dialup that was state of the art technology when Bill Clinton was serving his first term as president.

Moreover, by furthering the notion that telecom infrastructure is a competitive market offering, Obama is at odds with the Federal Communications Commission that -- at Obama's urging -- adopted a common carrier regulatory framework early this year predicated on telecom infrastructure as a monopolistic market. Consequently, the FCC's Open Internet rulemaking requires Internet service to be offered to all customer premises requesting it -- as telephone service before it -- under the universal service and nondiscrimination provisions of Title II the federal Communications Act.

FCC Chair Wheeler faces either/or choice on Internet regulation; the baby can't be split.

Obama’s call for an open Internet puts him at odds with regulators - The Washington Post: Huddled in an FCC conference room Monday with officials from major Web companies, including Google, Yahoo and Etsy, agency Chairman Tom Wheeler said he has preferred a more nuanced solution. That approach would deliver some of what Obama wants but also would address the concerns of the companies that provide Internet access to millions of Americans, such as Comcast, Time Warner Cable and AT&T. “What you want is what everyone wants: an open Internet that doesn’t affect your business,” a visibly frustrated Wheeler said at the meeting, according to four people who attended. “What I’ve got to figure out is how to split the baby.”

It's natural given Tom Wheeler's background as a telecom lobbyist that he would look for some kind of deal or compromise that opposing parties in a contentious policy issue can live with. But that's not what President Obama -- who designated Wheeler as Federal Communications Commission chair -- had in mind when he issued a statement this week calling on the FCC to issue rules defining Internet service a common carrier telecommunications service under Title II of the Communications Act instead of a more narrowly offered, specialized information service under Title I of the statute. These are entirely different regulatory schemes that don't lend themselves to hybrid models. It's an either/or choice. The baby can't be split. Moreover, doing so will only create legal uncertainty and fuel litigation. Rather than satisfying various stakeholders, none will be happy and more inclined to turn to the courts for redress of their grievances, potentially creating years of regulatory uncertainty.

Judging from the millions of comments filed with the FCC on the question, it's eminently clear the public preference is for Title II common carrier regulation of Internet service providers. Which makes sense given the Internet is gradually replacing the role the telephone system served in the past: a universal communications system accessible to everyone regardless of their location and whether they received or placed calls. Even the legacy incumbent telephone companies agree, saying it doesn't make sense for them to have to adhere to regulations governing landline telephone service.

Bottom line at this point, this is now primarily a political and not a regulatory issue. As such, expect politics to come more sharply into play. If Wheeler can't bring himself to make a clear policy call for Title II, President Obama could end up designating another Democrat on the FCC to replace him as chair. Speaking of Democratic politicians, I expect former President Bill Clinton will weigh in siding with Obama, saying something like Title II was where he ultimately intended Internet regulation to go when he signed the 1996 Telecommunications Act into law, with Title I more of a transitional but not permanent regulatory scheme. His vice president, Al Gore, could also join the Title II juggernaut.