Friday, June 20
We’ll find out soon enough whether the U.S. soccer team can survive the World Cup’s “Group of Death” with two strong European competitors (England and Germany). But for broadband, it’s clear who’s winning: the U.S.
It’s basic economics that if we as a society want less of something—for instance, smoking—we will impose a tax on it or restrict it by regulation, and consumption will fall. The opposite is also true: if we want more of something, deregulation and lower taxes will, by the operation of markets, lead to more of it.
The price, availability and quality of broadband follows the same rules. If we want more and faster broadband—and we do—then excessive and inappropriate regulation of broadband, such as some activists’ proposals for “Title II” common carrier regulation, is the wrong way to go. On top of all the legal and technological problems Title II would bring, we can confidently predict that it would sharply inhibit broadband investment.
A new paper from Christopher Yoo of Penn Law School’s Center for Technology Innovation and Competition takes a fresh look at the data and shows that the US is far ahead of Europe on virtually every relevant metric of broadband deployment. The reason, not surprisingly, is that the US regulates broadband lightly while European countries impose investment crippling wholesale unbundling requirements on broadband providers.
Res ipsa loquitur, the lawyers like to say, and Yoo says exactly that: “The data speak for themselves, and the empirical evidence confirms that the United States is performing much better than Europe in the high-speed broadband race[.]”
Look at the data from different angles (as CTIC’s interactive micro-site permits), and it tells the same story: access to next-generation networks (over 25 Mbps), the U.S. leads 82% to 54%; access to next-generation networks in rural areas, 48% to 12%; and LTE coverage, 86% to 27%. Unsurprisingly given these figures, the U.S. (meaning U.S. network operators) invests more than twice as much per household as Europe does—$562 vs. $244. Better service, with less packet loss in the U.S.. And entry-level broadband prices are lower here, too.
Why is the U.S. winning? It all comes down to fundamentally different models of regulation and the incentives each provides for investment: Europe relies on regulations that treat broadband as a public utility and foster competition among multiple leased access providers on incumbent provider platforms. New entrants lease incumbents’ facilities at wholesale cost (also known as unbundling). The U.S. regulatory light- touch has generally left buildout, maintenance, operation and modernization of Internet infrastructure to private companies and focuses on promoting facilities-based competition, in which new entrants are expected to construct their own networks.
The regulatory structure government chooses directly affects broadband availability, quality and price.
Focus on that investment statistic for a minute: there’s over twice as much investment per household in the U.S. as in Europe, which leads to more coverage.
We’ve already had a glimpse of what can happen if the U.S. government tries a different path, that of Title II regulation. When the FCC announced in 2010 that it was considering Title II reclassification of broadband as a possible approach to ensuring network neutrality, there was an immediate negative effect on the stock prices of the network operators who were deploying broadband across the country. On average, the market capitalization of the four largest ISPs in the United States lost a combined $18 billion and the market value of one of those entities dropped 15% overnight. The ability of these companies to acquire the financing necessary for aggressive broadband deployment diminishes as their value in the market declines. This was but one early sign of the kinds of problems that broadband providers will encounter in continuing their world leading broadband deployment performance if the FCC turns to Title II regulation.
So the light regulatory model of the U.S. brings greater adoption, more investment, and faster speeds, while due to the heavy-handed leased access regime on which Europe built its policies, the continent is now lagging far behind.
None of this is surprising to anyone who knows a bit of economics, but it’s a useful reminder as the FCC considers what sort of rules would best achieve our nation’s broadband goals. We can ill afford to neglect history and economics by imposing telephone-era, public utility regulation that will dampen investment at precisely the moment when carriers will have to undertake even greater expenditures to acquire spectrum in the upcoming incentive auction and then spend more to deploy facilities to bring wireless broadband to the entire US population at 4G levels. As Yoo writes, “we have a real-world basis for assessing the impact of imposing telephone-style regulation on the Internet[.] As regulators in the United States contemplate rules for next-generation networks, it would be wise to consider how going down the path of stiff telephone-era regulation has fared elsewhere.”
