Special access, end of PSTN no secret to wireline marketplace
by Bruce Mehlman
A recent Huffington Post article by Bruce Kushnick highlighted “special access,” a service long provided by companies like Verizon (NYSE: VZ), AT&T (NYSE: T) and CenturyLink (NYSE: CTL) to business customers seeking access to the nation’s antiquated telephone system. It inaccurately described special access as a monopoly market that is a “…secret network you should know about”—with “secret wires.”
I’m not quite sure what the author was trying to convey; however, I do know that special access is no secret. It’s a decades-old service that many Americans (including American businesses) have already abandoned and virtually all don’t use exclusively. It’s no secret in the marketplace: Far from being some monopoly, today’s reality is that the business market served by special access services is robustly competitive.
Don’t take my word for it—look at the companies and competitors who use special access services. In 2012, Sprint (NYSE: S) announced that it would look for other alternatives to telephone company special access service by starting an RFP for competitive bids from other companies. Thirty to 40 competitive providers were expected to offer alternative service to telephone company special access high-capacity services. In fact, at the conclusion of the RFP process, Verizon, the nation’s second largest phone company, obtained a contract to provide special access services to only 6 percent of Sprint’s cell towers in Verizon’s service area.
Special access is also no secret to America’s cable TV companies. Cable TV providers know all about these “secret” wires and have been competing fiercely against incumbent telephone companies with their own high-capacity Ethernet service to gain significant market share in the lucrative small business market. Cable entry into the telephone business market has been so successful that they are now offering Ethernet 2.0 services to compete with telephone company special access.
But beyond the details of the competitive special access market, there is a broader and more important point. These not-so-secret phone lines are the last vestiges of the old public switched telephone network, which is rapidly yielding to modern high-speed broadband networks that already carry 99 percent of all data traffic in this country. This is not a nefarious plot; rather, it represents getting closer to the goal of replacing the antiquated phone system as set out by the FCC’s 2010 National Broadband Plan.
The old telephone network served us well for decades, but its limited service capabilities are well known. Many consumers—including the 38 percent of households that “cut the cord” to wireless service or who receive phone service over cable—have already switched to using a high-speed broadband network from a telco or cable MSO. In fact, only 5 percent of Americans rely exclusively on “plain old telephone service.”
Ninety-five percent of Americans use broadband-based communications networks in some form. If affordable and ubiquitous nationwide broadband is our goal, then we need to start sunsetting the PSTN as soon as possible. Here’s why.
Regulatory requirements—nowhere mentioned in the blog post—force incumbent telephone operators to subsidize not one but two networks, the old TDM network that the author appears to favor and the new, faster IP-based network consumers want. Their competitors that offer broadband services, however, face no such burden of maintaining two networks, and those that rely on incumbent special access services benefit handsomely from subsidized, regulated access to incumbent telephone facilities. A recent study revealed that of the $154 billion incumbent telephone companies invested in their networks from 2006 to 2011, nearly $81 billion went to maintaining their old networks—ones the author admires—and only $73 billion devoted to new modern broadband networks.
Imagine what could happen if that $81 billion in mandatory regulatory costs were used to finish the buildout on the new networks to serve everyone. In the State of the Union address, President Obama set forth the goal to connect every school and library in the country to high-speed broadband—even 1GB ultra-high-speed broadband—within five years. He did not say: “Let’s connect schools with dial-up modems and copper wires.” His message was clear; it is not the special access technology of the past he seeks for America’s schools and libraries, rather our future will depend on the rapid buildout of modern high-speed broadband lines throughout the nation.
Kushnick was right about one thing when he stated that “there’s nothing special about special access lines.” Exactly correct: They represent old technology. Businesses as well as individual consumers are all migrating, fast, to the high-speed broadband networks that represent the future of telecommunications. And that’s no secret.
Source URL: http://www.fiercetelecom.com/story/special-access-end-pstn-no-secret-wireline-marketplace/2014-03-03
To Grow Our Future in Technology, Look to the Past
by Larry Irving
History doesn’t just happen. History starts with a vision.
In the early 1980s, Rep. George T. “Mickey” Leland, who was then chairman of the Congressional Black Caucus, envisioned a more inclusive telecommunications and media world.
A decade later, the late Secretary of Commerce Ron Brown recognized that the power of the Internet could unlock a brighter future for our children with better economic and educational opportunities.
Today, our leaders are writing history with critical decisions that will affect the future of the mobile revolution and the transition to all-Internet-based networks.
Mickey was weary of seeing stereotypical depictions of blacks and Hispanics in the media and was disappointed at the low rates of minority ownership and employment in the media and telecommunications industries. He understood that media ownership and employment would determine not just how white America saw black people but how black people saw themselves.
Equally important, he knew that electronic media and technology were going to be among the principal drivers of our economy and would present tremendous entrepreneurial opportunities for decades to come. And, being a great politician, he understood one other thing: He knew that times of great disruption bring great opportunity.
The media and telecommunications landscape was undergoing massive disruption in the 1980s. The historic AT&T was broken up into seven “Baby Bells.” New competitors such as MCI and Sprint were entering the telecommunications marketplace. Broadcasting was expanding from the three historic networks, and media-ownership opportunities were proliferating. And, perhaps most importantly, the cable-television industry was maturing and expanding.
Mickey was a strong supporter of innovation and technological advancement. But he made sure that every industry, even the most innovative industries, knew that his support for their efforts came with a condition: their support for increased opportunities for minorities and women.
Mickey fought for changes in the way minorities were portrayed by television broadcasters and movie producers; he drove the FCC to establish linkup and lifeline programs to increase telephone penetration rates in low-income communities; he fought for and won increased opportunities for ownership of radio and television stations by minorities; and, perhaps most importantly, he wrote legislation codifying increased employment and vendor opportunities for minorities in the cable-television industry. Those equal employment opportunity provisions became the model for other media industries, including the broadcasting industry.
Over the past 30 years, hundreds of thousands of minorities and women employees of media companies, in addition to thousands of cable vendors, benefited from Mickey’s hard work and vision. While the media and telecommunications industries are not as diverse as they could be, vast strides have been made as a result of Mickey’s vision and leadership.
Secretary Brown similarly understood the power of disruptive technology. He was a central figure in the Clinton administration’s policy formulations in the early days of the Internet, and he understood that the Internet was the transformative technology of its day. But he also understood that the Internet would only matter—would only be judged a clear success—if it benefited all Americans.
Shortly after Secretary Brown took office, a group of White House staffers presented him a list of proposed nominees for a Clinton administration private-sector advisory committee on the Internet. Secretary Brown looked at the list and noted that of the 25 suggested nominees, 22 were white males. He told the White House staff to take the list back and return with a more inclusive and diverse slate of nominees. One of the White House staff said, “But this list has been vetted and cleared by the White House,” to which Brown said, “Yes, and now it’s been vetted and rejected by the secretary of commerce who has to chair and manage that advisory committee.” The list was resubmitted with more diversity and a much-improved ratio of women and minorities on the committee.
The inclusion of women and minorities wasn’t just window dressing. Secretary Brown knew that we were at another technological inflection point. When he took office, fewer than 2 million people worldwide were on the Internet. The secretary knew that the Internet would grow and become ever more important. By ensuring diversity on the advisory committee, he made certain that as this high-powered group of individuals made policy suggestions to the president, they were looking at how this important new technology would affect and benefit all Americans and all American communities.
Secretary Brown was a firm supporter of the e-rate proposal that provided low-cost Internet connectivity to schools and libraries across America. He worked to develop policies and establish grant programs designed to connect schools, libraries, hospitals and rural health clinics. It’s a straight line from Secretary Brown’s commitment to connecting schools to the Internet two decades ago to the ConnectEd program the Obama administration supports today. Secretary Brown understood that, particularly in the early days of the Internet, millions of Americans would have their first experience with the Web in public institutions, and he fought to ensure those institutions had the resources they needed to serve their public.
Perhaps most importantly, he understood that there was a “digital divide,” and that it was the role of government to assist industry in bridging that divide. The digital divide would have been deeper and more pervasive but for Secretary Brown.
It is his signature on the front page of the first report defining the digital divide and stating that we, as a nation, have an obligation to ensure that all Americans have access to essential technological tools. He knew that with government and industry working together and with the formulation of smart policies, we could drive Internet connectivity rates higher. In slightly more than two decades, we have gone from 2 million people with access to the Internet to almost 3 billion people having access worldwide. Much of that growth is the result of the vision and the work of Ron Brown.
Today we are at another technological inflection point, another time of great disruption. The mobile revolution and the so-called “IP transition” promise to be even more disruptive than the cable revolution and the Internet revolution. And they promise to provide great opportunity for the smart and the agile. Women and men of vision must step forward to embrace these twin revolutions and work to ensure that these new technological tools are used to improve education, increase access to health care and fitness tools and provide for greater productivity and economic opportunity for our community.
Rep. Leland and Secretary Brown understood the power of technology to transform our image of ourselves, to enhance economic and educational opportunities and to ensure the future of our children. As we enter this next new phase of technological development, it is our obligation to further their twin visions.
