Because every American
should have access
to broadband Internet.

The Internet Innovation Alliance is a broad-based coalition of business and non-profit organizations that aim to ensure every American, regardless of race, income or geography, has access to the critical tool that is broadband Internet. The IIA seeks to promote public policies that support equal opportunity for universal broadband availability and adoption so that everyone, everywhere can seize the benefits of the Internet - from education to health care, employment to community building, civic engagement and beyond.

The Podium

Blog posts tagged with 'Fcc'

Thursday, October 20

A Quote from One of the Earliest Champions of Privacy


“Consumer data is inconsistently protected when it’s not allowed to be used in certain ways by some companies but is permitted to be used in the same ways by others. In line with the FTC’s model, which applies to Internet edge providers, the FCC should develop an approach to privacy for ISPs with the level of protection based on the sensitivity of the data and how it’s being used. By conforming the privacy protections across the Internet ecosystem, consumer confusion will be avoided.”

Rick Boucher, a member of the US House for 28 years who chaired the House Energy and Commerce Committee’s Subcommittee on Communications and the Internet

Wednesday, October 19

A Better Path for Privacy


With the FCC set to vote on its privacy order later this month, it’s worth examining how the Commission’s latest approach — which would greatly expand the definition of “sensitive data” and for the first time make web browsing “opt-in” for consumers — still risks harming the entire internet ecosystem.

Yes, the current course FCC Chairman Tom Wheeler is, on the whole, similar to the rules the Federal Trade Commission has long used when it comes to online data. But that doesn’t mean the proposed rules wouldn’t be onerous. They would also make for a decidedly uneven playing field. For example:

• The FCC’s current proposal paints an overly broad definition of “sensitive” data that could easily slow the growth of online commerce to a crawl.

• Certain obligations imposed by the proposal would only apply to ISPs, putting their businesses at a disadvantage to edge providers.

• Whereas the FTC has always used a context approach when it comes to treating web browsing as “sensitive data,” the FCC’s makes no distinction between health information and, say, online shopping.

• Making the collection of all web browsing opt-in for consumers — as some are proposing — is not just unnecessary, it’s unrealistic and would only confuse, annoy, and discourage consumers who understand that much of their online data is not sensitive.

Obviously, everyone agrees online privacy is important — especially as more and more of what we do each day is done digitally. But the FTC, providers, companies like Google, and the Obama administration know that the seamless sharing of non-sensitive data — is critical for the online economy. So rather than attempt to reinvent, or even tinker with, the longstanding framework for privacy, the FCC should follow their neighbors on Pennsylvania NW and mirror the FTC’s policies. If it ain’t broke, and all that.

By utilizing a balanced, technology-neutral approach to privacy, the FCC can back their claims of protecting consumers from bad practices while still keeping the digital economy growing. Most of all, sticking with what has already been proven to work will dispel confusion and needless hoops for consumers to jump through just to visit their favorite websites. It will also make sure every business involving the internet, from ISPs to edge providers and online companies, are all playing by the same rules. As our own Rick Boucher wrote for The Hill back in May of this year:

If and until Congress acts to require edge providers to respect consumer privacy, the only way to assure parity of treatment across the ecosystem and give consumers clear privacy expectations is to rely entirely on the FTC to lightly oversee privacy for both ISPs and edge providers.


Tuesday, October 11

The Investment Mixed Bag


The Progressive Policy Institute has released its annual “Investment Heroes” report on the top 25 companies putting dollars in America, and once again the telecom/cable sector topped the list with a combined capex investment of more than $48 billion.

That’s the good news. The not-so-good news is that investment from the telecom/cable sector was actually down compared to previous years. From the report:

AT&T and Verizon invested large sums to maintain and expand their networks again this year. However, according to our estimates, AT&T’s capital expenditure was down by 11.6 percent as compared to the previous year.

