Beyond Net Neutrality: The Importance of Title II for Broadband - Public Knowledge

Beyond Net Neutrality: The Importance of Title II for Broadband - Public Knowledge: Title II classification is critical for protecting an open internet, but it is also just as important for preserving our values of service to all Americans, including universal service and consumer protection. Broadband has the power to transform people’s everyday lives. Title II classification of broadband must remain in place to continue protecting the fundamental values of our communications systems.

H/T to Yosef Getachew of Public Knowledge for this item emphasizing the Federal Communications Commission's reclassification of Internet as a common carrier telecommunications utility under Title II of the U.S. Communications Act in its 2015 Open Internet Rulemaking. 

Title II's universal service provision has unfortunately been buried under the mainstream media "net neutrality" meme that is utterly meaningless from the perspective of the 34 million Americans the FCC found in 2016 lack access to advanced telecommunications infrastructure capable of delivering high quality voice, data, graphics and video. Here's what I wrote on the topic shortly before the rulemaking was adopted.

A universal service standard prevents all too common crazy quilt pattern of telecom infrastructure deployment such as this accompanying a post at Steve Blum's blog illustrating how legacy incumbent providers engage in neighborhood cherry picking and redlining.

Deceptive deal: Verizon Wireless 4G LTE "unlimited" isn't

Verizon Wireless which like other wireless ISPs has historically offered metered "data plans," sold in multiple price tiers based on the amount of data transacted over the connection. Under pressure from falling subscriber growth, Verizon Wireless recently introduced an "unlimited" service that dispenses with the meter and offers a flat monthly recurring charge under a 2-year contract. Sounds like a good deal, right, especially for the many households in areas redlined by landline ISPs and without an option for service?

Wrong. It's a lousy, deceptive deal. The VZ Wireless meter is still running under this so-called "unlimited" service which is in fact data limited. And it's a hard limit. Once the meter hits 10GB, the service is shunted off VZ Wireless's 4G LTE network and onto its outmoded and crippled 3G network that can't support streaming or Skype until the start of the next monthly billing cycle.

FCC Chair Pai wrongly describes natural monopoly of telecom infrastructure as competitive market

FCC Chairman Ajit Pai on Why He's Rejecting Net Neutrality Rules - Reason.com: If left in place, however, the Title II rules could harm the commercial internet, which Pai described as "one of the most incredible free market innovations in history. Companies like Google and Facebook and Netflix became household names precisely because we didn't have the government micromanaging how the internet would operate," said Pai, who noted that the Clinton-era decision not to regulate the Internet like a phone utility or a broadcast network was one of the most important factors in the rise of our new economy.

Companies like Google (excepting Google Fiber's now defunct venture into fiber to the premise service), Facebook and Netflix aren't network providers. Consequently, they don't face the high costs associated with building and operating telecommunications infrastructure serving homes, businesses and institutions that deters market competition and promotes market failure.

Ajit Pai: The funny thing about that is because it's precisely because the phone company was a slow moving monopolist. That's exactly the point we're trying to make. These rules, Title II rules were designed to regulate Ma Bell, and the promise with Ma Bell, the deal with the government was, we'll give you a monopoly as long as you give universal service to the country. As a result, for decades, we didn't see innovation in the network we didn't see innovation in phones and it's when you have a competitive marketplace and you let go of that impulse to regulate everything preemptively, that you finally get to see more of a competitive environment.

Pai is engaging in the distortion of describing the natural monopoly market that telecommunications infrastructure is as a competitive market. Wishing it were competitive won't make it so. The cost barriers to entry are simply too high. Just ask Google Fiber. Or the 34 million Americans who have experienced sell side market failure, their homes and small business not offered landline connections capable of delivering high-quality voice, data, graphics and video, according to figures released by the U.S. Federal Communications Commission in 2016. Market failure is hardly an indicator of a robustly competitive market.

Pai's predecessor Tom Wheeler indulged in the misguided notion that telecom infrastructure could be competitive market, even though the FCC under his leadership adopted the 2015 Open Internet rulemaking predicated on regulating Internet service as a natural monopoly, classifying it as a common carrier telecommunications utility.