The best way to celebrate Black History Month is to create some history of our own. Fast-tracking the move to modern, high-speed broadband networks, while ensuring that core consumer values are protected, will lay the foundation for even greater progress with education, health care, entrepreneurship, energy and the environment. We must understand and embrace new technologies and the opportunities they provide us. That’s what Mickey and Ron would have done.
Source URL: http://www.theroot.com/articles/culture/2014/02/blacks_in_technology_two_pioneers_who_inspired_the_next_generation_of_innovators.1.html
The future of telecommunications
By Former Rep. Rick Boucher (D-Va)
In today’s hyperpartisan environment, it’s useful to remember that not so long ago, Congress normally worked in a bipartisan manner to achieve matters of great national purpose. Saturday marks the 18th anniversary of one such notable achievement, the Telecommunications Act of 1996.
The ’96 Act was a watershed development in communications policy. It opened the door for cross-platform competition across a range of telecommunications sectors, expanding consumer choices and stimulating network investment. Telephone companies were empowered to offer multi-channel television service. Cable companies and other new entrants were empowered to provide competitive local telephone service. The Regional Bell Operating Companies were provided a path to enter the nationwide long-distance market upon demonstrating they had sufficiently opened their networks to local telephone competition, and they were given permission to manufacture telecommunications equipment.
The ’96 Act cleared away the regulatory underbrush that prohibited the cross-platform competition now made possible through technological advances. It ushered in an era of service convergence. Consumers benefited from the highly competitive market and were given one-stop shops for all their voice, video and data needs. Together with Congress’s wise decision in 1993 to adopt a light-touch regulatory approach to the then-emerging wireless industry and the contemporaneous decision of the Federal Communications Commission to forbear from applying common carrier regulations to broadband networks, the ’96 Act has undergirded the progress we have seen over the last two decades.
The rapid technological and marketplace changes advanced by the ’96 Act have outpaced our existing regulatory regime and brought us to a new policy inflection point. Technology and consumer access to information have changed so rapidly since 1996 that the debates we had in those days now seem quaint, and the communications opportunities available to consumers in 2014 would have been unrecognizable 18 years ago.
The dramatic shift toward broadband-based networks forecasts nothing less than the end of the aging telephone network first used in the era of Alexander Graham Bell. By the end of this decade, through a carefully planned process, all consumers will have transitioned to modern high-speed broadband networks.
Most consumers — essentially anyone who has a cellphone or who gets telephone service from a cable provider — have already made this switch without government action. Drawn in significant part by 4G wireless technology offering speeds comparable to the fastest wired broadband, consumers are fleeing the old network in droves. Today, less than one-third of the country uses it at all, and only 5 percent use it exclusively. It’s rapidly wearing out. Manufacturers don’t make new equipment for it, and the costs of maintaining it are skyrocketing. It’s a network with limited service functionality. As the transition to date underscores, consumers realize how broadband-based networks offer them far more. Driven by new technological opportunities, that’s the marketplace at work.
But as a result of current regulatory requirements, telephone companies collectively spend more maintaining the outdated network than investing in modern broadband networks. As the number of subscribers on the old network dramatically declines, these expenditures are simply unsustainable. Moreover, every dollar expended maintaining an outdated network is a dollar not available for investment in the modern, highly functional networks consumers prefer.
These realities in 2012 led the FCC’s Technological Advisory Council to recommend that the old, public switched telephone network sunset by 2018. At the time, the Advisory Council was chaired by Tom Wheeler, now FCC chairman. In his first months in office, he has embarked on a thoughtful process to achieve a complete national transition by decade’s end.
Modeled on the successful demonstration trial the FCC established in the run-up to the digital television transition, the agency this year will conduct several demonstration projects in carefully selected markets, through which consumers will rapidly be transitioned from the old network to modern multimedia platforms. With the information gained from these trials, the FCC can fashion a plan to sunset the switched network by a date certain.
Completing the transition will require answering some challenging questions, such as how to protect the core consumer values of universal connectivity, access to public safety and disability services and competition. Equally important: How do we maintain today’s vibrant environment for broadband investment?
Thanks to our light-touch regulatory regime, the U.S. already receives three-quarters of worldwide investment in broadband networks. These expenditures will be dramatically accelerated, with billions more invested, once the local exchange carriers are freed from the need to maintain outdated, less popular and highly expensive old networks, even as they invest in modern ones.
To meet these challenges, the full participation of all stakeholders, including government, consumers and network operators, will be essential.
The ’96 Act accomplished everything we intended. It unleashed a golden era of competition, service improvements, technological advancements and massive investments in high-speed broadband-capable networks. With the right public policies in place — policies favoring investments and newer technologies consumers want — this golden age will continue for all Americans.
The transition to IP networks, and the policy modernization that will accompany it, represent the largest telecom changes since the ’96 Act. It’s going to be an exciting several years.
Source URL: http://thehill.com/opinion/op-ed/197573-rick-boucher-the-future-of-telecommunications#ixzz2sYCVcCMp
Time for more American dreaming
by Jamal Simmons
Happily, President Obama talked about opportunity in the State of the Union speech last night. Since the economy tanked in 2008, leaders naturally began erecting barriers against fierce economic headwinds and knitting together a tighter safety net to catch those who were thrown off their financial perches in the maelstrom. Now it is time for Washington to get back to helping Americans dream again; then put concrete plans in motion to help us achieve those dreams.
I grew up in Detroit during the de-industrialization of America in the 1970s and 80s. Despite our collective idealization of the old days of manufacturing when men like my grandfather could raise a family of six on his blue collar auto plant wages, that world is not coming back.
Instead we must prepare our children for the jobs of the future that will require more skills and a willingness to keep adapting throughout their careers. Consumers spent over $2 trillion dollars on IT products and services in 2013, and one study reported that Apple paid app developers $5 billion dollars, Google $900 million and Microsoft $100 million. Yet despite our increasing diversity, another study found 83 percent of tech startups’ founding teams are all-white; 5 percent Asian and 1 percent African American. Only 10 percent of startup founders are women. Allowing those trends to continue is bad for the tech industry, bad for the people being left out and bad for the economic prospects of the United States. Much like the gene pool of families that intermarry over generations, our country’s innovative DNA will deteriorate without diversifying beyond the narrow band of elites now setting the pace in the tech industry.
Non-profits like #YesWeCode, Girls Who Code and LOFT (Latinos on the Fast Track) are taking on the challenge of teaching kids to code with the help of many corporate funders. Schools like Howard Middle School in Washington D.C. are trying to do their part by teaching students how to build their own apps to fit the needs of their communities.
The Howard Middle School students at the MMTC broadband summit recently presented apps to fight obesity, smartly provide for more efficient garbage pickup and, tragically, find missing girls of color because the news media doesn’t pay as much attention to their disappearances. One of these kids could be their generation’s Mark Zuckerberg or Nigerian-born Chinedu Echerou whose HopStop app to find mass transit directions was recently sold to Apple for a reputed $1 billion.
Other groups are opening doors of opportunity in Silicon Valley for minority workers and entrepreneurs. Laura Weidman Powers recently attended an event the Internet Innovation Alliance hosted in San Francisco with FCC Commissioner Jessica Rosenworcel, California Lieutenant Governor Gavin Newsom and representatives of academia and the investment community. Powers co-founded Code2040, which provides mentorship, internships, leadership training, and network development for minority talent by connecting them with growing tech companies.
The federal government can do its part by making sure all schools, regardless of income or geography, are equipped with high speed, high capacity broadband and well-trained teachers. The president’s ConnectED proposal to modernize the 1996 E-Rate law and get educational software into the classroom is a great place to start.
Once kids go home, they need the same access there that they have in school. Companies are focusing on enhancing high-speed broadband network deployment and low cost equipment options. In the interim, low-cost handheld devices like PDA’s and tablets are standing in. These devices require bandwidth and speeds that the private sector can provide. The Obama administration should continue working with companies to promote high speed broadband network deployment that will mean tens of billions of dollars in investment each year and more services for families and students at home.
Government can’t fix all of our problems alone. Like the non-profits above, it needs to partner with the private sector. That’s how we built the electric grid and nation’s railroads. As companies invest they will create opportunities for small and minority-owned businesses, and we know those companies tend to hire more women and minorities, which could make an even bigger dent in the unemployment rate.
Source URL: http://thehill.com/blogs/congress-blog/technology/196721-time-for-more-american-dreaming
Wheeler Could Be Obama’s Best-Positioned Lieutenant
December 4, 2013 | Bloomberg BNA
by Bruce Mehlman
Rarely can public figures glimpse their potential legacy the day they begin service. More often, their significance is only understood decades later. Yet newly confirmed Federal Communications Commission Chairman Tom Wheeler has the rare chance to anticipate his impact at the outset as President Obama’s second-term standout, assuming he seizes the unique opportunity afforded by time, place, and fate.
Wheeler arrives at the FCC at a critical time for the agency and the nation. The FCC is an agency in transition, overseeing a communications sector in revolution, powering an evolving economy despite a dysfunctional Congress and a struggling recovery.
