Friday, May 29, 2015

Incumbents' petition to block FCC's Title II rules faces steep legal hurdles, likely dismissal

John Eggerton of Broadcasting & Cable outlines the legal arguments being made by incumbent telephone and cable companies seeking to block enforcement of the Federal Communication Commission's recently promulgated regulations reclassifying Internet services as common carrier telecommunications services under Title II of the Communications Act.

The incumbents' petition is likely to be dismissed. The reason is what's known as judicial deference: courts generally defer to regulatory agencies' interpretation of statutory law requirements. The doctrine holds that regulators have the necessary expertise to discern and apply the finer points of statutes whereas judges, who generally do not, are naturally reluctant to second guess the decisions of regulators or interject themselves into disagreements over statutory law between regulators and regulated entities. Under the doctrine of judicial deference, the appropriate forum to work out disagreements with regulators over application of statutory law is the rulemaking process and not the courts.

In this case, the incumbents face an especially steep challenge because the Communications Act specifically grants the FCC broad discretion to apply Title II of the Act in the first section of Title II. Section 201(b) states that "[t]he Commissioner may prescribe such rules and regulations as may be necessary in the public interest to carry out the provisions of this Act."

Wednesday, May 06, 2015

Tom Wheeler tells cable industry to stop complaining, start competing | Ars Technica

Tom Wheeler tells cable industry to stop complaining, start competing | Ars Technica: Part of looking forward, in Wheeler's opinion, is boosting competition. With some exceptions, cable companies have generally not competed against each other, letting a single company dominate each region instead of "overbuilding" in each other's territory.

"You don't have a lot of competition, especially at the higher speeds that are increasingly important to the consumer of online video," Wheeler said. This means there isn't the kind of "intense and constant pressure to continue to improve" as there was in the days when DSL posed a serious threat to cable, he said.
The thing is, Mr. Chairman, telecommunications infrastructure doesn't easily lend itself to competition due to the high costs to build and maintain it. It functions as a natural monopoly like roads and highways and electrical distribution infrastructure. We don't build competing thoroughfares to offer motorists the choice of taking Highway "A" and "B" and "C," for example from the same starting point to the same destination. Or multiple power lines serving the same property. Having multiple landline Internet connections passing by premises is similarly overkill and economically wasteful. Just ask any of the legacy phone companies who feel compelled to issue news releases announcing "gigabit fiber" to compete with Google Fiber. It's a helluva lot cheaper to issue a news release than to actually overbuild competing infrastructure and doesn't risk the ire of shareholders averse to big capital expenditures.

The competition Wheeler's FCC and the federal government should be supporting is helping fund the planning and construction of open access fiber to the premise telecommunications infrastructure over which Internet Service Providers would compete to sell services to customer premises. This would also potentially provide greater opportunity for new services than could be offered over a vertically integrated cable provider that owns both the pipe and the services offered over it.

FCC's Sohn: Wired Broadband Competition Lacking | Broadcasting & Cable

FCC's Sohn: Wired Broadband Competition Lacking | Broadcasting & Cable: Gigi Sohn, senior counselor to FCC chairman Tom Wheeler, told a New Haven, Conn., audience Monday that "the simple truth is that meaningful competition for high-speed wired broadband is lacking."

She came not to bury broadband, but to praise the state's 1 gig community broadband project as a way to provide that "lacking" competition.

Viewed in the context of landline Internet infrastructure as a whole, Sohn is correct. It's a natural monopoly due to high cost barriers that keep out potential competitors as well as inefficiencies that make building parallel infrastructures as nonsensical as building multiple competing roads and highways serving the same area. If they were privately owned and operated for profit -- as is most telecommunications infrastructure in the U.S. -- the likelihood of their having a net present value greater than zero is slim to none.

What this story as well as many others lamenting the lack of "broadband competition" fail to mention is how Connecticut's project does offer competition to the consumer for Internet services via open access fiber infrastructure that provides wholesale access to Internet Service Providers (ISPs) as an alternative to the vertically integrated, closed access infrastructures used by the legacy telephone and cable companies as well as Google Fiber. ISPs would then compete to sell their services to consumers. From the CT Gig Project website:

The open-access model would introduce true competition into the Internet
marketplace. The idea is to build the infrastructure and then give Internet
providers equal access to utilize it. Your Internet choices should be made
based on price and service, not solely by the town boundaries you reside in.
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