While this is undoubtedly due to a number of factors, uncertainty about the FCC’s direction — namely, Title II regulation of the internet ecosystem — surely played a big role, especially from telecom companies like AT&T and Verizon. As IIA wrote in a 2014 filing with the FCC:

The continued success — and the future innovation — of our current Internet ecosystem… is seriously threatened by the proposal to reclassify broadband Internet access services under Title II. Indeed, it is hard to think of an action that would pose a greater threat to innovation and continued growth of the Internet than the proposal to reverse existing and sound precedent by reclassifying broadband Internet access under Title II of the Act.

Given the FCC’s Title II reclassification is just over a year old, it’s too early for a full picture of its impact on continuing investment. But these numbers from the Progressive Policy Institute hint at what could certainly become a trend in the coming years. Let’s hope all of us who warned the Commission about reduced investment are proven wrong.

Friday, October 07

Response to FCC Chairman Wheeler


Earlier today, FCC Chairman Tom Wheeler released the summary of his intended regulation of Business Data Services (BDS). Here is IIA’s response:

Today, we witness, with great disappointment, the FCC Chairman’s plan to re-regulate all copper-based legacy business data services throughout the nation. We fear that American businesses and consumers will ultimately be ill-served by an expert agency that ignores record evidence of robust competition in the market and instead opts for market intervention to favor certain service providers to the disadvantage of others. We hope that a majority at the agency will recognize the potential harm of this plan and will call for a return to long-held bi-partisan policies aimed at spurring innovation and promoting greater broadband infrastructure investment.


A False Compromise


Our Co-Chairman Bruce Mehlman has a piece in Investor’s Business Daily on Verizon, the FCC, and the current business data services discussion. An excerpt:

Trade association INCOMPAS, which represents competitive local exchange carriers (CLECs), and Verizon have been working together to “negotiate” a deal with the Federal Communications Commission. Although the terms may make perfect sense for them, they’re bad for the actual deployment and adoption of broadband infrastructure and, namely, the future of business data services (BDS).

Some are currently trying to sell this as a “compromise” plan — it’s not; a compromise typically requires there to be opposite sides at the table. Verizon is in the midst of transformation where it has sold off much of its wired telephone footprint across the nation in recent years and, as a result, now finds itself more and more a buyer of BDS in much of the country.

Good for Verizon if it thinks that this transformation benefits its company and shareholders, and quite logical for the company to lobby regulators on its new position. The FCC, however, retains the duty to investigate what’s really at stake in the purported “compromise” and to spot and call a shell game when they see one. Unsurprisingly, it all comes down to price and profit.

You can check out Mehlman’s full piece over at Investor’s Business Daily.

Tuesday, October 04

The Damage of Mandatory BDS Price Cuts


A new research paper from Anna-Maria Kovacs of the Georgetown Center for Business and Public Policy details potential damage from FCC-mandated price cuts on Business Data Services (BDS). From the paper:

We model the effect of mandatory BDS price cuts on the free cash flows of BDS providers. We conclude that BDS rate-cuts are likely to do serious damage to the financials of competitive providers, i.e. non-incumbents, as well as incumbents who provide BDS infrastructure. Because company valuations reflect multiples of cash flow, decreases in cash flow are likely to result in lower valuations. The heaviest damage is likely to be to those who are primarily facilities-based, but the free cash flows and valuations of resellers are also likely to be harmed.

Also of note in the paper:

• Since all BDS providers will be hit financially, their ability to afford the network buildout both the Obama Administration and the FCC want to see by 2020 will also be affected.

• Mandating price cuts for high-capacity Ethernet and dark fiber will have a significant impact on the free cash flow of BDS providers, making it more difficult for them to make the business case for the costly migration from 4G to 5G technology.

Since both the buildout by 2020 and the migration to 5G listed above are a focal point for the FCC, why would the Commission want to undermine their own agenda by mandating BDS price cuts? Hopefully the FCC will provide an answer to this question — or better yet, move away from mandating price cuts altogether.

Kovacs’ paper is titled “Business data services: The potential harm to competitive facilities deployment.” You can check it out for yourself here.