The government writ large, meanwhile, is playing a historically outsized role. Whether measured by taxes, spending or regulation, it is hard to find a prior period over the past 50 years when the federal government exerts greater influence in our economy. A former financial services CEO recently advised his successor that ‘‘your number one client is the government.’’ Many fear Wall Street has become addicted to Federal Reserve interventions. Taxpayers foot more than $1 trillion in annual health care bills, even before Obamacare expands coverage. More than half of all citizens are net recipients of government largess, receiving more in benefit and transfers than they pay in taxes. Over the past century, the number of pages in the tax code has ballooned 18,034 percent.
Yet one bright exception has been the high-tech economy, where the government has played a far less intrusive role. While trade policy, immigration, and federal support for basic research and STEM (science, technology, engineering and mathematics) education have been essential, the sector has seen no bailouts, no hand-outs, no too-big-to-fail-outs. Government intervention in tech has been minimal, especially relative to heavily regulated services, and energy.
Not surprisingly, tech’s freedom from command-and- control regulation has enabled breakneck innovation, furious competition and the fundamental reshaping of how Americans live, work, play, and learn. Technology is transforming education, health care, retail, and manufacturing, and creating new jobs for skilled workers. Yet this non-stop innovation is bringing our most dynamic new sector into conflict with an anachronistic regulatory framework, threatening future progress ab- sent visionary change.
Enter Chairman Wheeler.
At the FCC, Wheeler inherits a regulatory regime designed decades ago for an earlier era. Voice and video services are regulated under separate provisions of the Communications Act of 1934 (Title II and Title VI, respectively) based on assumptions of a permanent monopoly and massive barriers to entry. The Act and its subsequent amendments fundamentally fail to acknowledge the competitive alternatives created by the technological and marketplace convergence of the broadband age. Today’s FCC-enforced regulatory framework was designed for a world without Netflix Inc., Skype Communications, Google Inc., or iPhones — a world without the Internet. Thus, the agency remains stuck in the past, distinguishing among companies based on the technology they use and their legacy status under the Act. Consumers make no such distinctions.
To be the chairman that our economy needs, Wheeler should reorient his agency around three primary goals:
First, the FCC should narrow its mission. Previous efforts to regulate siloed monopolies are no more needed than TV antennas. Leave competition policy to competition authorities, and focus on core FCC competencies such as public safety, consumer protection, and universal service for those most in need. Remove regulations that face backwards, such as those covering the increasingly obsolete copper TDM (time-division multiplexing) telephone networks, which fewer and fewer consumers use.
Second, Wheeler should declare ‘encouraging investment’ a core purpose of the agency. Private investment has driven fierce competition across Internet plat- forms while barriers to entry have fallen. With $17 trillion in federal debt, taxpayers cannot foot the bill for today’s 4G and fiber-to-the-home deployments or tomorrow’s even bolder new networks. Nor should we ask them to. Private investment will continue provided policy makers give some measure of regulatory certainty that the ‘‘rules of the road’’ will not change arbitrarily, and all investors will compete on level playing fields.
Finally, Wheeler must work to make the FCC the government’s most efficient, transparent, and predictable agency. Decisions should be data-based, rather than outcome-oriented, considered and delivered within reliable timeframes.
So far, Wheeler has placed a high priority on auctioning spectrum — and without preordaining winners or losers. He also has initiated long-overdue efforts to get the IP transition under way as soon as January, looking favorably towards approving real-world market trials that will help reduce inefficient investment in old technologies that siphon money away from new high speed broadband infrastructure.
In short, early signs from Wheeler’s commission are most promising.
Mehlman served as assistant secretary of commerce for technology policy from 2001 to 2004 and is founding co-chairman of the Internet Innovation Alliance and founding partner at Mehlman Vogel Castagnetti
To read the insights of Mehlman’s Internet Innovation Alliance co-chairman, Rick Boucher, visit the Telecom- munications Law Resource Center’s BNA Insights
Reproduced with permission from Telecommunications Law Resource Center, 2013 TERCN 1, 12/4/13. Copyright © 2013 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com
From Plain Old Phones to Broadband: A Policy Prescription for the FCC
November 21, 2013 10:13PM ET | Bloomberg BNA
by Rick Boucher
American innovation has led to massive adoption of cutting-edge communications and entertainment technologies. Functionalities and services once wondrous and new are now commonplace. A step back reveals how far and how fast we’ve come. In 2000, television changed forever as TiVO introduced us to time shifting, the ability for consumers to record and watch TV programs at the scheduled hour of their choosing. That same year, our Internet and telephone experience was enhanced as cable modems began to take hold in American homes. The following year, we saw the first iPod, and how we buy, store, and listen to music has never been the same. The iPhone (2007) and iPad (2010) gave birth to a revolution in the use of mobile data.
Unseen but ever-present wired and wireless broadband networks provide the foundation for the high-quality video, voice and Internet services that Americans have welcomed with historic enthusiasm, as they have been adopted by in the home and mobile users at a stunning pace.
During the past decade, under our feet and above our heads, the nation’s broadband service providers have invested tens of billions of dollars to bring high-speed wired and wireless connections to our homes and businesses and in the process have reshaped almost everything about how we communicate. Because of these investments, we constantly have available a seamless stream of voice, data, and video on demand.
Today’s digital networks offer boundless opportunity—boosting economic growth and job creation; through remote monitoring and telemedicine, bringing world-class medical care to remote communities and easing the burden of chronic conditions; improving education for students of all ages by delivering advanced coursework, college classes, and even online degrees through distance-learning programs; maintaining constant communications with business associates, family and friends; and providing entertainment and real-time news, weather, and sports information.
This enhanced connectivity also enables civic empowerment—especially for groups who haven’t always been heard—enabling them to communicate more easily with elected officials and to organize and advocate on their own behalf.
Achieving the next level of broadband investment and enabling faster connections, more capable services and deeper Internet penetration in hard-to-serve areas will be facilitated by policy changes by the FCC. With the commission’s newly arrived leadership, these needed changes should be at the forefront of the agency’s agenda.
While communications of all kinds have rapidly moved to the Internet and broadband networks, the aging copper-wire, circuit-switched telephone network remains in place, using the same technology Alexander Graham Bell pioneered. It offers plain old telephone service (POTS), and Americans are fleeing it in droves at an ever-accelerating pace. Only 5 percent of Americans use the old network as their exclusive communications medium. Another 38 percent use it in combination with wireless service, and most Americans use wireless communications only or rely on a combination of wireless and a wired alternative to the telephone network, such as cable modem service.
We stand at an inflection point where the rules that were sensible in the last century for a heavily regulated circuit-switched telephone monopoly are no longer sensible in today’s competitive communications landscape dominated by broadband and a multiplicity of Internet-enabled services. The requirement of current law that telephone companies spend billions annually maintaining a single-function, aging network that consumers no longer prefer is impeding the next level of broadband investment. Planning and delivering a rapid transition to an all-broadband communications environment is the greatest challenge that the new FCC chairman faces.
A Change Requiring New Policy
In its time, the phone network was a culture-changing technical marvel that introduced nationwide communication through copper wire, erasing geography and reliably enabling Americans to dial business contacts, friends, family, and neighbors anytime, anywhere.
During the early and mid-20th century, access to telephones grew rapidly as government aided and promoted a monopoly to accelerate network build-out to reach all Americans. As telephone service became nearly ubiquitous in the latter half of the last century, technological and market advancements created the possibility for alternative satellite, wireless, and landline communications for businesses and consumers.
Realizing the potential benefits that the array of digital technologies could provide, the U.S. government ended the phone monopoly, and with passage of the Telecommunications Act of 1996, began to chart a course toward more robust competition and entrepreneurship in the nation’s communications marketplace. Consumers were first offered choice in the long distance telephone market. Then new providers, such as cable companies, built out broadband networks to offer competitive wired residential telephone and Internet services. The door was opened for telephone companies to offer cable TV service, and digital networks were developed that could accommodate it.
As the reliability of wireless communications increased and access to broadband services has expanded, American consumers at work and in the home have embraced them with a passion. Modern broadband communications systems now link us to the Internet; move information, data and video at lightning speed; and carry our voice “phone” calls, too. These are the networks consumers prefer, and the transition away from the antiquated telephone network is occurring with remarkable speed. As society now treasures its smartphones and tablet devices, streaming videos, GPS guidance systems, and other electronic wonders, we forget that little more than a decade ago personal communications was still largely about POTS. Current law still assumes that most communications are delivered by the POTS network.
Existing regulations were created in a world where heavily regulated phone companies provided copper wire voice service, lightly-regulated cable companies delivered TV, and wireless companies offered services deemed too unreliable to compete with wired telephone service. In fact, these rules still compel telephone companies to invest nearly $13.5 billion each year to maintain and run the old copper phone system as if it were still the nation’s core communications system used by almost all.
