Legacy incumbent telephone and cable companies have threated to sue the U.S.
Federal Communications Commission if as expected the FCC follows President
Barack Obama’s call to classify Internet services as a common carrier utility
under Title II of the Communications Act. The incumbents hope the specter of
prolonged litigation and uncertainty will give the FCC pause before it acts
next month.
The problem for the incumbents however is even if they make good on the threat,
it may not buy them the degree of uncertainty and delay they would like. Any
litigation arising from the expected regulatory action by the FCC would likely
be disposed of in relatively short order. The courts operate under a doctrine
of judicial deference to how regulators interpret and apply statutory law such
as the Communications Act. They are loath to put themselves in the place of
regulators and second guess administrative rulemaking, reasoning the regulators
and not the courts hold the requisite expertise when it comes to figuring out
how to apply the finer points of statutory law.
Possibly realizing this, the incumbents’ lobbying corps is implementing a backup
strategy in Congress to amend the Communications Act to carve
out Internet service on the grounds that it doesn’t function as a market monopoly
– the underlying rationale for classifying it as a common carrier utility like
telephone service. Demerits of that legislative rationale aside, that nascent effort
also isn’t likely to be productive since even if passed it would face a likely presidential
veto.
The outlook for 2015 is common carrier utility regulation of the Internet is
coming and isn’t likely to be derailed.
Analysis & commentary on America's troubled transition from analog telephone service to digital advanced telecommunications and associated infrastructure deficits.
Thursday, January 22, 2015
Wednesday, January 21, 2015
21st century needs new regulation for a new generation of telecommunications services
A major contributing factor to the current crisis over how to regulate Internet-based telecommunications is the passage of time. Lots of it. It's been more than four generations -- 80 years -- since the United States enacted the Communications Act of 1934 regulating telephone service as a common carrier utility.
A 1996 update of the statute incorporated Internet services. But they were so new then regulators -- the Federal Communications Commission -- didn't consider them as a common carrier telecommunications service. Internet was an optional additional service, accessed by special connections made over slow dial up modems to specialized information services such as CompuServe and America Online. Now two decades later, it serves as a all purpose telecommunications service providing data, voice and video over Internet protocol (IP).
In a little more than a month's time, the FCC will decide whether to regulate IP services as a common carrier utility under Title II of the Communications Act. Indications are it will do so -- most likely for landline delivered, premise Internet service. Along with the designation come rules designed to ease and promote the construction of infrastructure to serve all premises and not just selected ones as is the case under the present regulatory policy.
Twentieth century legacy telephone and cable companies have built their business models based on the current policy, models that will be disrupted with the shift toward regulating the Internet as a common carrier utility that must be offered to all and not just some Americans.
But out of disruption comes business opportunity for a generation of new providers. The federal government should put in place meaningful technical assistance and funding -- and not just "funding leads" given the importance of Internet infrastructure -- to help the new Internet telecommunications providers of the 21st century become established and financially viable for the long term.
A 1996 update of the statute incorporated Internet services. But they were so new then regulators -- the Federal Communications Commission -- didn't consider them as a common carrier telecommunications service. Internet was an optional additional service, accessed by special connections made over slow dial up modems to specialized information services such as CompuServe and America Online. Now two decades later, it serves as a all purpose telecommunications service providing data, voice and video over Internet protocol (IP).
In a little more than a month's time, the FCC will decide whether to regulate IP services as a common carrier utility under Title II of the Communications Act. Indications are it will do so -- most likely for landline delivered, premise Internet service. Along with the designation come rules designed to ease and promote the construction of infrastructure to serve all premises and not just selected ones as is the case under the present regulatory policy.
Twentieth century legacy telephone and cable companies have built their business models based on the current policy, models that will be disrupted with the shift toward regulating the Internet as a common carrier utility that must be offered to all and not just some Americans.
But out of disruption comes business opportunity for a generation of new providers. The federal government should put in place meaningful technical assistance and funding -- and not just "funding leads" given the importance of Internet infrastructure -- to help the new Internet telecommunications providers of the 21st century become established and financially viable for the long term.
Saturday, January 17, 2015
U.S. needs complete telecom infrastructure construction strategy, not minimalist incrementalism
The United States needs a comprehensive, holistic approach to ensure the
construction of fiber optic infrastructure to provide robust Internet enabled
telecommunications services in the 21st century on a par with universal
telephone service in the 20th. The nation won’t achieve that
standard in a timely manner by relying on incremental, one off builds.
While it’s laudable that some local governments have built or are planning fiber infrastructure in response to private sector market failure on the supply side (as spotlighted this week in Cedar Falls, Iowa by President Obama), these builds without significant and sustainable funding support cannot cumulatively provide the telecommunications infrastructure the nation needs and should have been planning at least two decades ago. As Steven S. Ross notes in his article in the November-December, 2014 issue of Broadband Communities, Bandwidth: Good for Rural Residents, Good for the Country, these localities that have or are putting in place modern telecommunications infrastructure participate in the same economy as do others lacking it.