Tuesday, September 27

Election Night & Beyond


Over at The Street, our own Bruce Mehlman writes about the election and what it could mean for tech and investment. An excerpt:

[I]n this world of technological convergence, in which companies offering Internet, video, and traditional communications services are merging (some quite literally and others through expanding their business lines), investors should know that there are some critical decisions on the horizon regarding interference in these markets or light-touch regulation. Those decisions will impact whether companies invest robustly, whether distributors of content will have the right incentives to continue innovation in that space, and many other issues. Watch the returns on Election Night – but also watch those critical appointments in regulatory agencies over the coming year to get a fuller flavor of the impact of government regulation on markets.

Check out Mehlman’s full piece at The Street.

Thursday, September 22

Boucher on Business Data Services


Earlier today, Morning Consult published an op-ed from our own Rick Boucher on the FCC’s ongoing business data services proceedings. An excerpt:

Simple economics suggests that the way to promote the most rapid deployment of the fastest business data services to the enterprises that need them is to rely on competition and the market forces that drive innovation and investment. The FCC, however, seems to start from the position that only regulation can ensure that adequate services are provided to businesses. And so the agency is seeking to set prices at a level that, while convenient for some competitors, doesn’t allow for a sufficient return on investment to stimulate broadband deployment. How this approach will spur investment and deployment is anyone’s guess; the FCC doesn’t have an answer.

Now a group of seven prominent economists has just made clear their opposition to the conclusions the agency is drawing from its plethora of regressions. In short, the economists argue that, because the FCC starts from the wrong place – the mistake that correlation implies causation – the agency, therefore, ends up at the wrong place – the idea that there is not only market power in the Ethernet market but market power that justifies price regulation. As they write, “[a]s commenters across the spectrum rightly acknowledge, the rationale for ex ante rate regulation hinges entirely on protecting customers from a dominant provider’s abuse of market power; in turn, there is no plausible argument for regulating BDS providers that lack market power.”

Check out Boucher’s full op-ed over at Morning Consult.

Monday, September 19

Economists on BDS Competition


As the FCC continues its murky — and occasionally confounding — Business Data Services (BDS) process, seven economists have penned a letter to the Commission arguing that any imposed rate regulation on what is a truly competitive market would be a mistake and counterproductive. From said letter:

As commenters across the spectrum rightly acknowledge, the rationale for ex ante rate regulation hinges entirely on protecting customers from a dominant provider’s abuse of market power; in turn, there is no plausible argument for regulation BDS providers that lack market power. No party has suggested — let alone demonstrated — that competitive BDS providers exercise significant market power. Moreover, some of the undersigned economists have examined marketplace data regarding the current state of BDS competition and have found that such data do not support claims that incumbent LECs exercise market power broadly in the provision of BDS.

Translation: The BDS market is competitive and there is no need for across the board price regulation. Again, from the letter:

To the degree there are some BDS markets with persistent monopoly power, we agree that it could be economically justified and welfare enhancing to reduce monopoly rents in such markets to a best approximation of competitive levels, to the extent such a goal can be achieved without imposing large costs on providers and disincentivizing investment. The Commission should limit any such regulation to markets characterized by monopoly power that are unlikely to become effectively competitive in the near future. To that end, the Commission should regulate BDS rates for legacy services only in geographic BDS markets where only a single facilities-based provider is present or nearby.

Translation: If regulation is necessary, it should be implemented using a scalpel, not a hacksaw.

To read the full letter from the economists to the FCC, click here.

Monday, September 12

The Infrastructure of Virtual Reality

By Brad


Over at tech site Recode, our Co-Chairman Jamal Simmons and former Co-Chairman Larry Irving have penned an op-ed on virtual reality and the need for regulators to encourage private investment in the infrastructure that supports it. An excerpt:

The future of virtual reality is bright. Investors are bullish, users are excited to consume novel entertainment and educational applications, and engineers are developing new products. While innovators create exciting hardware and content, a VR future is only possible if policymakers make the right decisions today. Virtual reality will require new and upgraded broadband networks, both wired and wireless, that will be capable of satisfying future bandwidth needs of the technology, which consumes massive amounts of data.