Too Much Investment to Maintain Old Technology
As the number of telephone company subscribers on POTS sharply falls, the per-subscriber cost of maintaining the old network has become unsustainable. According to a recent study, America’s telephone companies made more than $154 billion in capital expenditures from 2006 to 2011. Surprisingly, the majority of that investment was dedicated to maintaining the declining telephone network, even though today only about one-third of Americans still use it at all, and only 5 percent use it exclusively. Every dollar that is spent maintaining a voice-only network that consumers are fleeing is a dollar not invested in the modern multifunction broadband networks that consumers prefer. Every dollar telephone companies spend on an ancient, declining, and little used technology is a dollar not spent developing the more capable broadband infrastructures through which phone companies can become stronger competitors in the offering of voice, video, and data with largely unregulated cable companies. That’s an important goal because when competition is fair and fierce, consumers ultimately win big with competitive pricing and greater choices to fit their personal needs.
Ancient rules and old ways of thinking are undermining innovation, damaging competition, forcing billions of dollars into misdirected capital investment, and slowing our national progress. Maintaining the status quo for the antiquated telephone network—either by decision or inaction—is a costly anachronism. Requiring phone companies to operate voice-only telephone networks while they are building out new fiber-optic broadband networks makes as much sense as requiring a hitching post in front of every store, forcing bus companies to maintain streetcar tracks, or insisting on backup electric fans in every air-conditioned building.
The IP Transition: Six Principles to Consider
The FCC’s 2010 National Broadband Plan is instructive. It observes that the regulations requiring telephone companies to maintain the old phone network “siphon[s] investments from new networks and services” and is “not sustainable.” The report also declares that the transition to “broadband is the greatest infrastructure challenge of the 21st century.” The FCC’s Technological Advisory Council recommended that the transition and sunset of the POTS network be completed by 2018.
That’s not very far away, and meeting that schedule will bring its own unique challenges. Consumers must be protected, and certain populations are at risk of being disadvantaged. Of particular concern are those who are not yet taking advantage of the opportunities created by new digital technologies. For example, late adopters—largely older and less affluent consumers, many of whom reside in hard-to-serve rural areas, who have not yet joined the broadband era—may be at greater risk unless we complete the transition in a carefully planned and orderly way. The transition to 21st century communications networks must serve every American. But that result is not pre-ordained; it will require hard work.
Government must play a key role throughout this process by advancing consumer interests with a transition plan guided by core principles. These basic protections will remain government’s responsibility even after the old phone system is shut down:
1. The commitment to universal service must endure. Next-generation high-speed broadband networks and their benefits must be available to every American. As we move beyond the old phone network, we cannot leave anybody behind. Without dictating specific technologies or micro-managing how communications competitors meet their public service obligations, we must push the envelope to ensure that every American can access modern broadband service and enjoy the benefits that come with it. At a minimum, post transition everybody should enjoy service at least as good as they can now receive from copper-wire phone networks.
2. Public safety must be assured. 911 emergency calls must go through—every single time—no matter what technology or services consumers adopt.
3. Services for the hearing-impaired and those with vision problems also must be retained at levels that at least match what consumers enjoy today.
4. Consumer protection must remain at the heart of communications policy. Consumers must know that government has their back; that service providers will deliver on their promises; that spotty service, fraud, or other abuses will not be tolerated. Consumers must have a place to take complaints with confidence that something will be done about them.
5. Establishing a backup plan for power failures should be part of the transition process. The rebuilding after Hurricane Sandy exposed some potential weaknesses in the way our digital technology works today. While fiber-optic-based systems tolerate water damage that can short out copper wires, they are more vulnerable when the electricity at the user’s premises goes out.
6. Special retrofitting and other creative solutions may be required to ensure that modern networks function fully with personal and business equipment such as fax machines, security systems, health monitors, and credit card readers, even though they may not currently be compatible with today’s broadband connections.
FCC Should Begin Trials Now
Consumer interests are paramount. These core challenges must be met before the book is closed on the antiquated POTS network. Contrary to the claims of some, the post-transition environment will not be regulation free. Indeed, regulation will be necessary to assure consumer protection, but just as networks are modernizing, the regulatory landscape must be modernized as well.
What’s needed is smart regulation appropriate to protect consumers and public safety, promote competition and support universal service, while also encouraging sustained private investment and innovation in America’s next-generation communications networks.
The upgrade and modernization effort will require thought and planning. That’s why we must start now while the existing phone system is available as a “safety net” backup for any potential glitch or surprise that might arise during the upgrade to a new and modern system. No one is proposing a “flash cut” in which the telephone network disappears overnight. This process will, in fact, probably take half a decade to complete.
To take the first step, the FCC should rely on a time-tested method: demonstration projects. Conducting demonstration trials in carefully selected markets in which existing POTS users are rapidly moved to Internet protocol-based networks will provide a controlled environment for an accelerated transition with the existing telephone network still in place as a safety net.
This approach gives consumers an assurance that if any unexpected problems causing consumer disruptions arise, service can continue over the telephone network while technical and service issues are resolved. Through the demonstration projects, we can determine what is likely to go wrong and have solutions in place prior to a broader national transition.
The FCC has a recent successful precedent for taking precisely this step. In the nation’s transition from analog to digital television broadcasting, the FCC conducted a similar test. Leading up to the digital TV conversion, some warned of potential negative consequences for consumers. The warnings were similar to those we are hearing about the transition from POTS to modern networks. In particular, the articulated fear was that switching to digital television broadcasts would harm consumers, particularly the elderly and less technically savvy viewers who decide to keep their older analog television sets but would experience difficulty installing the required converter box to receive and convert the new digital broadcasts. The circumstance of rural and lower income viewers was a particular focus. To address these concerns, the FCC launched a demonstration project in Wilmington, N.C., an area with a wide diversity of viewers, including those with low incomes, the elderly, and viewers living in both metropolitan and rural areas.
The FCC’s Wilmington demonstration project proved a success. It provided clear evidence that on the day analog broadcasts ended, viewers were prepared. There were almost no complaints. Analog television users across the Wilmington region had successfully installed digital-to- analog converter boxes. The trial inspired confidence that the national transition could proceed uneventfully, and on national transition day, very few problems were encountered.
Employing the same model, the FCC should now move quickly to authorize closely supervised demonstration projects in selected markets, perhaps one urban and one rural, where people quickly shift from existing telephone networks to modern broadband networks. The demonstration projects offer a test bed to guarantee that core consumer values will be protected, to learn what may go wrong in a controlled rapid transition and to devise solutions for problems that in fact arise prior to a broader national transition.
While the attraction of broadband networks has propelled a POTS-to-broadband transition that is now well advanced, we owe it to ourselves to plan and complete it on the schedule that the FCC’s Advisory Council recommended. Applying the knowledge gained through demonstration projects we can accelerate the POTS phase-out and realize the benefits of greater network functionality, a broader array of services for consumers and the economic efficiencies that come from devoting investment to the networks of the future rather than the network of the past.
Public-Private Partnership Needed for New Road Map
For the moment we have the luxury of time to conduct demonstration projects, but an additional sense of urgency for action is now apparent. The current telephone network is supported by antiquated equipment, and as consumers have continued their ongoing migration to the new networks, equipment providers either no longer manufacture or have significantly scaled back production of the TDM (time-division multiplexing)-based equipment necessary to maintain and operate the POTS network. As fewer replacement parts become available, maintaining the phone network grows dramatically more expensive, further skewing the ratio between investment in old and new technologies, with the ever-escalating costs being passed on to consumers. All Americans stand to benefit from shifting investment to modern networks that offer consumers service as least as good as what they enjoy today, as well as the greater functionality that broadband networks can offer.
A public-private partnership among all stakeholders—consumers, telecom companies, suppliers, and regulators—will be needed to establish the rules of the road for the new network. These stakeholders can embrace key principles—recently outlined by the leading consumer advocacy organization Public Knowledge—service for all, competition, reliability, consumer protection, and public safety.
Simply providing access to new technology while protecting core consumer values, however, isn’t the whole job. We also must boost adoption rates, educating every American about what the transition means, how it will affect them and how by using broadband they can improve opportunities for themselves and their families. We can’t afford to leave any American in the dark about the value of broadband; we can’t leave anyone behind.
So the real questions surrounding the IP transition are not whether, but when; not if, but how. Bipartisan support exists in Congress for the transition itself and for the basic principles that should be at its core, including consumer protection, universal service, network reliability, competition and public safety. Now is the time for all stakeholders to work together, starting with the demonstration projects, to ensure that the transition’s rapid final phase proceeds as smoothly as possible.
New FCC Chairman Embraces Need for Quick Action
The Internet’s evolution has brought us to another critical juncture in communications policy as we consider how to complete the transition from the bygone era of plain old telephone service to the broadband future of the 21st century. It’s a critical transition, given broadband’s increasingly dominant role in every part of our economy, as well as its ability to improve lives and advance economic growth. It’s also something that just about every stakeholder, including the FCC, regards as inevitable.
In 2011, the Technological Advisory Council led by now-FCC chairman, Tom Wheeler, noted that “[t]he FCC should take steps to prepare for the inevitable transition” from the old network and in fact “take steps to expedite the transition, with a target date of 2018,” including the need to “re-align regulatory requirements to emerging technologies.”