Because whatever happens in Brazil, the U.S. has already beaten Europe in the broadband competition for economic growth.
Thursday, June 19
Today marks the 80th anniversary of the 1934 Communications Act. Signed into law by President Franklin D. Roosevelt, the Act was basically a shuffling of the Federal Radio Act of 1927 and the Mann-Elkins Act of 1910, which covered telephone service. From Wikipedia:
The stated purposes of the Act are “regulating interstate and foreign commerce in communication by wire and radio so as to make available, so far as possible, to all the people of the United States a rapid, efficient, nationwide, and worldwide wire and radio communication service with adequate facilities at reasonable charges, for the purpose of the national defense, and for the purpose of securing a more effective execution of this policy by centralizing authority theretofore granted by law to several agencies and by granting additional authority with respect to interstate and foreign commerce in wire and radio communication, there is hereby created a commission to be known as the ‘Federal Communications Commission’, which shall be constituted as hereinafter provided, and which shall execute and enforce the provisions of this Act.”
While the 1934 Act served America quite well for over six decades, in 1996 it was given a much-needed overhaul to better reflect the technology of the day. But even that overhaul now seems like a bit of a relic, as today’s current broadband age — both wired and wireless — has completely revolutionized America’s communications.
With some activists currently calling for the FCC to reclassify broadband services under Title II, it’s worth remembering that Title II was originally part of the 1934 Act. In other words, those pushing for reclassification of broadband services want the FCC to use an 80 year old law to govern the modern Internet.
Rather than brute force a law on the books since before World War II, a smarter way to govern today’s Internet — and whatever shape the Internet takes in years to come — would be to once again revisit the Communications Act. A lot has changed in 80 years, after all, and relying on such an outdated framework for today’s technology could very easily do much more harm than good.
Friday, June 13
At today’s FCC open meeting, Chairman Tom Wheeler recused himself from the Commission’s work on the transition to all-IP networks. As Kate Tummarello of The Hill reports:
At the agency’s June open meeting on Friday, Wheeler announced that he would not participate in the agency’s work on this topic, citing his tenure on the Board of Directors for telecom company EarthLink, which recently filed to participate.
Wheeler served on EarthLink’s Board of Directors for ten years before resigning last year after the Senate confirmed him to be FCC chairman.
Friday, June 06
With the net neutrality debate once again on the front burner, AT&T Senior Executive Vice President Jim Cicconi has penned a lengthy post at the company’s Public Policy Blog to break down how reclassifying broadband service under Title II is a bad idea for just about everyone with a stake in the open Internet. An excerpt:
Title II would not prohibit the creation of fast lanes and slow lanes on the Internet — that is clear in the plain language of the law, not to mention 80 years of FCC precedent and court decisions. Arguments to the contrary are pure fantasy. At a minimum, Title II supporters have to concede that their argument depends on the bank shot that an appellate court will agree (a) that the FCC can change its mind about how the Internet works after the Supreme Court has validated its prior decision; and (b) the FCC can then ignore the plain language of the statute and 80 years of precedent to determine that the prohibition of “unjust and unreasonable” discrimination actually means it can prohibit any discrimination. And think of all the additional proceedings that will be needed to unpack where we draw the lines between information services “haves” and telecommunications services “have nots.” If that is the road we choose to travel, the investment uncertainty alone will have a massive negative impact on American broadband deployment for years to come.
There’s another important argument against Title II — invoking it would risk massive collateral damage to many, if not most, U.S. Internet companies. Title II could turn every edge or content company into a common carrier for at least part, if not all, of their services.