Policymakers need to make more spectrum available, too. People are using their iPhones and Android phones for the early versions of VR, but today’s tools will not be adequate for a fully immersive, high-definition virtual reality future. Whether it is 4K, 5K, high-definition or ultra-high definition, each next-generation technology will require retrofitting our infrastructure. It’s time to rethink, rebuild and reinvest.

Check out at the full op-ed over at Recode.

Thursday, September 08

A Look at the Current FCC’s Legacy of Confusion

By Brad

With the election looming and the current makeup of the FCC likely nearing its end, Fred Campbell has penned a thorough look at what he describes as the FCC’s “legacy of confusion about competition.” An excerpt:

The Wheeler FCC’s repudiation of economic rigor and legal precedents is an anomaly that should end with this fall’s election. Unfortunately, Wheeler is determined to dictate the economic and engineering of several market segments before his time expires. In the few months he has remaining, Wheeler wants to:

• Dilute copyright protections for digital content, dictate retail pricing, and weaken privacy protections for consumers in the video marketplace (despite an FCC finding from just last year that this market is effectively competitive), all of which threaten to bring television’s second golden age to an end;

• Impose ineffective data regulations just on broadband Internet access providers (while leaving other big data companies untouched) that would give internet edge competitors government-sanctioned competitive advantages in the internet advertising and big data markets at the expense of consumers; and

• Impose new price regulations on business data services to reduce the investment costs of favored companies (like Sprint) at the expense of their competitors.

These last-minute proposals are inconsistent with our fundamental economic policy of promoting competition and private investment, and none of them are premised on the sound, data-driven analyses Wheeler promised.

Check out Campbell’s full piece over at Forbes.

Wednesday, August 31

Title II Back in Court

By Brad

Speaking of the FCC and Title II (see our infographic), the Commission’s reclassification of broadband still faces challenges in court.

The FCC’s regulation has been challenged by providers and others, asking for a full federal appeals court review of the previous panel decision. As BNA reported, the FCC has already asked for the deadline to respond to be extended to October 3.

Friday, August 26

40 Years of Smart Policy & the FCC’s About-Face


Tomorrow is the 40-year anniversary of the Internet Age. On August 27, 1976, scientists from SRI International successfully sent an electronic message from a computer set up at a picnic table at a Portola Valley, California biker bar, to SRI and on through the ARPANET network to Boston.

While the U.S. has seen nearly 40 years of pro-growth internet policy, the Federal Communications Commission in 2015, unfortunately, went from promoting internet investment and innovation through an open, multi-stakeholder platform to making the internet a government utility weighed down by Title II regulation. Check out the infographic below to see the FCC’s abrupt about-face.


Wednesday, August 17

ICYMI: IIA’s BDS Reply Comments

By Brad

We recently submitted Reply Comments to the FCC’s proposed Business Data Services (BDS) policy. You can read the full comments here, but here’s some highlights:


Only the private sector can provide investment necessary for BDS deployment. As the FCC previously recognized, $350 billion of investment is needed to meet the Nation’s high-speed broadband needs. Investment capital at that level can come only from the private sector, not from government. Similarly, private investors will invest only where they can reasonably envision a positive return on their investment. Thus, to meet the growing demand for ubiquitous nationwide high-speed broadband deployment – including the BDS market – government should advance only those policies that actively promote and encourage, rather than deter, private investment.

Investment has promoted and will continue to promote real competition in the BDS market. IIA’s studies affirm how the business broadband market has evolved (and continues to evolve) far past the point at which ongoing regulation of this market can be justified. By the end of 2015, wireline competitors, including cable and CLECs, had roughly the same number of business broadband lines as the Incumbent Local Exchange Carriers (ILECs). CLECs seek to continue to rely on incumbents’ networks where they can, rather than employing a business strategy based on true facilities-based investment and competition.

Further Competitive Local Exchange Carrier (CLEC) investment would be easy but continues to lag. Facilities-based competition is accessible for the vast majority of buildings for which there is BDS demand. The FCC’s record highlights how 25% of buildings connected only to ILEC services with demand for BDS services are 17 feet away from the nearest competitive provider’s fiber network, 50% are 88 feet away, and 75% are within 456 feet. If CLEC providers truly wished to serve these buildings, they would have few difficulties building out nearby fiber to them. CLECs have made a business decision to ignore direct facilities-based competition and rely on other carriers’ capital investments to reach customers, rather than to adopt policies that will promote investment and thus benefit the economy as a whole.