The recommendation reflected vision and foresight then, and provides an ambitious but achievable agenda now. When it’s achieved, Americans will have access to reliable networks designed specifically for broadband voice, video, and Internet services, rather than antiquated networks that support phones wired to the wall. Every app, every smartphone and tablet, every desktop computer will smoothly connect consumers to the online experience of their choice—telemedicine services for better health, virtual classrooms for lifetime learning, their legislators’ offices for civic engagement, a job opportunity, a business contact, a sporting event, a movie, friends and family across town or on the other side of the world. That’s the goal—delivering the services consumers want. Upgrading and modernizing our 20th century telephone networks will get us there.
This goal now appears closer on the horizon than ever before. In one of his first official acts, Chairman Wheeler has made clear the need to speed the “Fourth Network Revolution,” recognizing how “new networks catalyze innovation, investment, ideas and ingenuity.” He stated that “the time to act starts now” and proposed a timetable for FCC action in January 2014 on how to “begin a diverse set of experiments that will allow the commission and the public to observe the impact on consumers and businesses of the [IP transition and proposed demonstration projects].” In setting this course, the new chairman has jump-started the process and appears ready to steer the FCC toward addressing the key policy, technical, and consumer issues necessary to bring 21st century high-speed broadband to more Americans.
In our land of opportunity and innovation, we’re a place of relentless creativity. At the core of our success is an entrepreneurial culture powered by private sector investment. In that American tradition, it’s incumbent on us to ensure that the benefits and opportunities of next-generation networks and services become widespread and available to all. The POTS-to-broadband transition will free the needed investment. The next steps for us to take are now clear.
Reproduced with Permission from The Telecommunications Law Resource Center, Copyright 2013, The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com.
Washington Lags Consumers in Embracing Digital Age
By Rick Boucher
Oct. 24, 2013 (published online on Oct. 23, 2013)
As they have throughout history, Americans are embracing technological change as a way to improve their quality of life. Just as the steam engine, electric light bulb and the automobile drove earlier revolutions, Internet-based communication is expanding our horizons and opening boundless opportunities. But Internet innovation could move even faster if Washington policymakers could manage to keep pace with the average American.
A new study by veteran telecom guru Dr. Anna-Maria Kovacs makes clear that 21st-century innovation is weighted down with antiquated 20th-century regulations. Across the country, Americans connect via text, Twitter, Skype and email, but Washington’s rules assume that telephone service is still king and that consumers have little choice.
The old phone system rules still see the world in silos — phone companies deliver voice service and are heavily regulated, cable companies offer TV and are unregulated, and wireless companies sell unreliable voice service that regulators discount as a competitor to wired phone service.
With the help of innovation, however, in 21st-century America, the old distinctions have been obliterated. Phone and cable companies compete head-to-head in the offering of voice, video and Internet access. There are now more wireless devices in the country than people. Thanks to one law (the Telecommunications Act of 1996), there is now a diverse communications market in which consumers choose the specific Internet, voice, digital information services and technologies they want from a wide range of providers.
“The most effective competition,” Kovacs writes, “is between different technology platforms that bring different characteristics and economics to bear.”
But those old silo-centric rules skew competition and misdirect investment. Some broadband providers — the former local phone companies such as AT&T and Verizon — are compelled by regulation to maintain the old phone network on par with the new. That means billions of dollars that should be invested in Internet-based innovation are directed, by Federal Communications Commission rules, into an antiquated phone network that more than two-thirds of Americans have stopped using and thousands more leave behind every day.
It’s as if towns still require a hitching post in front of every store, force the bus company to maintain streetcar tracks, or insist on backup electric fans in every air-conditioned office.
By contrast, cable TV companies, wireless operators, satellite providers and new broadband entrants such as Google are free to invest in modern facilities as they see fit in order to give consumers the services they want without any obligation to keep up older networks.
The disconnect between antiquated phone rules and the reality that Americans experience daily in the marketplace results in distorted competition, stifled innovation, limited choice and increased costs for consumers. America owes consumers an updated set of rules that fits today’s reality — not deregulation, but smarter regulation that protects consumers, ensures public safety and also allows every communications provider to put its dollars into bigger and better networks.
Arguing for liberating investment dollars from antiquated technology, Kovacs observes: “Consumers will be best protected if all resources are devoted to the networks that they have chosen to use rather than being wasted on the networks most have abandoned, and that the rest are likely to abandon within a few years.”
Smarter regulation requires that new rules be guided by a set of consumer-focused principles. Without dictating specific technologies or micro-managing how communications competitors meet their obligations, we should insist that every American have access to reliable service. Protecting consumers from fraud or misconduct by service providers, ensuring competition and consumer choice and ensuring public safety access also are critical. Every American should be confident, for example, that they can reach 911 no matter what communication device or technology they choose.
Current trends make clear that almost every American will soon use communications from Internet-based technology, not the old phone network. Knowing that, the FCC should move quickly to market trials to learn what problems consumers will experience with a rapid move from the old network to Internet-based communications. With that knowledge, means can be found to meet consumer needs.
Throughout history, innovation and new technologies have improved the way we live. But each change also required adjustments to maximize the gains. When the automobile overtook the horse, we needed new rules of the road so traffic would flow safely and efficiently. Electric lighting gave us the chance to adjust schedules for efficiency and lifestyle benefits because our day was no longer governed by the rising and setting of the sun.
Similarly, it’s time for smart, modernized telecom rules that promote consumer choice and protect consumer rights, enhance competition, and ensure public safety so that Americans fully enjoy the boundless opportunities of the Internet Age.
Source URL: http://www.rollcall.com/news/washington_lags_consumers_in_embracing_digital_age_commentary-228610-1.html
High-speed broadband networks with a safety net
By former Rep. Rick Boucher (D-Va.)
It is hard to believe that next month marks one year since Superstorm Sandy slammed into the East Coast, flooding streets, tunnels and cutting power in many towns. Beyond causing $65 billion in damage, the storm highlighted the vulnerabilities of our aging telephone network and the broader need to modernize and upgrade our nation’s communications infrastructure to bring 21st Century services and capabilities to all Americans.
There is an urgent need to complete the upgrade of the century-old telephone network, and replace it with a sparkling new broadband communications system that links to the Internet; moves information, data, and video at lightning speed; and carries our voice “phone” calls, too. It’s an exciting change that creates jobs, opens the door to improved schooling, and enhances access to medical care among other benefits.
It also means saying goodbye to a familiar friend – the old telephone network that’s enabled us to chat with friends and family from the comfort of our own homes for more than 100 years. A marvel of the 20th Century, that system is now becoming obsolete, surpassed by broadband technologies capable of delivering phone calls and offering a myriad of new communications services and applications.
The switch to the next-generation network is invigorating; it’s beneficial and, as the consumer group Public Knowledge has pointed out, “It’s inevitable.” In fact, the vast majority of Americans, perhaps 75 percent, have already made the move. Their house phone, which may look and feel just like what they’ve always had, is now connected to and powered by the same broadband technology that connects their computers to the Internet and can deliver high-definition TV programs, as well. With so many making the switch, the old network has grown redundant and increasingly costly to operate and maintain. In fact, some manufacturers have already pulled the plug and stopped making antiquated equipment for the telephone network, such as the circuit switches used to connect calls.
This nationwide upgrade and modernization requires thought and planning, and should be undertaken in a way that protects consumers and assures that basic voice service remains available and reliable. That’s why we ought to do it now – while the existing phone system can provide a “safety net” as a back-up for any potential glitch or surprise that might arise during the complex transition toward a new and modern technology.
Although inevitable, the move to the network of the future is gradual enough that we now have an opportunity to direct and shape it in a seamless way for America’s consumers. Since we know it’s coming, we owe it to ourselves to make sure it happens the right way and ensure that any potential disruptions are minimized for those who choose to arrive late to the high-speed broadband age.
Central to a smooth transition is having public dialogue among all stakeholders – consumers, telecom companies, suppliers, and regulators – to help set the rules of the road for the new network. Under a collaborative process, we should arrive at key principles to guide us – perhaps beginning with five concepts recently proposed by Public Knowledge – service for all, competition, reliability, consumer protection, and public safety.
In addition to overarching principles, important technical activity, such as geographic field tests, must commence to better understand what works and what doesn’t in real life and to find solutions for the issues that will inevitably arise. Such advance testing, similar to the trials conducted for America’s switch to digital TV, is the best way to protect consumers. Trials give us the chance to come up with fixes now while the old telephone network is in place to lessen any potential consumer disruption associated with the switchover.
Upgrading and deploying modern broadband networks in a controlled, supervised fashion with “safety net” functionality in place is far superior to inaction. Beyond the obsolescence that is rapidly diminishing the circuit-switched network, as we witnessed during the past hurricane season, our nation’s older telephone system is highly susceptible to the forces of nature and the physical destruction they can bring.
In the future, when natural disasters obliterate legacy telephone networks, service restoration for consumers and businesses will be achieved through the deployment of new wireless and/or broadband network technologies. Under those circumstances, network upgrades occur without the benefit of the existing copper telephone network and the likelihood of consumer inconvenience and disruption being much greater.
Right now, we have the gift of time to get the path toward modernization right by devising a smart new framework tailored for next-generation communications. But without an action plan, such as starting local market trials, some of that time slips away each day. We need to get working without further delay so that the transition to 21st Century communications is a step forward for all and a step backward for none.