Cicconi goes on to argue that FCC Chairman Tom Wheeler already has a way to ensure an open Internet without the regulatory hammer of Title II:
Section 706, as interpreted by the court and explained by Chairman Wheeler, does provide a path. It’s a path AT&T supports. For one, it has already been blessed as a valid source of jurisdiction to address the kinds of concerns articulated by Chairman Wheeler and others throughout the current debate. In upholding Section 706 authority, the Verizon court gave the FCC wide latitude to prohibit conduct that would deter broadband investment. And the approach that Chairman Wheeler has proposed would clearly prevent practices like paid prioritization that we feel would change the fundamental nature of the Internet.
Thursday, June 05
Via David Gelles and Nichael J. De La Merced at The New York Times, the long rumored merger between Sprint and T-Mobile is starting to heat up:
Sprint and T-Mobile have talked about a combination for years but continued to put it off, each preoccupied with other deals, and concerned about scrutiny from antitrust regulators.
But in recent days, the two sides have settled on the terms of a $32 billion deal that is likely to be announced this summer, people briefed on the matter said on Wednesday.
Under the terms of the deal, which are still preliminary, Sprint would acquire T-Mobile for about $40 a share in cash and stock, a 17 percent premium to Wednesday’s price.
Between this, the proposed Comcast-Time Warner Cable merger and, to a lesser extent the proposed AT&T-DirecTV coupling, the DOJ and FCC have a lot of work ahead of them.
Tuesday, June 03
Via Kate Tummarello at The Hill, lawmakers from both sides of the aisle have some ideas for how the FCC can successfully update an existing program to bring more technology to schools:
A bipartisan group of lawmakers laid out recommendations for the Federal Communications Commission to modernize its E-Rate program to fund technology in classrooms.
“The funding priorities must reflect the changing nature of the Internet, so that our classrooms and students have access to today’s technology,” a group of 46 lawmakers told the FCC in a letter on Monday.
“America’s school and libraries are in need of a technological update to accelerate next-generation education reforms, support teachers and enhance student learning through universal access to high-speed broadband.”
Thursday, May 29
The latest flare up in the never-ending net neutrality debate involves the possibility that the FCC could regulate Internet service under Title II. At The Hill, Kate Tummarello reports the very idea of Title II has already inspired work on a bill from House Republicans:
A new House Republican bill would prevent the Federal Communications Commission (FCC) from going forward with a proposal for stronger regulations on Internet service providers.
Late Wednesday, Rep. Bob Latta (R-Ohio) — vice chairman of the House Commerce subcommittee on communications — introduced a bill that would keep the FCC from reclassifying Internet providers to treat them more like traditional phone companies, which are heavily regulated.
“The Internet has remained open and continues to be a powerful engine fueling private enterprise, economic growth and innovation absent government interference and obstruction,” Latta said in a statement announcing his bill.
Tuesday, May 27
Speaking of the FCC, Julian Hattem at The Hill reports that Senate Republicans aren’t yet going to step into the Commission’s latest foray into the net neutrality debate:
The top GOP senators on the Appropriations Committee and the subcommittee overseeing the FCC both told The Hill this week that they don’t expect a rider preventing the commission from moving forward with the effort.
“I don’t see any possibility of that. I really don’t,” said Sen. Mike Johanns (R-Neb.), the ranking member of the Financial Services and General Government subcommittee.
“It’s not there yet,” added the top Republican on the full committee, Sen. Richard Shelby (Ala.). “But you know, this is early.”
Last Friday, when most people were gearing up for the long weekend, FCC Chairman Tom Wheeler was busy outlining the Commission’s agenda in an official blog post. Encouragingly, the transition to all-IP networks received top billing:
Next month’s open Commission meeting will be highlighted by an update on our efforts to facilitate the transition from the circuit-switched networks of Alexander Graham Bell to a world with fiber, cable and wireless Internet Protocol (IP) networks. This past January, the Commission unanimously adopted an Order inviting service providers to propose voluntary experiments designed to assess how the transition to IP networks impacts users and initiating targeted experiments. In three weeks, the Commission will receive a status report on proposed experiments and how best to deploy next-generation networks, while preserving enduring values like universal access, competition and consumer protection.