The rapid deployment of fiber to date has occurred without the heavy hand of regulation, and there is no reason to doubt that it will continue. The robust fiber build-out to the nation’s existing macro cell towers to facilitate the transition to 4G wireless networks is an excellent barometer of how the market responds to business opportunities presented in the wireless backhaul market.


The new 5G networks will transmit data at Gigabit speeds and will, by definition, not be able to use TDM-based megabit speeds. Thus, the regulation of legacy networks is irrelevant to future 5G deployment. The Commission simply cannot use the market-driven transition to 5G networks as justification for ex ante regulation, which would seem to steer the direction of 5G evolution rather than letting the technology evolve and markets along with it.


High-speed broadband is deployed most quickly when investors have incentives to invest in these deployments. A system that imposes price regulation and lowers profit margins for investors will not provide the necessary incentives for rapid deployment of 5G technology (or even 4G technology) to rural America.

Tuesday, August 09

Boucher on Business Data Services in Forbes

By Brad

Over at Forbes, our Honorary Chairman Rick Boucher has an op-ed on how regulating prices for business data services will only increase the digital divide. An excerpt:

It’s well understood that high-speed networks are deployed most quickly when investors can foresee a profitable rate of return on investment. Because of the unique challenges to network deployment in rural America, the need for a predictable rate of return on investment is essential for rural providers. The Commission’s proposal would impose on rural America a system that, by design, is assured to diminish new network investment. With price regulation, rural deployments would bring lower returns. With the incentive to invest removed, few companies would be willing to dedicate the capital needed to modernize rural networks. The deployment gap will widen, and the arrival of competition in the business data market will be delayed. Even if one high-speed network company proved willing to invest in the currently unserved rural market, it would immediately be saddled with de facto monopoly status and subjected to price regulation.

Under these conditions, it’s certain that few companies would make rural investments. The FCC cannot simply overlook the reality of these markets and remain true to its and the Administration’s commitment that all Americans, and all American businesses, including rural hospitals and educational institutions that are the lifeblood of many local communities, deserve and should receive the same broadband services available in metropolitan areas.

Check out Boucher’s full op-ed over at Forbes.

Watch the IIA Event at the Republican National Convention


The light-touch regulatory framework of the 1996 Telecom Act set the stage for extensive internet network investment and innovation. To examine how this investment and innovation have empowered Americans to shape presidential races, we hosted “From Netscape to Snapchat: Politics in the Age of Broadband” at the Rock and Roll Hall of Fame in Cleveland during the Republican National Convention (RNC). You can watch a video of the event below.

Thursday, August 04

Verizon’s Exit

By Brad

Over at The Street, our own Bruce Mehlman has an op-ed on Verizon’s recent about face when it comes to investment and facilities-based competition, particularly in the business data services market. An excerpt:

Since 2003 — a virtual eternity in the fast-paced world of telecom — Verizon has staunchly advocated for investment, deployment of fiber, and facilities-based competition. Verizon’s once-visionary leadership coined the phrase ‘new wires, new rules/old wires, old rules’ used by the FCC to create pro-fiber investment policies that helped spur the deployment of its modern high-speed broadband network. The “Fi” in FiOS, a central part of Verizon’s corporate strategy and broadband buildouts — stands for fiber, after all.

Yet Verizon now trumpets a deal with the competitive local exchange carrier (CLEC) trade association INCOMPAS that favors price regulation in the BDS market. Why the sudden change? Some might suggest that Verizon’s proposed mergers currently pending before the FCC and other government agencies might be the reason why the company is now simply driving 55 past the speed trap giving a friendly wave to the regulatory cops.

But there’s another likely reason: In a highly regulated environment, it can be tempting to let regulators determine outcomes in markets rather than doing the hard work of competition.

You can read Mehlman’s full piece at The Street.