Source URL: http://thehill.com/blogs/congress-blog/technology/324911-high-speed-broadband-netwroks-with-a-safety-net
Modern myths of moving away from the old telephone network
by Jamal Simmons
When night arrives in remote areas, the contrast to city life becomes clear. The absence of streetlights and skyscrapers might make some fear what lurks in the darkness.
Fear of the unknown, however, is not limited to still nights in secluded locales. It can hold back American innovation and economic growth in the form of those who invoke bogeymen to scare consumers away from technological advances. That’s happening today, as a dialogue is just beginning on how to upgrade and modernize the nation’s old telephone networks to next generation high-speed Internet networks.
Antiquated telephone networks were built to handle one-to-one voice communication, but modern fiber-based broadband networks can provide Internet, video and voice services. They enable everything from voice and text messages to social networks, video conferencing, online gaming, digital TV and streaming video. These modern fiber-based networks and services can unlock a world of opportunity, drive technological innovation, create and sustain new jobs, foster powerful economic growth, and spur immense capital investment so that the United States can continue to lead the world.
One of the nation’s largest phone companies AT&T (NYSE: T) recently proposed to work with the Federal Communications Commission (FCC) to roll out this new technology through real-life test trials in a couple of markets around the country. AT&T seeks to engage federal regulators in a public and transparent process to help bring 21st century networks and services to American consumers. These cautious experiments would replicate the closely observed and very helpful FCC-sponsored DTV market trial in Wilmington, N.C., conducted in advance of the nationwide digital TV broadcasting switchover. When the Wilmington trial revealed a lack of significant switchover problems, the FCC and Congress proceeded more confidently to the nationwide transition, with consumer groups less fearful of the change.
Geographically diverse but limited trials would give policy makers a controlled setting and real-time look at the impact of new fiber-based networks designed to replace the copper-based telephone network. The knowledge gained from these market trials would enable the FCC to address any problems that might arise and help guide forward-looking policies to assist in the eventual transition to nationwide next-generation, high-speed broadband networks.
Demonstration projects in selected markets would help create a clearer path for more efficient and effective private sector investment. These trials will also provide consumers with access to new services, while ensuring that those who seek to just maintain plain-old voice service have that option.
Market trials would provide the data necessary to understand the real impact of these modern fiber-based networks on consumers, and it would enable policy makers to determine how best to ensure universal service, 9-1-1 access and disability access on these new technologies. It’s essential that no one be left behind and that each consumer continues to receive communications services at least as good, as reliable and as affordable as what he or she has today.
Protecting consumers does not mean imprisoning them with outdated networks. Important consumer services will continue after the transition to next-generation high-speed broadband networks is complete. The challenge for the FCC is resolving the policy questions that will enable the quick replacement of the antiquated telephone network with fiber-based networks, while acknowledging and ensuring the continuation of essential consumer services.
Our nation shouldn’t be inhibited by modern myths. As former FCC Chairman Julius Genachowski and Commissioner Ajit Pai have noted, the shift from old telephone networks to modern broadband networks is already proving an incredible boon for consumers and for the American economy. Now is not the time for America to get spooked by the unknown. Let’s test the transition, make any necessary adjustments and keep progressing forward.
Source URL: http://www.fiercetelecom.com/story/modern-myths-moving-away-old-telephone-network/2013-09-09
Open Spectrum Auctions Open Door to Growth
by Rick Boucher
Imagine someone handing you, and only you, the winning Powerball numbers before the jackpot sequence was ever revealed. Sounds great if you’re the person holding the ticket, but not exactly fair to everyone else.
The Federal Communications Commission (FCC) could hand its equivalent of a winning Powerball ticket to select communications companies in the upcoming spectrum auctions. As the FCC creates rules for the incentive auctions, it has the ability to stack the odds, restricting participation in the auctions by some mobile providers and essentially picking winners and losers among our nation’s carriers.
Today, the wireless industry’s future is in the hands of policy makers. The federal government expects to hold spectrum auctions in 2014 in which air frequencies currently used by broadcast television stations, but well-suited for mobile broadband, will be put up for sale. Much is at stake in the way that the auction is structured and in its ultimate success.
Beyond the urgent need to supply carriers with the spectrum sufficient to serve consumer demand, the auction is expected to produce revenues for other key national priorities:
• Up to $7 billion from the auction proceeds will be set aside for the creation of a national broadband network for local police, fire and emergency services. “First Net,” as it is known, will create a fully interoperable broadband service connecting local first-responders nationwide.
• Broadcasters must be paid from the auction revenues as an incentive for their donation of spectrum to the auction.
• Broadcasters that choose not to donate spectrum but to continue over-the-air broadcasting may be required to relocate to another channel so that a continuous band of spectrum attractive to commercial bidders can be created for the auction. Broadcasters who are part of this “repacking” have been promised reimbursement of their relocation costs from the auction proceeds.
• And federal policy makers are expecting that after the foregoing needs have been met, there will be ample auction proceeds available for budget deficit reduction.
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. For example, FCC data shows that the third-largest carrier Sprint Corp. (NYSE: S) (including Clearwire), controls over one-third of the mobile wireless spectrum held by US carriers—far more than any other provider.
The fourth-largest carrier, T-Mobile US Inc. , recently acquired Metro PCS with its significant spectrum holdings, and the merged company can now rely for spectrum acquisition financing on the deep pockets of Deutsche Telekom AG (NYSE: DT), which has controlling ownership of T-Mobile.
Neither of these two providers requires special treatment in the auction. They either have sufficient spectrum or the resources to acquire it without tampering with the auction rules.
These realities were recognized by Congress when it passed the 2012 legislation authorizing the incentive auction of broadcaster-held spectrum to the mobile carriers. In the authorizing statute the FCC is prohibited from excluding from the auction financially qualified bidders. That provision underscores Congressional intent that the auctions be open to all and argues strongly for a process that enables every carrier to
bid for spectrum sufficient to meet its needs in every market that it serves.
Creating rules for the incentive auction is now in the hands of the FCC and will provide an early test of the leadership of the agency’s new chairman. The wireless industry is one of America’s economic bright spots, highly successful and highly competitive, with 80 percent of Americans having a choice of five or more wireless carriers.
The FCC should choose to sustain the industry’s success by creating a level playing field fair to all as the incentive auction is launched. The ambitious goals of the incentive auction can only be achieved if all qualified bidders are welcomed into the process.
Let’s allow carriers to acquire the spectrum they need to meet consumer demand. Competition in a truly open auction should determine the winners and losers, not the FCC.
Source URL: http://www.lightreading.com/author.asp?section_id=222&doc_id=705219&
New Spectrum Policy to Decide U.S. Wireless Future
by Rick Boucher
NEW YORK (TheStreet)—Sometimes I can be a little spoiled: Yesterday’s luxuries turn into necessities that I can’t possibly live without. The cool new gadget that once amazed me becomes ho-hum, just another tool I take for granted. I expect the smartphone in my pocket to work anytime, anywhere and, upon the next upgrade, to be better and faster. But for smartphone users across the country, here’s a warning: The future of the mobile device we love so much depends on policymakers in Washington and what they decide about spectrum. It’s essential that they get it right.
Spectrum, the radio frequencies that enable wireless devices to talk to one another, is in short supply—a spectrum crunch is upon us. The Federal Communications Commission now confronts some tough decisions regarding how best to free up more of this resource so our mobile phones and tablets continue to work the way we expect.
Congress sets national spectrum policy. Last year it gave the FCC the task of drafting rules to auction off underused broadcast TV spectrum—“600 MHz spectrum”—so that wireless carriers can continue to provide fast and accessible mobile broadband service. At the same time, in its effort to further wireless competition, the FCC is reviewing its existing “spectrum screen,” the tool used to flag whether a service provider controls too much spectrum in any individual market.
Congress was clear on how the agency should approach these very different tasks. In the 2012 Congressional Spectrum Act, Congress directed the FCC to allow all financially qualified bidders to compete in the 600 MHz auction to maximize auction proceeds and to ensure that the carriers can buy the spectrum they need to meet customer demand. On spectrum concentration, Congress affirmed the FCC’s ability to change its spectrum screen through its formal rulemaking authority that includes notice and public input.
Yet, the Department of Justice now appears to advocate that the FCC should ignore Congress’ clear direction and instead approach these two separate activities through a single proceeding and in ways that would make the auction of 600 MHz spectrum more complicated and less effective.
DOJ is urging the FCC to restrict the two largest carriers, Verizon (VZ) and AT&T (T), from participating in the auction. DOJ seeks to accomplish the restrictions by having the FCC adopt an ad-hoc spectrum screen in a proceeding whose main purpose is to set the organizational structure of the 600 MHz spectrum auction.
Limiting the amount of spectrum these carriers can acquire would potentially rig the auction results, prevent some carriers from getting the spectrum necessary to give customers the service quality they demand, and forestall future wireless innovation. It’s also at odds with Congress’ clear preference for a competitive, level playing field among qualified bidders.
With fewer qualified participants, the auction is less likely to meet Congress’ desire to maximize auction proceeds to fund a planned nationwide public safety broadband network, to compensate broadcasters for the auction of their spectrum and to reduce the federal budget deficit. A recent Georgetown University study contends that severe bidding restrictions could cut revenues by as much as 40%.
