Broadband, Net Neutrality and other Telecom Politics

Exhibit 3-D: Availability of 4 Mbps-Capable Br...

Broadband Access Map via Wikipedia

There was a time when communications services meant landline phone service and long distance calling.  It was a regulated monopoly and Ma Bell was the big muther of all.  Then in 1984 a judge said that after 100 years Ma Bell was an antitrust violating ‘moll’ like every other market power dominating capitalist.  The judge ordered Ma Bell broken up into a series of regional baby bells.  Ever since there has been a slow motion competition to bring all the children back under Ma Bell’s wing.  Today AT&T is once again a VERY big telecommunications company after one of the kids bought out the remnants of the old broken up and worn down AT&T to recreate a scalable national business.

What is different is wireless and broadband communications.  The traditional phone business today is a declining land-line market share business because the action is in mobile wireless and in high speed internet access.

This causes a big problem for the Federal Communications Commission (FCC) because its reason for being largely evaporated with the introduction of competition and choice in communications services.  So it fusses and pontificates over issues often so arcane that only the sacred cows of the industry being gored care much—like net neutrality and more recently high speed broadband access to rural areas of the country.

Recently, the FCC issued its seventh report issued under section 706 of the Telecommunications Act of 1996 requiring annual assessments about “availability of advanced telecommunications capability to all Americans.” To satisfy the law, the FCC must determine whether advanced telecommunications capability (“broadband”) is being deployed to all Americans in a reasonable and timely fashion.  How’s that for a ‘make work’ job for a Federal agency?

The answer the FCC arrived at is, of course, NO it isn’t because the data collected by the National Telecommunications and Information Administration (NTIA) for the National Broadband Map shows that as many as 26 million Americans live in areas unserved by broadband capable of “originating and receiving high-quality voice, data, graphics, and video telecommunications.”

The other problem is that even when it is available as many as one-third of potential customers do not subscribe to the service. Telecom companies say there is no business case to offer broadband under such circumstances and some rural areas have no immediate prospect of being served, despite, according to the FCC, “the growing social costs of digital exclusion.”

OMG!  Not that—digital exclusion!

So the FCC says it must conclude that broadband is not being deployed in a reasonable and timely fashion to all Americans and fashion “remedies” to cure the disease.

The FCC assessment also says that Americans who do not subscribe to any form of high-speed Internet access service because they can’t afford it, they lack of digital literacy, and some perceive that the Internet is not relevant or useful to them. In addition, as many as 80 percent of E-rate funded schools and libraries say their broadband connections do not fully meet their needs (READ: please give us more money!). And to add insult to injury—some available international broadband data services are faster, better but not necessarily cheaper than those in the US. (READ: The United States may lag behind other developed countries.). These data also suggest, according to the FCC that broadband is not being reasonably and timely deployed and is not available to all Americans.

Never mind that more people have phone service and broadband access than ever before and new devices like iPhones, iPad, Android, Twitter, YouTube and other mobile services have radically changed the telecommunications services and mix from the days of Ma Bell.  The FCC says the telecom industry has made great strides to bring better and faster broadband to most Americans. Providers invest tens of billions of dollars annually in the networks that make broadband possible.

So what’s the problem?

Since broadband deployment in the United States is still “not reasonable and timely” says the FCC, the statute directs that the Commission “take immediate action to accelerate deployment of such capability by removing barriers to infrastructure investment and by promoting competition in the telecommunications market.”

  • Universal Service Fund (USF). In the ‘good old days’ the cost of bringing phone service to rural areas was socialized by charging a small universal service fund charge to every phone bill.  The accumulated money was used to reduce the cost of extending that rural service and is still collected today.  The FCC wants to expand the use of that USF fund to cover broadband.  Part of the current debate is the prudence of changing the terms for using the USF money.  And rural telecoms still want to get money from the fund to improve their system and service in an effort to stay competitive with the big players and reduce the attrition of land-line service as wireless becomes available.
  • Net Neutrality. The second issue causing debate is over net neutrality and whether the FCC should be able to adopt rules that allow some broadband traffic to gain priority (high occupancy lane analogy) for the internet.  Congress has periodically involved itself in this as a virtual civil rights issue but it really boils down to who will pay for the capacity expansion to serve the appetite of online users?  Will it be the biggest users?  Will that cost be socialized?  Can there be premium service that allocates more bandwidth to those willing to pay for additional capacity or speed?
  • National Broadband Plan. The FCC laid out a National Broadband Plan to address these issues and keep itself as the center of attention in the debate. The FCC said it will continue to collect data and assess progress on the issue of broadband availability.  Meanwhile, outside of Washington DC back on Main Street those responsible for providing rural communications services have a different perspective on the problem.  The Rural Broadband Cost Study they produced estimates the investment dollars needed to upgrade rural area lines in to broadband capability is about $10.9 billion and its going to take time given the relatively low return on the investment required.  They got some money from stimulus funding to support their objectives but the FCC report says that pace is too slow for policy-makers.

So there you have it, we all have a need for speed when it comes to our broadband access and we are more than willing to dump our ISP like a hot rock if we can get faster, better broadband service.  We’ll even pay more for it but competition means mostly we will not have to do so.  Mobile communications have also changed the game so radically that many of these access issues are being resolved as a byproduct of the transition to mobile, wireless communications.

It’s good for the FCC to frame the issues and hold conferences to encourage the debate, but we really don’t want them to DO ANYTHING anymore because the government imposed solutions they are likely to offer us bear little resemblance to what we want and what competition is bringing us.

The FCC held a USF reform workshop may 18 2011 to explore how the federal and state governments might split up the task of implementing Universal Service program reforms and what each entity’s long-term Universal Service responsibilities should be.  So instead of sitting through another long winded discussion of arcane telecom issues here is a summary from that workshop.

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