Phoenix Center on Business Data Services and the FCC

By Brad

The Phoenix Center has released a new paper penned by Dr. George Ford titled “Learning from Bad Technique: The WIK-Consult Report on Business Data Services.” While the title of the paper may leave you guessing, its findings make pretty clear that the FCC’s current course and speed when it comes to Business Data Services are misguided. From the paper:

The need for rate regulation requires first a determination that there is market power, meaning that the observed prices or rates are above some “proper” level, usually defined with reference to economic cost or competitive outcomes. Yet, no party has provided the Commission with convincing evidence that prices are not “just and reasonable.” Instead, the unsupported claim that BDS prices “are too damn high” pretty much sums up the economic arguments, leaving the Agency little to work with and explaining its historical reluctance to intervene.

But past is past and the current Commission under Chairman Tom Wheeler has signaled its determination to address and likely lower BDS rates. The regulatory paradigm is outlines in the BDS NPRM is to skirt the issue of evaluating market power altogether, and instead use the simple head-count of the number of competitors as proxy. This analytical substitution is without validity in economic theory and especially inapt for telecommunications markets where fixed costs are largely relative to market size.

Wednesday, August 03

Senators Reach Out to FCC Over Special Access

By Brad

As the FCC continues its special access agenda, its use of flawed data is not escaping notice. The latest to voice their concerns about the Commission’s current course are nine senators — eight democrats, one independent — representing rural communities. From a letter these lawmakers sent to FCC Chairman Tom Wheeler on August 1:

We appreciate the Commission’s goal with the FNPRM to incentivize telecommunications providers to build and invest in networks while enhancing competition among the various providers of business data services. As you work toward a final rule, it is especially important for rural states like ours that the Commission use all the available data, including the data submitted earlier this year by the major cable operators, to both measure competitive markets accurately and ensure that the regulations for noncompetitive markets are based on the real cost to provide service.

The bipartisan letter was put together by Senator Jon Tester (D-Mont.), who was joined by Maria Cantwell (D-Wash.), Patty Murray (D-Wash.), Heidi Heitkamp (D-N.D.), Michael Bennet (D-Colo.), Amy Klobuchar (D-Minn.), Bob Casey (D-Pa.), Angus King Jr. (I-Maine), and Tammy Baldwin (D-Wisc).

For more on the FCC’s flawed Special Access process, check out this recent column from Hal Singer.

Tuesday, August 02

Ignoring the Cable Giant in the Room

By Bruce Mehlman


The smart folks at Light Reading have kicked off a four-part series analyzing the Cable industry’s performance and opportunities in serving the business market. If you’re the type who enjoys wonking out on telecommunications complexities, you’ll want to check the series out.

The first part of the series, “How Cable Means Business About Business,” examines cable company entry into the business data services market. The data it presents makes clear how companies such as Comcast and Time Warner (now part of Charter Communications) have made significant inroads in the commercial communications service market. As this chart from the article shows, Comcast’s business market strategy appears focused on medium-sized business customers.

And Time Warner Cable (now owned by Charter Communications) has seen year over year revenue growth in the commercial service market:

So what’s the big deal about these charts? Why is cable’s growth in commercial services relevant?  It’s important because the Federal Communications Commission (FCC)  is poised to impose new price regulations on existing antiquated copper-based networks as well as new fiber facilities and services that serve business customers. The FCC justifies this regulatory overreach on the perceived lack of competition in the marketplace.   

In doing so, however, the Commission appears to be turning a blind eye to the true competitive nature of the commercial services market. As we’ve noted before, in crafting new price regulation, the FCC is relying on dated, incomplete and deeply flawed data. The FCC’s market data is not only nearly three years old, it also fails to capture the robust entry and success of cable in this market. 

Imposing heavy handed price regulation on this rapidly changing market could create long-term incentives that ultimately lower capital investment, lessen facilities-based competition, and harm consumer for businesses in urban and rural markets across the nation.   

Broadband network investment vital to 21st century economic growth and job development should not be put at risk, it’s not too late for the FCC to pause and consider these new data points before rushing to judgment.

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