With the Spectrum Act, Congress reaffirmed that sunshine always improves decision-making. In the past, the spectrum screen was adjusted without public notice or debate, during reviews of individual transactions, and then applied broadly to the entire industry. That’s a recipe for uncertainty that makes companies wary to invest, thereby doing consumers a disservice.
Further, the screen often has been applied inconsistently. For example, when determining the total amount of spectrum that can be used effectively for mobile service in a given market, a huge chunk of Sprint/Clearwire (S)spectrum over which mobile broadband service is now provided is excluded from the FCC’s current screen. Regulators decided it was less valuable—even though Sprint/Clearwire today uses that spectrum to compete in the broadband market.
Irrespective of DOJ’s specific policy prescription on spectrum aggregation, the FCC should avoid using the incentive auction design process as a vehicle to craft spectrum policy. Spectrum aggregation policies should be considered and adopted in a separate, transparent rulemaking that will then apply uniformly to every company and all spectrum transactions—everybody needs to know and live by the same rules.
In contrast, imposing an ad-hoc spectrum rule limiting carrier participation in the 600 MHz auction is likely to complicate and delay the auction despite bipartisan agreement—at the FCC, in the Obama Administration and in Congress—that speed is vital for allocating urgently needed spectrum to meet consumers’ needs.
Good spectrum policy is about continuing to provide the best wireless service in the world so we stay connected 24/7 without delays, dropped calls or slow downloads. That keeps us happy, and for some of us, even spoiled. It requires designing an auction in which every qualified bidder has a chance to acquire the spectrum needed to satisfy its customers. It means keeping auction rules “simple,” as FCC Commissioner Jessica Rosenworcel has suggested.
To promote competition and innovation in the long run, it means addressing the spectrum screen in a separate rulemaking through an open process with public input.
Source URL: http://www.thestreet.com/story/11992343/1/opinion-new-spectrum-policy-to-decide-us-wireless-future.html
Banning bidders from spectrum auctions doesn’t make sense
by Jamal Simmons
Making government policy is not like Little League soccer. Robust competition is a hallmark of our nation, but giving everybody a chance to play shouldn’t mean keeping the most capable players off the field when we need them most. As the Federal Communications Commission (FCC) develops the rules for upcoming spectrum auctions, including the big telecom players will raise the most money and allocate much-needed spectrum to its most efficient uses. Policymakers are well aware of the far-reaching benefits of competition. Many aim for “ensuring a competitive landscape for U.S. businesses” to be their calling card, with the good intention of fueling the American economic engine. But before taking action, particularly that which affects sectors like the telecom industry that are already competitive, it’s important to understand where we are and where we’re going.
The wireless industry is a standout. According to CTIA’s semi-annual statistics, it grew five times faster than the U.S. economy overall in 2012. Consumer demand for the advanced capabilities and mobility of smartphones, tablets and laptops is exploding, and carriers are challenged by limited airwaves, or “spectrum,” over which wireless data travels. The federal government intends to put airspace up for sale that is currently used by broadcast television stations, but is well-suited for mobile broadband – and it couldn’t come soon enough, because wireless providers are in dire need of the opportunity to buy the spectrum required to serve their customers.
Carriers like AT&T and Verizon led the wireless industry’s $17.2 billion in capital investment in the last half of 2012 – up 37 percent from the previous year – yet they’re struggling to provide their customers with enough bandwidth to take full advantage of these investments in innovation. The spectrum crunch is upon us, and all qualified bidders should have the chance to participate in spectrum auctions in order to expand high-speed mobile broadband service to more Americans. Yet on April 11 the Justice Department asked that the FCC to restrict the two largest wireless providers from bidding in the upcoming auction. In considering the Justice Department’s request, the FCC should first refer back to the statute authorizing the incentive auction, which requires the FCC to allow all qualified bidders to participate and affirms Congress’ intent to afford all potential bidders equal treatment.
An independent study by Georgetown University’s Center for Business and Public Policy analyzed the economic impact of restricting participation in the upcoming auctions. The study finds that completely barring Verizon and AT&T from participating in the bidding would reduce auction revenues by about 40 percent, lowering federal auction proceeds as much as $12 billion. Rules that deprive the largest carriers of having a shot at buying more spectrum would also slow down the nationwide transition to faster 4G, fourth generation wireless broadband, and would result in estimated, cumulative losses of 118,400 jobs by 2017. Overreaching restrictions that have the effect of reducing auction proceeds would mean that less spectrum is available for mobile broadband use – a double-whammy that would hurt the American consumer and taxpayer.
Favoring certain bidders in the past, without enough concern for effectiveness, negatively impacted auction proceeds, left major blocks of spectrum unused, and led to what former FCC Chairman Julius Genachowski identified as “America’s looming spectrum crisis.” Going forward, the FCC should instead focus on setting up a fair process that gives all qualified bidders an opportunity to compete in the wireless market.
Competition is important. So is alleviating the spectrum crunch by deploying mobile broadband to satisfy increasing consumer demand and funding the Congressional mandate to build-out a public interoperable mobile broadband public safety network. The Justice Department’s proposal isn’t about big companies making space for small ones. T-Mobile and Sprint, the two companies the proposal would benefit, are multi-billion dollar entities with nationwide footprints. They ought to be able to slug it out in the marketplace on their own.
Unlike kid games, in real life nobody is guaranteed a trophy.
Source URL: http://thehill.com/blogs/congress-blog/technology/309173-banning-bidders-from-spectrum-auctions-doesnt-make-sense
Broadband policy: Department of Justice going too far in attempts to regulate spectrum auction
by Bruce Mehlman
In March, 37 senators urged President Barack Obama to appoint Jessica Rosenworcel to chair the Federal Communications Commission. The president instead named the well-qualified venture capitalist and industry veteran Tom Wheeler. Rosenworcel is sure to continue contributing mightily to the FCC as a commissioner, but perhaps the president should consider her for another job—attorney general.
This is not another criticism of the controversies embroiling the Department of Justice. Rather, Rosenworcel’s real contribution would be to offer a breath of fresh air in economic policy in the department, especially with regard to the dynamic tech marketplace.
The Justice Department doesn’t get it. Rosenworcel does. And the department’s anachronistic worldview threatens to delay our mobile broadband future.
Our nation faces a serious “spectrum crunch.” Too few radio frequencies are devoted to consumer broadband applications to meet the exponentially growing demand of wireless consumers. Too much existing spectrum is allocated for government or non-broadband uses, limiting consumers’ options. And America lacks a reliable, interoperable public safety broadband network and the $7 billion-plus needed to build it.
To address many of these challenges, Congress recently authorized “incentive auctions,” where broadcasters can voluntarily sell under-used radio frequencies to the highest commercial bidders. Proceeds will be used, in part, to build the public safety network and pay down debt while enabling wireless companies to help fix the spectrum crunch. Win, win, win.
Only some now suggest the auctions should exclude certain bidders. One might expect this from wireless competitors looking to narrow the competition. But on April 11, the DOJ’s Antitrust Division seemingly joined their cause, urging policymakers to impose auction “rules that ensure the smaller nationwide networks, which currently lack substantial low-frequency spectrum, have an opportunity to acquire such spectrum.”
Congress expressly mandated that no bidders be excluded from the auctions. Yet DOJ would do precisely that. Such interventions are frequently unfair and usually unwise, given the difficulty of predicting the future, especially as it relates to technology.
Rosenworcel appears to understand this. In a recent speech, she urged policy makers to first and foremost maximize auction revenue for the public safety network, FirstNet. She further recommended an open and transparent auction process that promotes speed, efficiency and fairness—not picking winners and losers.
She and fellow commissioner Ajit Pai make clear that the real solution to the spectrum crunch is not limiting carriers’ access to new radio frequencies—they will all need more bandwidth to give consumers what they want. Rather government should make significantly more spectrum available to the entire wireless industry on a fair and open basis. Instead of restricting who can bid, let’s find ways to transfer far more spectrum to the commercial market.
The mobile sector is constantly changing. With multiple mergers and spectrum-sharing arrangements in the works, DOJ’s recommendation could steer new frequencies to those with the greatest access to bandwidth. Just last month Morgan Stanley observed that a combined Clearwire, Sprint and DISH network would hold more than twice the spectrum of either Verizon or AT&T, the two companies DOJ aims to restrict.
DOJ’s supporters point out that it could block mergers and deals to protect competition, but how far should government go in controlling our wireless sector? Lawyers propose deciding which spectrum is most valuable, declaring who can buy it and how much they can acquire, then overseeing which companies can merge. Such a managed marketplace is not a formula for global leadership or rapid innovation.
So if we cannot make her FCC chair, let’s send Jessica Rosenworcel to Justice. Or at least hope that the DOJ heeds her counsel for humility, restraint and common sense in the upcoming incentive auctions.