Wednesday, May 14
Over at VOXXI, IIA Broadband Ambassador Kristian Ramos highlights why the FCC’s incentive spectrum auctions need to be open to every bidder willing to invest. An excerpt:
What many fail to realize is that the rate of growth in spectrum usage continues to accelerate. For example, the amount of spectrum used by mobile broadband data doubled in 2012 and is expected to increase eightfold by 2018.
To address this impending “spectrum crunch,” in 2012 Congress authorized the FCC to conduct a voluntary incentive auction as a way to make additional spectrum from television broadcasters available to commercial wireless providers so that they can meet the ever increasing demand for wireless broadband.
The proceeds of the incentive auction will be used to compensate broadcasters for relinquishing their spectrum and pay for a nationwide broadband public safety network consistent with the recommendation of the 9/11 commission, with leftover funds going toward deficit reduction.
However, for the auction to work properly, the FCC needs strong participation from as many broadcasters and bidders as possible. In fact, 78 House Democrats recently told the FCC as much, writing in a letter: “The FCC must invite as many participants as possible ‘on equal terms’ to an ‘open and fair’ broadcast TV spectrum incentive auction.”
Participation in the incentive auction matters. Remember: The auctions are voluntary, which means broadcasters that are participating do not have to sell their unused spectrum if they do not feel as if they are being fairly compensated.
By increasing the number of bidders participating in the auction, the FCC would improve the financial impact of the auction and enhance broadcaster participation. The more broadcaster spectrum that is available at auction, the more spectrum is available for consumers.
Check out Ramos’ full op-ed at VOXXI.
Wednesday, May 07
In the upcoming incentive auction for wireless spectrum, the Federal Communications Commission (FCC) seeks to advance widespread deployment of mobile broadband in rural America with the infusion of additional 600 MHz “low” band spectrum into the wireless market.
What’s the best approach to achieving the goal of expanded rural service? Don’t restrict the auction by cutting out companies that currently serve rural America and want to expand their presence there.
FCC Chairman Wheeler kicked off a lively debate on this issue in his recent blog post maintaining that:
“The low-band spectrum we will auction is particularly valuable because it has physical properties that increase the reach of mobile networks over long distances at far less cost than spectrum above 1GHz. Today, however, two national carriers control the vast majority of that low-band spectrum. This disparity makes it difficult for rural consumers to have access to the competition and choice that would be available if more wireless competitors also had access to low-band spectrum.”
While no disagreement exists on the need for more spectrum and the policy goal of expanding mobile broadband availability in rural America, the realities of today’s marketplace suggest an alternative view on the best way to bring affordable and ubiquitous mobile broadband services to more of America’s heartland.
Sprint and T-Mobile contend that that the success of the spectrum auction depends on the FCC’s ability to limit AT&T (T) and Verizon’s (VZ) future spectrum purchases. Yet, neither Sprint (S) nor T-Mobile (TMUS) has publicly committed to use any additional spectrum to serve rural America. Instead, a recent study by Dr. Anna Maria Kovacs reveals that these wireless entities have informed Wall Street that they would limit high-speed wireless broadband coverage to a population of only 250 million. For America’s rural consumers, their plan means far less broadband service coverage from Sprint and T-Mobile than what these companies offer to their existing voice service customers. In fact, it appears that their goal in utilizing new spectrum is to limit enhanced broadband service mainly to the nation’s urban centers.
If satisfying Wall Street’s demands for Sprint and T-Mobile to use newly acquired spectrum only to serve revenue-rich urban and suburban broadband customers is the nation’s primary goal, the FCC may be on the right track. On the other hand, if expanding mobile broadband deployment to rural Americans everywhere, from the mountains of western Virginia to the open ranges of the West, best serves the public interest, the FCC may want to choose a different path.
Unlike Sprint and T-Mobile, AT&T and Verizon have stressed that they will use additional spectrum to serve nearly a population of 300,000,000, bringing advanced mobile broadband services to less densely populated areas. In fact, these companies already serve large portions of rural America directly (not just through partners), offering the same competitive nationwide pricing and calling plans that they offer in the suburbs or cities.