No FCC enforcement of universal service, anti-redlining provisions of Open Internet rulemaking

Cable, internet connection still not available for many: After 36 years of not being able to access standard internet and cable TV at their home in Deerfield, Gloria and Greg Kasprowicz recently had a Spectrum representative come to their door asking if they would like to have service. The couple, who live three miles from the local Spectrum headquarters on Firehouse Road, were excited when the representative told them they could get service through Spectrum, so they set up an appointment and waited anxiously.

But the date and time of the installment came and went, and no one showed up. So Gloria gave Spectrum a call to see what was going on and was told the company wasn’t able to service her house at this time. “What do you do at this point?” Gloria asked. “(Service) comes up from the bottom of the road, so the first couple of houses, I believe, have it. And it comes down the road to probably a half a mile up the road from us. There’s like a mile stretch — the last mile — for some reason they started from the top and came down and started from the bottom and came up.”

Technically under the U.S. Federal Communications Commission's 2015 Open Internet rulemaking that classified Internet protocol-based telecommunications as a common carrier telecommunications service, Spectrum would have to honor the Kasprowiczs' request for service. That's because the reclassification under Title II of the federal Communications Act includes that requirement as part of Title II's universal service and anti-redlining provisions. But despite adopting the rule, The FCC has never enforced those requirements. The current FCC chairman, Ajit Pai, is reportedly preparing to reverse the rulemaking.

NC bill that permits leasing of muni fiber raises question of how it reduces infrastructure construction costs

Rural broadband internet bill passes NC House | News & Observer: House Bill 68 is titled the BRIGHT Futures Act, which stands for Broadband, Retail, Internet of Things, Grid Power, Healthcare and Training. Its main goal is expanding access to high-speed, broadband internet in rural areas of the state where it’s often too expensive for private service providers to extend their lines.

*  *  *
Bill sponsors say cities, towns and counties could make use of what’s known as “dark fiber” – additional capacity in existing infrastructure that government uses to connect traffic lights, schools and public facilities. Leasing capacity to private internet providers could provide revenue to local governments that could support the expansion of
government-owned fiber networks.

The problem as stated here is it's too costly for private telecom providers to extend their infrastructure to rural areas. So how does allowing these providers to lease local government owned fiber address the cost of building the needed infrastructure that connects homes and small businesses? Particularly given the challenging business case to justify building infrastructure to serve these areas?

A concise summary of poor state of American telecom

The FCC Is Leading Us Toward Catastrophe – Backchannel: Adding a little internet-y flavor to basic, physical telecommunications lines makes zero difference to the economics of building these essential connections. Because the upfront costs of building communications lines — very physical things, lots of labor costs involved — are high, because no one needs two lines to their house, and because it was cheaper to upgrade the cable systems to higher speeds than to dig up copper wires and replace them with fiber, we have ended up with a country subject to geographically divided markets, private, unconstrained monopolies, and big holes where internet access is rare and expensive where it exists at all. In urban areas, local cable monopolies generally wield tremendous power and charge as much as they like. Rural places, meanwhile, are often relegated to inadequate connections over copper phone lines.

Susan Crawford provides an concise summary of the poor state of American telecommunications borne out of misguided and excessive reliance on market forces to modernize and build out the nation's telecom infrastructure in a natural monopoly market where market forces don't work.

Robert W. Taylor, a pioneer of the modern computer, dies at 85 - LA Times

Robert W. Taylor, a pioneer of the modern computer, dies at 85 - LA Times: Robert W. Taylor, one of the most important figures in the creation of the modern computer and the Internet, has died. He was 85. According to his son Kurt Taylor, the scientist died Thursday at his home in Woodside. He suffered from Parkinson’s disease and other ailments. Taylor’s name was not known to the public, but it was a byword in computer science and networking, where he was a key innovator who transformed the world of technology. Taylor was a Pentagon researcher in the 1960s when he launched Arpanet, which evolved into what we know today as the Internet.

Presaging the concern in our current time over disparate access to advanced Internet-based telecommunications, Taylor wrote the following in a paper he co-authored, The Computer as a Communication Device published in April 1968 in Science and Society:

For the society, the impact will be good or bad, depending mainly on the question: Will "to be on line" be a privilege or a right? If only a favored segment of the population gets a chance to enjoy the advantage of "intelligence amplification," the network may exaggerate the discontinuity in the spectrum of intellectual opportunity.