Source URL: http://www.mercurynews.com/opinion/ci_23453441/broadband-policy-department-justice-going-far-attempts-regulate
To Network the Nation, Go Back to the Future
By Rick Boucher
A little less than two decades ago, in a bid to stoke competition and create more choices for consumers, Congress rewrote the law that governed telephone and cable TV communication. It was a difficult, bipartisan, multi-year effort as we weighed the advice of policy experts, listened to competitors’ concerns and looked for the best way to serve consumers. That focus and a lot of hard work created a landmark accomplishment that stimulated competition and consumer choice in the local telephone, long-distance and cable television markets.
Today, the development of the Internet has brought us to another critical juncture in communications policy as we consider how to complete the transition from the bygone era of plain old telephone service to the digital bonanza of the 21st century. It’s a critical transition, given the Internet’s increasingly dominant role in every part of our economy, as well as its ability to improve lives and help achieve important national goals. It’s also something that just about every stakeholder, including the Federal Communications Commission, regards as inevitable. As we move forward, the guiding principle must be to put consumers first.
When complete, this Internet transformation will mean that every telecom service will move over the fastest, most reliable broadband networks built specifically for Internet-based delivery of voice, video and data rather than antiquated networks that were designed for phones wired to the wall. Every app, every smartphone and tablet, every desktop computer will smoothly connect consumers to the online experience of their choice – telemedicine services for better health, virtual classrooms for lifetime learning, their legislators’ offices for civic engagement, a job opportunity, a sporting event, a movie, friends and family across town or on the other side of the world. That’s the first goal – delivering the services consumers want. Indeed, that move is already under way led by consumers themselves, about three quarters of whom have left the old wired phone network for services provided with digital tools.
Ideally every consumer – in the rural communities of Southwestern Virginia, the mountains of Colorado, and the poorest neighborhoods of the inner city – should have access to this advanced network. The principle of universal service, which ensured basic telephone service for every American, may be even more important in the Internet age. As FCC Commissioner Jessica Rosenworcel explained: “No matter who you are or where you live, prosperity in the 21st Century will require access to broadband services.”
But providing access to the service isn’t the whole job. We also must boost adoption rates, educating every American about what the transition means, how it will affect them and why they should use broadband to improve opportunities for themselves and their family. We can’t afford to leave any American in the dark about the value of broadband; we can’t leave anyone behind.
A competitive marketplace that enables consumers to choose among different providers, technologies and service options is another core goal, because competition provides consumers a better deal. That principle guided our work on the Telecommunications Act of 1996. In today’s context, FCC Commissioner Mignon Clyburn has it exactly right: “We must also ensure that competitive alternatives are available to consumers and that all providers continue to invest and innovate – pushing one another to offer consumers the best services at the lowest prices.” Competition thrives where a level playing field exists and consumers understand the rules of the road. Basic consumer protections are vital to guard against deceptive and abusive practices.
The Internet has prospered in large part because of decisions dating to the Clinton administration to steer clear of excessive rules about matters such as terms of service and pricing. While the tradition of light touch regulation of the online space should continue, regulators must remain on guard against potential abuse and make sure that consumers receive the services they’re paying for.
Protecting public safety also remains a vital goal. Next generation networks must be reliable so that consumers can communicate in times of greatest need. Disruption of 911 in Hurricane Sandy made clear that we have work to do to achieve this goal. Ensuring access to first responders on new networks is one reason that I support proposals like one by AT&T for field tests. Market trials of IP technology will enable carriers to identify potential problems and find solutions before the final transition from the old networks to the new. Every American must have the means to reach 911 in times of emergency in this digital era.
Finally, there is the matter of outdated regulation, specifically legacy rules adopted decades ago for the old phone system. Without prejudging specifically what rules should go and what rules should stay, our nation’s regulatory system must be just as modern as the networks it governs. Over the past decade, regulators have correctly recognized that new technologies require new rules. As outgoing FCC Chair Julius Genachowski observed last December in creating the Commission’s technology transition task force, “[T]he ongoing changes in our nation’s communications networks require a hard look at many rules that were written for a different technological and market landscape.” A national dialogue moderated through an FCC proceeding should summon a broad range of stakeholders from consumer groups to broadband providers to focus on the rules that are appropriate for a time when all communications are Internet-based.
To be clear, modernizing regulations for the transition does not mean a regulation-free zone. What’s needed is smart regulation appropriate to protect consumers and public safety, promote competition and support universal service, while also encouraging significant and sustained private investment in America’s next-generation communications networks. Again to quote Commissioner Rosenworcel, “Our policies in these transitional times must do two simple things. They must promote confidence for private investment in digital age infrastructure – and they must promote confidence for consumers to realize the full potential and opportunity that our digital world provides.”
I couldn’t have said it better myself.
Source URL: http://thehill.com/blogs/congress-blog/technology/296399-to-network-the-nation-go-back-to-the-future#ixzz2RaHI8axi
Lessons from the ‘90s for re-igniting growth now
Commentary: Key decisions made years ago still apply today
By Bruce P. Mehlman
Economic growth stalls. Public debt is exploding. People quit looking for work faster than new jobs can be created. Around the world, voters turn to policymakers to solve these economic challenges and re-ignite growth. But how?
Solutions vary radically. Some see government bureaucracy and red tape as the problem, proposing budgetary discipline and deregulation to solve our woes. Others perceive government as the solution, urging greater Keynesian stimulus through public investment and more comprehensive regulation of “big business.” In nearly every nation, policymakers are experimenting with various remedies, from Japanese currency devaluation to European austerity to massive Chinese infrastructure investments.
Over the next 18 months, four newly named leaders in the Obama Administration have the opportunity to expand on proven successes and reignite growth. At the Federal Communications Commission (FCC), the Office of United States Trade Representative (USTR), the Treasury Department and the State Department, these new officials can advance policy solutions that we know can work, provided they have the vision and courage.
Across geographic and ideological spectrums, policymakers agree that the keys to future prosperity are productivity, innovation and entrepreneurship. And their most compelling proof point remains the Internet and its extraordinary contribution to American employment and efficiency. A huge amount of the Internet-enabled growth that has supercharged our economy over the past two decades resulted from four critical decisions made by U.S. policymakers in the mid-1990s on issues that have returned to the fore today.
First and most significantly, 17 years ago, bipartisan majorities in Congress passed the Telecommunications Act of 1996. Recognizing the enormous value of competition as a driver of progress, Congress rewrote a 1934 monopoly-era law to promote investment in new networks and competition across platforms. The act led regulators to drastically cut terminating-access charges imposed on emerging wireless services, spurring the mobile boom. New rules begat new investment, with more than $1.2 trillion in private capital expenditure; the broadband era was born.
Next, in December 1996, U.S. negotiators at the World Trade Organization got 75 nations to agree to the Information Technology Agreement (ITA) that eliminated customs duties on a wide array of information and communications technology products. Trade in these goods exploded from $1.2 trillion in 1996 to $4 trillion in 2008, vastly expanding markets for American exporters while lowering the cost to U.S. entrepreneurs of powering up, logging on and joining the networked world. U.S. productivity surged a massive 85%, from 1.4% per year (1980-1995) to 2.6% per year in the 15 years after.
In July 1997 the Administration released its “Framework for Global Economic Commerce,” recognizing the imperative of avoiding government control of core Internet governance functions. By investing Internet governance functions in a professional, private-sector led, bottom-up organization (ICANN), policymakers blazed an unprecedented trail that has minimized political interference in Internet growth and avoided a balkanization of this critical global medium. Internet usage grew from 16 million in December 1995 to 2.4 billion today.
Finally, in August 1997, Congress passed the Balanced Budget Act of 1997 (BBA), legislation that significantly boosted investor confidence by imposing fiscal discipline over Washington budgets. Of even greater impact, the BBA lowered capital-gains rates to 20%, encouraging a torrent of venture capital funding that gave rise to many of today’s leading tech employers.
For 15 years these policies and the Internet economy they fostered helped power economic growth during boom times and sustain job creation and productivity in the lean years. Yet each of these essential policies is now at risk.
Today some policymakers propose higher tax rates on capital gains and entrepreneurial activity, either to spare spending or “fix” income inequality. New Treasury Secretary Jack Lew should prioritize maintaining effective tax incentives for venture capital.
At the same time, trade in high-tech goods and services is increasingly limited by new protectionist barriers and the failure of the ITA to evolve with new innovations. USTR nominee Mike Froman should make expanding the ITA to new technologies and additional markets his top priority.
Regimes less committed to Internet freedom are this month pushing to move Internet governance functions away from the multi-stakeholder ICANN and to the government-run United Nations instead. New Secretary of State John Kerry must prevent UN takeover of Internet governance as a top priority.
And in domestic telecom markets, many are seeking re-regulation of advanced broadband networks with monopoly-era telecom laws… old rules for all wires. FCC nominee Tom Wheeler should champion efforts to deregulate all-IP broadband networks to re-ignite our innovation-led growth.
It is critical that the policymakers of 2013 learn from and apply the lessons of 1996-1997. The broadband-enabled Internet economy can continue to benefit American consumers and power renewed productivity, innovation and entrepreneurship, provided policymakers make the right decisions.
Bruce P. Mehlman is founding partner of public affairs company Mehlman Vogel Castagnetti, co-Chairman of the Internet Innovation Alliance and former Assistant Secretary of Commerce for Technology Policy.