Excluding certain companies from the auction in an attempt to engineer greater “competition” isn’t going to work. Modern broadband networks require significant capital investment to build out these new services to difficult-to-reach populations. The companies that are most likely to make that capital investment are the ones who currently serve rural America and have announced their intention to expand rural access with newly acquired spectrum.
Availability of high-speed mobile broadband depends on service providers that agree to actually deploy cell towers there—something both Sprint and T-Mobile have failed to commit to doing in the future. They seem perfectly content to focus their core efforts on areas where revenue per square mile will be highest. The “back 40” of Manhattan contains a lot more people, after all, than the back 40 of a ranch in New Mexico or Montana.
While these two foreign-owned entities are free to advance their business interests in Washington and Wall Street corridors, America’s rural customers depend on the FCC to separate fact from fiction and help deliver broadband to every corner of the nation.
Non-existent investment commitments and theories on managed competition are no basis to rig an auction. If we seek a real “pop” in high-speed mobile broadband use in rural America, let’s look at the population each company has agreed to serve. Our spectrum policies shouldn’t exclude from the auction the prospective bidders who have actually announced plans to serve more of America’s heartland.
Monday, April 28
Last week, FCC Chairman Tom Wheeler made waves when he announced new net neutrality (yes, it’s back) rules. At Tech Policy Daily, Roslyn Layton argues that the Internet sky is not falling:
There is no doubt that feelings about net neutrality are strong. Many consider the Internet a human right and that it should not be subject to market norms, indeed that it should be offered without charge and under government control. But whether we like it or not, there are real world costs to delivering the internet. Furthermore the services that we overwhelmingly use online (Google, Facebook, Twitter, Netflix etc) do not do it out of the goodness of their hearts. They expect to make a profit, and if it means that they improve their service so we chose them over others, so be it. The reality of what the FCC proposes actually puts the power in the hands of content and application providers – subject of course to what their customers demand.
The FCC will reportedly take up the proposal at its May meeting. Stay tuned…
Wednesday, April 23
Via our Tumblr.
Monday, April 21
With the FCC moving toward its upcoming incentive spectrum auction, The Hill‘s Kate Tummarello examines a debate over Wi-Fi:
Next year, the Federal Communications Commission will auction off airwaves worth billions to wireless companies. While the agency has pledged to set aside some unlicensed airwaves — which fuel consumer electronic devices like garage door openers and Wi-Fi routers — some fear the FCC might not reserve enough of the valuable airwaves as it tries to meet congressionally set revenue goals.
The highly anticipated 2015 auction will involve buying airwaves back from broadcasters and then selling new licenses for those airwaves to spectrum-hungry wireless companies looking to expand their networks.
While most focus on the battle between wireless companies over the agency’s plans to limit certain companies in the auction, the tech industry is watching to see how much of the available spectrum the FCC will set aside for unlicensed use.
With wireless companies in dire need of more airwaves — and the government in need of revenue — it’s clear the FCC faces a precarious balancing act. Finding a solution that works for everyone will be tricky, but it needs to be done in order for consumers not to end up on the losing end of the auction.
Wednesday, April 16
As the FCC continues to design its upcoming incentive spectrum auction, 78 House Democrats have penned a letter — led by Congressmen John Barrow and Bennie G. Thompson — encouraging the Commission to maximize the benefits of the auction by ensuring they are open to all entities willing to bid. An excerpt from the letter:
For the auction to be a success, the Commission should maximize participation by both broadcasters incented to relinquish their spectrum rights and bidders seeking to buy those rights in the spectrum auction. In fact, inviting as many bidders as possible to compete in an open and fair auction on equal terms will allow for the full market price for spectrum to be realized and, in turn, lead to higher compensation to incent greater broadcaster participation resulting in more spectrum for the auction.