New York State’s initiative announced this week it would dedicate $500 million of a $4.5 billion windfall arising from the settlement last year of prosecutions of alleged misconduct by banks and insurance companies to subsidize fiber construction. That’s one time, opportunistic funding that will help construct fiber in areas where it doesn’t exist. But it addresses only a small fraction of the state’s significant need as shown by the accompanying map. The money will quickly be exhausted with no plan fiber up the rest of the Empire State, reinforcing existing disparities. Similar underfunded initiatives exist in other states. Incrementalism allows policymakers to claim small, short term victories but leaves incomplete networks in its wake over the longer term.
Other examples of incrementalism are the continuing circa 2002 debate over “broadband speeds” -- which grows increasingly irrelevant in an age of fiber optic-based telecommunications technology -- and “net neutrality.” Net neutrality – the principle that all Internet traffic be given equal priority – is meaningless without robust network service in the first place. A more important principle than net neutrality is Metcalfe’s Law. It holds that the value of a communications network increases as the number of connections to the network grows. With so many Americans not offered fiber Internet service, the U.S. has a long way to go to recognize the full value of Metcalfe’s Law. It won’t get there with piecemeal incrementalism.
While it’s laudable that some local governments have built or are planning fiber infrastructure in response to private sector market failure on the supply side (as spotlighted this week in Cedar Falls, Iowa by President Obama), these builds without significant and sustainable funding support cannot cumulatively provide the telecommunications infrastructure the nation needs and should have been planning at least two decades ago. As Steven S. Ross notes in his article in the November-December, 2014 issue of Broadband Communities, Bandwidth: Good for Rural Residents, Good for the Country, these localities that have or are putting in place modern telecommunications infrastructure participate in the same economy as do others lacking it.
New York State’s initiative announced this week it would dedicate $500 million of a $4.5 billion windfall arising from the settlement last year of prosecutions of alleged misconduct by banks and insurance companies to subsidize fiber construction. That’s one time, opportunistic funding that will help construct fiber in areas where it doesn’t exist. But it addresses only a small fraction of the state’s significant need as shown by the accompanying map. The money will quickly be exhausted with no plan fiber up the rest of the Empire State, reinforcing existing disparities. Similar underfunded initiatives exist in other states. Incrementalism allows policymakers to claim small, short term victories but leaves incomplete networks in its wake over the longer term.
Other examples of incrementalism are the continuing circa 2002 debate over “broadband speeds” -- which grows increasingly irrelevant in an age of fiber optic-based telecommunications technology -- and “net neutrality.” Net neutrality – the principle that all Internet traffic be given equal priority – is meaningless without robust network service in the first place. A more important principle than net neutrality is Metcalfe’s Law. It holds that the value of a communications network increases as the number of connections to the network grows. With so many Americans not offered fiber Internet service, the U.S. has a long way to go to recognize the full value of Metcalfe’s Law. It won’t get there with piecemeal incrementalism.
Friday, January 16, 2015
Study finds relationship between recent U.S. settlement patterns and telecom services
The November-December 2014 issue of Broadband Communities includes primary research finding a correlation between population trends and the robustness of telecommunications services. The study covers the period of April 2010 to December 2013.
Editor-at-large Steve Ross, who conducted the research, notes his findings relate to a recent U.S. Commerce Department study showing the relative lack of robust Internet service in rural areas compared with urban areas. Examining census data, the Commerce Department study found for the first time in U.S. history, most rural counties lost population between 2010 and 2012.
Ross includes a couple of caveats on his research. He notes the broad urban/rural county classification used doesn't take into account that exurban counties often include some areas that are functionally urban and others that are functionally rural. He also cautions against drawing conclusions from the data as to whether the availability of strong telecommunications services attracts population and lack thereof drives out migration.
Given the relationship between robust telecommunications services and settlement patterns, Ross's research suggests that U.S. settlement patterns could strongly be influenced with the deployment of more robust telecommunications infrastructure in less populous areas of the nation. Especially given the fact that much of today's information and knowledge-based economic activity can take place most anywhere that infrastructure is available.
Editor-at-large Steve Ross, who conducted the research, notes his findings relate to a recent U.S. Commerce Department study showing the relative lack of robust Internet service in rural areas compared with urban areas. Examining census data, the Commerce Department study found for the first time in U.S. history, most rural counties lost population between 2010 and 2012.
Ross includes a couple of caveats on his research. He notes the broad urban/rural county classification used doesn't take into account that exurban counties often include some areas that are functionally urban and others that are functionally rural. He also cautions against drawing conclusions from the data as to whether the availability of strong telecommunications services attracts population and lack thereof drives out migration.
Given the relationship between robust telecommunications services and settlement patterns, Ross's research suggests that U.S. settlement patterns could strongly be influenced with the deployment of more robust telecommunications infrastructure in less populous areas of the nation. Especially given the fact that much of today's information and knowledge-based economic activity can take place most anywhere that infrastructure is available.
