Monday, February 10, 2014

The major causes of U.S. premise Internet service policy quagmire

U.S. telecommunications policy for premises Internet connectivity is in need of reassessment and revamping. It severely limits the nation’s ability to ensure all homes and businesses have fiber to the premise Internet connectivity capable of serving both current and future needs as bandwidth demand continues to grow exponentially.
Call it the Levin quagmire, named after former U.S. Federal Communications Commission official Blair Levin. In 2012, Levin predicted little change in the status quo, noting for most Americans over the near term, the best wireline network available to them will be the same one they have now. According to the FCC, for about 19 million Americans that’s dialup, state of the art technology in the early 1990s when Bill Clinton was starting his first term as president.

Summed up, these are the circumstances and policies that have produced the current quagmire:
  • There is an insufficient business case for legacy incumbent telephone and cable companies to invest in building out their networks to serve all premises in their service areas or to upgrade existing infrastructure to fiber to the premise service. Nevertheless, these providers generally don’t avail themselves of federal and state subsidy programs aimed at capitalizing the cost of Internet infrastructure.
  • Federal subsidy programs such as the Connect America Fund are only available to telephone companies and not cable companies that are becoming the dominant premises Internet service providers over telephone companies that are instead concentrating their capital investments on mobile wireless markets.
  • Legacy incumbent telephone and cable providers view their service territories as proprietary franchises. Consequently, they oppose the award of subsidies to alternative providers and lobby for subsidy program eligibility rules inappropriately based on mobile wireless service and outmoded and changing standards of Internet service. They also lobby for state laws that bar local governments from building and operating fiber to the premise networks or make it impractical to do so.

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