USTelecom is right -- and wrong -- on public telecom infrastructure

Survey: Most Americans cities to build, sell Internet plans: Proponents of independent Internet networks argue that a "public option" for Internet access could help drive down the price of broadband and increase speeds. Opponents say the expense of building new networks represents an unacceptable financial risk for many local governments. "Municipal broadband networks too often end up failing and costing taxpayers millions," said USTelecom, a trade association representing Internet providers and telecom companies.

USTelecom is right. Modernizing telecommunications infrastructure rapidly enough to meet the nation's needs in an era of Internet protocol-based services will indeed cost tax dollars. It simply has to because infrastructure costs billions to build. That high price is not compatible with the short term business models of private investor owned legacy telephone and cable companies. That's why they're confined to piecemeal build outs and bandwidth rationing that leave many existing and putative customers in their service territories unserved and undeserved and complaining about lousy, poor value service. Even conservatives are waking up to the fact of this market failure, recognizing that market forces don't work well when it comes to high cost infrastructure. And it's about time.

USTelecom is also correct that local governments face significant financial risk due to the large sums involved. That's why I propose in my eBook Service Unavailable: America’s Telecommunications Infrastructure Crisis a federal "public option" since only the federal government -- and not state and local government -- can shoulder the burden.

Where USTelecom as well as those who support local government telecom infrastructure modernization projects are wrong is claiming these projects represent market competition with legacy incumbent telephone and cable companies. They do not and cannot. Local governments are responding to market failure, not any desire to compete in the telecommunications industry. They are looking to meet their needs to support economic development in the digital economy and address their citizens' complaints about crappy service from the incumbents. That situation has occurred because telecommunications infrastructure by definition is a natural monopoly and not a competitive market characterized by many sellers and buyers. Thus market forces fail, too weak to provide incentive for incumbent telephone and cable companies to provide better service.

U.S. at crossroads on telecom infrastructure modernization. The choice is to look to the past -- or to the future.

The United States stands at a crossroads when it comes to modernizing its telecommunications infrastructure. Many observers including Susan Crawford and this writer believe that modernization must be future-focused, providing an infrastructure that’s sufficiently robust and able to accommodate the rapidly growing demand for bandwidth that comes with the transition to digital, Internet-protocol based telecommunications. That means replacing the legacy metallic infrastructure that worked well for telephone and cable TV service in the 20^th century with the infrastructure of the 21^st: fiber optic connections serving every American doorstep. The future is big and it demands big thinking.

Others such as Doug Brake of the Information Technology & Innovation Foundation argue for a retrogressive approach that encourages us to think small. It proposes incremental fixes, prioritizing those areas worst impacted by market failure borne out of the misguided heavy reliance on investor-owned infrastructure. Instead of producing a future of bandwidth abundance where the term “broadband speed” is obsoleted, Brake’s incremental outlook would condemn Americans to a future of ongoing bandwidth poverty and its adverse effects for the larger socio-economy.

Competition isn't the answer for better premise telecom service

California lawmakers give cable utility perks, without utility obligations: Historically, there was a difference between telephone companies, which have been state regulated utilities for more than a century, and cable companies, which were originally franchised by local governments but managed to escape that oversight ten years ago. At least in California. Today, the differences are diminishingly small, particularly in urban and suburban markets where cable and telephone companies sell the same services and enjoy a comfortable, unregulated duopoly.

The distinguishing characteristics of a natural monopoly are high initial capital costs, usually related to infrastructure construction, and powerful economies of scale, both of which give the first mover in the market insurmountable advantages over would be competitors. In the old analog world, telephone and television service were completely different businesses, linked only by a common dependence on wireline networks. Now, both offer voice and video, and face competition in those segments from wireless providers. But they are also almost always the only wireline broadband option and wireless service is not a credible substitute, in either practical or microeconomic terms.

This is an excellent and much needed microeconomic description of the dominant privately owned telecommunications infrastructure that dominates in the United States that is all too often absent from the current policy discussion. Many ask why there isn’t competition in the telecommunications industry like exists in most consumer products and services. If it works there, then it must work in telecommunications also. More competition is the answer for better choice and consumer value, they conclude.