We agree with the position taken by the House Democrats. As our Honorary Chairman, former Congressman Rick Boucher, wrote in an op-ed for Light Reading last year:
In order to meet these multiple needs simultaneously, it’s essential that the auction be open to all financially qualified bidders. Some have suggested that the largest mobile carriers be restricted in their ability to participate fully in the auction in order to favor smaller carriers. Limiting the ability of the largest carriers to purchase the spectrum their customers are demanding will mean fewer services for consumers and lower auction proceeds, rendering very difficult the challenge of meeting all of the competing and urgent demands for the auction revenues.
Moreover, it is not at all clear that spectrum acquisition restrictions on the largest carriers would actually promote competition.
Monday, April 14
At the Washington Post, Cecilia Kang has an extensive profile of FCC Chairman Tom Wheeler. An excerpt:
“I’m not sitting here sucking eggs,” Wheeler said at his first public meeting in November, a warning shot of what was to come. “I’m looking seriously at these issues.”
Such candor has defied early assumptions about President Obama’s FCC pick. The former lobbyist was pegged by many as a lame-duck regulator, likely to lay low and stick to worker-bee issues.
Instead, the 68-year-old has eagerly grasped a national megaphone on the defining — and the utterly arcane — telecom policy issues of the day.
Kang’s full profile is worth checking out. And for an extensive look at the issues Wheeler’s FCC faces, read our Honorary Chairman Rick Boucher’s op-ed from November for Bloomberg Government.
Tuesday, April 08
Miss our Internet Academy on the future of America’s telecommunications policy yesterday? We’ve got you covered.
Monday, April 07
Earlier today we held our latest Internet Academy, which featured former House Energy and Commerce Chairmen Rick Boucher and Jack Field discussing the past and future of America’s communications policies. We’ll have archive of the event up soon, but in the meantime, The Hill‘s Julian Hattern has a write-up. Check it out.
Wednesday, April 02
Monday’s move by the Federal Communications Commission to open up the 5GHz band for Wi-Fi and other unlicensed uses has the potential to kickstart the expansion of new, faster Wi-Fi technology. That’s a win — for consumers, for innovation, and for America’s digital infrastructure.
But even as those of us who have long pushed for expanded high-speed Internet access pop champagne corks, it’s worth noting that the FCC’s action is just a step in what should really be a sprint by the Commission when it comes to making more spectrum available for mobile broadband. As Commissioner Ajit Pai said in his statement:
“If we’re to keep pace with consumers expectations, we need more 5GHz Wi-Fi spectrum, not just better use of existing 5GHz Wi-Fi spectrum. We must redouble our efforts on making an additional 195MHz of spectrum available for unlicensed use.”
Commissioner Pai is right on the money, but that quote only tells half the story. In order to a) keep up with consumer demand, and b) truly advance mobile broadband deployment and speeds across the country, the FCC must also make more licensed spectrum available for commercial use. Or, as Commissioner Jessica Rosenworcel succinctly put it, “Good spectrum policy requires a balance of licensed and unlicensed [spectrum].”
Again, the FCC’s 5GHz Wi-Fi move is worth celebrating. But there’s still a lot of work to be done. To quote Commissioner Mignon Clyburn, “We need to be ambitious in finding more ways to provide licensed and unlicensed spectrum for commercial services.” And with consumer demand for mobile broadband not likely to diminish anytime soon, the clock is ticking.
Tuesday, March 25
Congressman Adam Kinzinger and FCC Commissioner Ajit Pai have penned an op-ed for the Chicago Sun-Times on the need to better train kids for the digital economy. The full op-ed is definitely worth checking out, but here’s an excerpt:
To prepare our children for digital-age jobs, we need to get them online today. Our students’ futures are too important to let this opportunity for far-reaching reform slip from our grasp.
A student-centered E-Rate program would give kids in small towns a better chance to compete with those growing up in big cities. Real reform would help children in Illinois and throughout small-town America see a brighter tomorrow — and we stand ready to ensure that E-Rate lives up to that promise.