Thursday, January 15, 2015
USTelecom makes case for Title II common carrier regulation of Internet
Consumers Continue Shift Away From Landline – Regulations Are Behind | USTelecom
This telecom industry article helps make the case for regulating consumer Internet services as common carrier telecommunications services under Title II of the Communications Act. As the article notes, the existing common carrier regulations are designed for a bygone era of analog voice telephone service delivered over copper that is becoming increasingly outdated as landline technology shifts to fiber optic that can deliver voice and other services using Internet transmission protocols.
This telecom industry article helps make the case for regulating consumer Internet services as common carrier telecommunications services under Title II of the Communications Act. As the article notes, the existing common carrier regulations are designed for a bygone era of analog voice telephone service delivered over copper that is becoming increasingly outdated as landline technology shifts to fiber optic that can deliver voice and other services using Internet transmission protocols.
Wednesday, January 14, 2015
Administration’s “broadband” push window dressing
Always something happening and nothing going on
There's always something cooking and nothing in the pot
-- John Lennon, Nobody Told Me
The Obama administration’s PR initiative this week on U.S. telecommunications infrastructure deficiencies is largely window dressing and will likely mean the wired network that Americans have today for their home and small business Internet connection is likely the same one they’ll have for the foreseeable. This prediction was made in 2012 by former U.S Federal Communications Commission official Blair Levin and continues to hold true in 2015:
The reason is the same as in 2012: insufficient available capital. Building Internet infrastructure to serve homes and businesses is a high cost endeavor. Those high costs have produced market failure on the supply side as the administration acknowledges, noting in this fact sheet that three of four Americans lack networks providing a level of service increasingly required for many online services. “Rarely is the problem a lack of demand — too often, it is the capital costs of building out broadband infrastructure…”
The administration is correct that local governments will have to play a major role in meeting the Internet infrastructure needs of their residents, infrastructure many argue is as critical in the 21st century as roads and highways were in the 20th. But it has no meaningful plan to help these localities finance infrastructure construction beyond highly limited and restricted funding available through existing grant and loan programs directed to rural areas of the nation that are only a drop in the bucket relative to the many billions of dollars needed.
In fairness to the administration, even it if did have a plan, it would face difficult odds getting Congress to appropriate the necessary funding. That has left the administration with little to offer in the way of tangible economic assistance. The administration is relaunching its BroadbandUSA website, where among other things it will offer “funding leads” for financing infrastructure construction. Given the lack of needed dollars, the administration has also been reduced to talking points that unfortunately won’t do anything to build last mile fiber to the premise infrastructure including:
There's always something cooking and nothing in the pot
-- John Lennon, Nobody Told Me
The Obama administration’s PR initiative this week on U.S. telecommunications infrastructure deficiencies is largely window dressing and will likely mean the wired network that Americans have today for their home and small business Internet connection is likely the same one they’ll have for the foreseeable. This prediction was made in 2012 by former U.S Federal Communications Commission official Blair Levin and continues to hold true in 2015:
"For the first time since American ingenuity birthed the commercial Internet, we do not have a single national wireline provider with plans (real plans, not “fiber to the press release”) to deploy a better network. For most Americans, five years from now, the best network available to them will be the same network they have today."
The reason is the same as in 2012: insufficient available capital. Building Internet infrastructure to serve homes and businesses is a high cost endeavor. Those high costs have produced market failure on the supply side as the administration acknowledges, noting in this fact sheet that three of four Americans lack networks providing a level of service increasingly required for many online services. “Rarely is the problem a lack of demand — too often, it is the capital costs of building out broadband infrastructure…”
The administration is correct that local governments will have to play a major role in meeting the Internet infrastructure needs of their residents, infrastructure many argue is as critical in the 21st century as roads and highways were in the 20th. But it has no meaningful plan to help these localities finance infrastructure construction beyond highly limited and restricted funding available through existing grant and loan programs directed to rural areas of the nation that are only a drop in the bucket relative to the many billions of dollars needed.
In fairness to the administration, even it if did have a plan, it would face difficult odds getting Congress to appropriate the necessary funding. That has left the administration with little to offer in the way of tangible economic assistance. The administration is relaunching its BroadbandUSA website, where among other things it will offer “funding leads” for financing infrastructure construction. Given the lack of needed dollars, the administration has also been reduced to talking points that unfortunately won’t do anything to build last mile fiber to the premise infrastructure including:
- Increasing “competition.” (Sounds great, but ignores the fact that telecommunications infrastructure is a natural monopoly, not a competitive consumer market like groceries, vehicles and air travel. It also undermines Obama's position that Internet should be regulated under Title II telecommunications common carrier rules that are predicated on a monopoly market.)
- Enforcing “net neutrality” rules on Internet service providers. (A wonky term that doesn’t mean anything to consumers with subpar or no wired Internet service options).
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