But as Steve Blum explains in his blog post, that reasoning is fatally flawed. More competition isn’t possible in a natural monopoly market where high cost barriers and the power of incumbency deter would be competitors. (Just ask Google how its flagging Google Fiber venture worked out) Telecommunications infrastructure will never be a robustly competitive market, defined as one with many sellers and buyers offering consumers many choices, enabling market forces that allow consumers to choose the best value and force out uncompetitive players.

When it comes to landline premise telecommunications service, most Americans can select from no more than two providers. And sadly for millions, none at all since the business model of vertically integrated investor owned providers must naturally redline and cherry pick among neighborhoods, creating winners and losers among consumers. As long as the nation relies on this broken model, it
will continue to lag when it comes to building the world class telecom infrastructure it needs to accommodate the explosion in digital communications.

The latest telco FTTP CapEx avoidance strategy: "wireless fiber"

Handcuffing Cities to Help Telecom Giants – Backchannel

This piece by Susan Crawford describes the latest large incumbent legacy telephone company strategy to avoid capital expenditures on fiber to the premise (FTTP): radio. Or as some incumbent voices term it, "wireless fiber." It follows the first CapEx avoidance strategy employed by AT&T a decade ago: running fiber to neighborhood nodes and serving customer premises via existing twisted pair copper designed for analog voice service. Naturally, there were lots of technology and service problems with that approach mixing old and new technology. And like the wireless everywhere strategy, it doesn't serve large portions of telco service territories where population density is lower.

As Crawford points out, wireless infrastructure no matter how fast can't offer the carrying capacity of fiber to accommodate inevitable future increases in bandwidth demand. It requires radios -- many of them -- mounted on utility poles and backhauled by lots of fiber. Running so much fiber into neighborhoods, Crawford begs the question of why not extend it all the way to customer premises (FTTP)? Anticipating resident push back against ubiquitous, unsightly field equipment installations in local government approval processes, the incumbents are aiming to preempt the locals while telling them "wireless fiber" will solve their telecom needs.

West Virginia telecom infrastructure initiative embodies 3 fatal public policy flaws

Charleston Gazette-Mail | Groups push for broadband expansion in WV: Senate President Mitch Carmichael, R-Jackson, said Tuesday that at least two broadband-related bills are in the works, and lawmakers expect to introduce legislation in the coming days. The Senate bill would offer tax credits for companies to help recoup costs of bringing internet to remote areas, said Carmichael, an executive with internet provider Frontier Communications. The bill also may authorize the state to provide loan guarantees to internet firms that plan to expand broadband service. Carmichael said some internet providers want legislation designed to bring internet service to households that don’t currently have it, while other companies support measures that would increase internet speeds.

“We want to [encourage] competition,” Carmichael said. “If we’re going to do investment of any type, it should go to the areas that have no service.” Generation West Virginia, AARP West Virginia and the state Broadband Enhancement Council held a press conference at the state Capitol Tuesday to raise awareness about the importance of high-speed internet service and to unveil a plan — called Gig Ready — to bolster support for broadband expansion.

This West Virginia effort although well intended contains three fatal flaws that are unfortunately frequently embraced by other states and by federal policymakers.

1. Offering loan guarantees and tax credits to legacy telephone and cable companies to invest in advanced telecommunications infrastructure in the belief that will help achieve universal service. It will not. The incumbents' short term business models are designed to extract maximum cash flow from current assets and do not allow them to make significant long term capital investments in new infrastructure. Tax credits and loan guarantees can't overcome that hard economic reality.
2. The belief that the role of government vis telecommunications infrastructure is to promote market competition. Telecom infrastructure is a natural monopoly and cannot and never will be a competitive market. Promoting market competition in telecom infrastructure is like promoting water skiing in the arctic.
3. Sloganeering. Call it Game of Gigs or Gig Ready, slogans can't construct telecom infrastructure. They are not so much aspirations for the future but rather reflect a poverty of action and commitment (harder) relative to a surplus of talk (far easier).

Net neutrality hurts health care and helps porn, Republican senator claims | Ars Technica

Net neutrality hurts health care and helps porn, Republican senator claims | Ars Technica: Sen. Ron Johnson (R-Wisc.) agreed that net neutrality rules harm ISP investment and offered a lengthy analogy to explain why. Johnson said he wants to cut through the “rhetoric, slogans, and buzzwords,” before saying that enforcing net neutrality rules is like letting too many people use a bridge and ruin people’s lawns. Net neutrality rules, he said, also give pornography the same level of network access as remote medical services.

This is an unfortunate outcome of the misplaced obsession with the "net neutrality" aspect of the U.S. Federal Communications Commission's 2015 Open Internet rulemaking that erased the line between legacy and advanced telecommunications services by reclassifying Internet service as a common carrier telecommunications utility under Title II of the Communications Act. The obsession with net neutrality is so exaggerated that the term has become synonymous with the rulemaking.

The Open Internet rulemaking does properly require ISPs to treat all telecommunications traffic equally and without preference as to content. But with millions of Americans left offline and many still using circa 1994 dialup access that was state of the art when Bill Clinton was serving his first term as president, the higher value of the rulemaking is bringing Internet service under the universal service and anti-redlining requirements of Title II that have governed telephone service for decades -- and not debating whether the network should give priority to porn or any other information. Those requirements also comport with Metcalfe's Law, which holds a network is only as valuable as the number of subscribers on it.

Senate to Look at Infrastructure Challenges | Broadcasting & Cable

Senate to Look at Infrastructure Challenges | Broadcasting & Cable: The Senate Commerce Committee has scheduled a hearing for Wednesday, March 1, on the telecom and transportation infrastructure challenge. The Donald Trump Administration has pledged a trillion-dollar infrastructure upgrade, which is expected to include broadband infrastructure. In addition, there are legislative efforts to spur infrastructure buildouts, and FCC chairman Ajit Pai has backed making broadband part of that effort as well.

“With a national discussion on federal infrastructure investment underway, it’s worth remembering that many Americans live far away from the highest-ticket projects their tax dollars are asked to fund,” said Sen. John Thune (R-S.D.), chairman of the committee, in announcing the hearing. “This hearing will look at how wise infrastructure investment decisions can ensure that all Americans benefit from improvements to national transportation and digital networks.”

It's great to see Sen. Thune recognizing that digital telecommunications infrastructure is also important 21st century infrastructure. Yes, 20th century transportation infrastructure is also need of investment. But it shouldn't come at the expense of telecom infrastructure that like roads and highways has also been neglected for decades.

Had proper planning and policies been put in place a generation ago as I write in my recent ebook Service Unavailable: America's Telecommunications Infrastructure Crisis, nearly all American homes, schools and businesses would have fiber optic connections by 2010 rather than relying on the failed investor owned corporate business model that has caught the nation up short. That leaves millions of Americans unable to access modern advanced telecommunications services or served by poor value and sluggish metallic connections that can't accommodate the growing bandwidth demand of today and tomorrow's digital economy.

The digital economy requires the capacity to handle the efficient movement of ideas, products and services just as 20th century transportation infrastructure did for people, goods and services. Telecom infrastructure thus should be properly regarded as interstate infrastructure as is transportation infrastructure.

R&D won't solve America's urgent telecom infrastructure deficiencies

That group “really push[es] a comprehensive narrative that the U.S. broadband -- private-sector broadband -- has failed the country, that we are falling behind other countries in our broadband performance,” said Doug Brake, telecom policy analyst at ITIF and coauthor of “How Broadband Populists Are Pushing for Government-Run Internet One Step at a Time,” released in January. The populists think “we have these rapacious broadband monopolists that are not upgrading and just harvesting rents from the entire population,” Brake said. “We see that narrative as being incorrect on almost all the points that it puts forward.” Broadband populists have a two-pronged approach and use small tactical debates to achieve their overall goal, Brake said. On one hand, they support the bottom-up solution of government-owned infrastructure with internet service providers delivering services on top of it -- even while acknowledging the limitations of that approach. “We think that that model does not fundamentally support long-term innovation,” Brake said. “That’s competition just based on price andcustomer service. It’s not competition based on the technology itself.” He said he’d rather see ISPs incentivized to pour money into research and development of the next generation of broadband, for instance.

The debate over muni broadband expansion -- GCN

Brake's position is utter nonsense. Fiber optic connections to customer premises could have been made to nearly every American home, school and business by 2010 had the nation put in place the right telecommunications policy and planning in the late 1980s and early 1990s when it was becoming apparent that telecom would shift from analog to digital and be distributed via Internet protocol. Fiber optic infrastructure remains the state of the art telecommunications infrastructure technology, with plenty of capacity to carry burgeoning bandwidth demand well into the future. Performing R&D on a possible successor is fine. But it's not going to solve today's urgent telecommunications infrastructure needs that require rapid deployment of fiber connections.

As for Brake's characterization of incumbent legacy telephone and cable companies being "rapacious broadband monopolists that are not upgrading and just harvesting rents," they had better well be. Because it's exactly what their investors expect of them: minimal capital expenditures and maximizing revenues from a captive, natural monopoly market.

Gov. Brown sets California's priorities for U.S. infrastructure bill -- but telecom not on list

Brown Sets California's Priorities For Trump Infrastructure Bill - capradio.org: Gov. Jerry Brown’s administration has released its list of California priorities for a potential federal infrastructure funding package backed by President Trump. The list is noteworthy not only for the projects it includes but for the ones left off. On the list? Highway projects throughout the state, including new carpool and toll-charging express lanes. California’s earthquake early warning system. And, of course, Brown’s legacy projects: high-speed rail and the Delta tunnels. “Mostly, the projects that we have submitted all have a request of $100 million or more,“ says the governor's transportation secretary, Brian Kelly. “So we really did focus on larger projects with clear, long-term and short-term benefits to the state.” Notably absent? Two prominent water storage projects backed strongly by California Republicans: Sites Reservoir northeast of Sacramento and Temperance Flat Dam northeast of Fresno.

Also missing from the list: telecommunications infrastructure. This in a state regarded as a leader in information and communications technology and home to Silicon Valley as surrounding communities continue to lack modern fiber optic service. Telecom infrastructure deficiencies are most pronounced in the Golden State's Central Valley municipalities of Modesto and Fresno, in the Sierra Nevada foothills east and northeast of the state capital of Sacramento in Placer and El Dorado counties, and up the Interstate 5 corridor in Sutter, Butte and Yuba counties to the Shasta County seat of Redding. (See related post here). Is is truly good public policy to finance 20th century infrastructure while neglecting vital infrastructure for the 21st?

U.S. requires crash federal telecom infrastructure program

Like other forms of infrastructure that were largely built out in the 20th century – such as transportation, energy, water and sewage – broadband is a foundation for economic activity across many sectors. But, unlike other potential infrastructure priorities, the public benefits of broadband could grow exponentially in the coming decades, as the nation is just beginning to realize the potential innovation and productivity gains from combining high bandwidth, low-latency connectivity with massive sensor, computing, and storage capabilities.

Unlike most other types of infrastructure, the nation’s digital infrastructure is largely corporate owned and generates revenues from paying subscribers. However, the private carriers who invest in broadband capex do not, in general, capture the full benefits of those investments (e.g., the positive externalities of the internet economy and the multipliers from increasing innovation and efficiency in adjacent sectors), so their investment levels are lower and slower than would be optimal for the country. (Emphasis added). The public-policy challenge, therefore, is to increase largely private capital flows to levels consistent with the potential public benefits of abundant, ubiquitous broadband without crowding out existing private sector investment.

The above is excerpted from a white paper by Paul de Sa, who formerly headed the U.S. Federal Communications Commission's Office of Strategic Planning and Policy Analysis. The paper was published on the U.S. Federal Communications Commission website last month. de Sa's point on the larger benefits of ubiquitous modern telecommunications infrastructure and its economic stimulus and multiplier effect mirrors my own, discussed in my recent eBook, Service Unavailable: America's Telecommunications Infrastructure Crisis.

I fully agree with de Sa's assessment that relying on the current dominant model of privately owned infrastructure where Internet Service Providers own the connections to customer premises as well as the services offered over them cannot support rapid and robust infrastructure construction to catch the nation up to where it needs to accommodate exploding bandwidth demand today and in the future. It's naturally limited by investment risk that comes with selling and servicing monthly subscriptions one customer premise at a time that constrains access to the needed many billions of investment capital and is prone to market failure. Until the United States explicitly recognizes the limitations of this model and treats telecommunications as the national infrastructure asset that it is and launches a crash publicly-financed telecom infrastructure initiative, the nation will continue to rapidly fall further behind as the 21st century advances.

As a footnote, de Sa's paper was retracted this week by his acting replacement, Wayne A. Leighton. (h/t to Steve Blum's blog).