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FCC Looks to Reclaim Its Broadband Mojo

The Federal Communications Commission (FCC) has opened a formal Notice of Inquiry (NOI) that will probe a handful of possible legal options the agency can pursue to help it reestablish its authority over broadband rules and policies and keep the fire under the National Broadband Plan stoked. (See FCC Declares War on Broadband .)

The FCC is looking to develop a new legal framework for broadband after its current legal approach was put in doubt when a court overturned an earlier Commission order against Comcast Corp. (Nasdaq: CMCSA, CMCSK) regarding the MSO's earlier treatment of some peer-to-peer Internet traffic. The court thought the FCC's enforcement order had gone too far by relying on its "ancillary authority" over broadband. The court opinion left the door open for the FCC to check its options. (See Net Neutrality Ruling: FCC Loses, Comcast Wins and The National Broadband Plan.)

"We need to reclaim our authority," FCC Commissioner Michael J. Copps said during today's meeting, noting that the Comcast decision puts the Commission's broadband plan "in jeopardy" and "potentially on hold."

The NOI could be followed by a formal rule-making procedure. In the meantime, the inquiry will seek comments on how existing or new legal frameworks can help the FCC reestablish its authority on broadband. It won't look to change the Commission's treatment of content distribution networks and backbone services, since they are already outside the scope of the FCC's authority over broadband. At the start, the NOI will weigh these three options, and ask for comments on other possibilities:

  • Title I: This option would maintain the status quo on cable modem service and retain its Title I classification as an information service. On this point, the FCC wants to evaluate whether keeping this classification intact would enable it to reach its policy goals when it comes to elements such as universal service, privacy, access for people with disabilities, and harmful practices by ISPs (the Comcast example).

  • Title II: This much stronger option, sometimes called the "nuclear option," would apply all Title II (telecommunications service) provisions to broadband services. The FCC wants to know about the potential consequences of this approach and how it could affect innovation and investment in broadband services.

  • "Third Way": This approach, which appears to be the most popular one heading in, is generally modeled on how cellphone services are governed today. This revised approach aims to forebear from enforcement of all of the rules found under the Title II classification. Under the FCC's initial proposal, this Third Way would apply only to the "transmission component" of broadband services, including things such as denial of service, and protection of privacy. And it wouldn’t look to install rate regulations or require MSOs to unbundle their networks. (See Third Way or Third Rail?)

    This soft-touch, "bare minimum" approach, some in the Commission hope, will offer "increased predictability" for the broadband industry and avoid a reduction in ongoing infrastructure investment.


It's not known if or when today's action will morph into a full blown rule-making procedure, but the FCC has set a July 15 deadline for initial comments on the NOI, with reply comments due by August 12.

Commissioner Copps is among those who want the FCC to have a much stronger say in how the nation's broadband policies are enforced and want the agency to seek out a stronger, more blanket approach to establish its authority rather than taking things on only when new issues emerge.

"Case-by-case inevitably becomes court case by court case," he said. "It would be death by a thousand cuts."

There haven't been many voices that are calling for a full Title II classification on broadband, and even the Third Way has had its critics.

Sanford C. Bernstein & Co. Inc. analyst Craig Moffett has noted that "forbearance can, in theory, be reversed at any time." Merrill Lynch & Co. Inc. analyst Jessica Reif Cohen thinks those fears are overblown because forbearance is difficult to overturn, noting that the FCC hasn't reversed forbearance in more than 20 years. (See Did the Market Overreact? )

Regardless, some carriers are already squawking that tighter regulations could curb future broadband investments. Earlier this week, AT&T Inc. (NYSE: T) reportedly said it might cut back U-verse-related spending if the FCC went forward with its plan to reclassify broadband.

Comcast has already expressed that it thinks the existing Title II classification is sufficient, but said it's prepared to work with the FCC on a Third Way approach so long as it does not "cast the kind of regulatory cloud that would chill investment and innovation by ISPs."

Free Press , an organization that was front and center in the Comcast-FCC case, thinks the Third Way offers a measured response to helping the Commission get back its broadband mojo.

"Based on their overheated rhetoric, the phone and cable companies would seem to prefer to keep the broken legal framework adopted by the Bush-era FCC rather than consider whether better, sounder options exist. Objecting to merely asking these questions is absurd," said Free Press policy counsel Aparna Sridhar, in a statement.

— Jeff Baumgartner, Site Editor, Light Reading Cable

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paolo.franzoi 12/5/2012 | 4:31:49 PM
re: FCC Looks to Reclaim Its Broadband Mojo

&nbsp;


Jeff,


Here is the thing about wireless....it, like the Cake, is a lie.


The air bandwidth is really limiting and shared.&nbsp; Ask the folks over at AT&amp;T if they want to start maintaining 500 sessions of 25 Mb/s each like a U-Verse DSLAM does.&nbsp;


What I am driving at is that wireless is fundamentally limited and extendable to only a given extent.&nbsp; It is limited by the fact that it has the lowest SNR of any of the transmission media (air, twisted pair, coax, fiber).&nbsp; Unless a miracle in coding occurs (which remember works just as well in any of those other media as well), wireless bandwidths are going to be limited.


Just wrap your mind around this as a really broad brush comparison.&nbsp; This is not apples to apples but should give you an idea of the issue.&nbsp; So....our good friends at AT&amp;T have put in bandwidth caps for wireless and Comcast has for its cable modems.&nbsp; I believe the biggest cap for AT&amp;T is 2Gbytes and the smallest cap for Comcast is 250Gbytes.&nbsp; For the non-techies that ought to be telling.


seven


&nbsp;

Duh! 12/5/2012 | 4:31:49 PM
re: FCC Looks to Reclaim Its Broadband Mojo

I largely concur with Seven.&nbsp; But also have to add that one of the biggest hidden cost factors is in the arcane matter of pole attachments.&nbsp; It also turns out that the FCC has another open proceeding on that subject.&nbsp; Now that I'm thinking about that proceeding in terms of this one,&nbsp; I've got to wonder if the FCC's lack of statuatory authority over broadband could shade the proceeding to control costs and access to pole attachments as applies to broadband carriers.


BTW, there are some areas of the country with three or more facilities based broadband operators.&nbsp; While the RCNs and Knowlogys of this world haven't precisely thrived, they've survived.&nbsp; And there are still quite a few municipal broadband operators who compete directly with cable and telco.&nbsp;&nbsp;

paolo.franzoi 12/5/2012 | 4:31:49 PM
re: FCC Looks to Reclaim Its Broadband Mojo

&nbsp;


theschnack,


I disagree with your opening assertion.


The reason for the duopoly in fixed broadband access is not favors.&nbsp; It is cost. There is simply too much cost to create new competitors in a broad brush in this market (and here I need to be clear I am talking about residential).


Both AT&amp;T and Verizon have recently spent several $B on network upgrades.&nbsp; Cable has spent lesser but similar amounts. Where is the money for a 3rd wire?&nbsp; The cost to construct many networks is simply too high.&nbsp; This is not a favor, it is reality.&nbsp; Even the CLEC model built upon the existing network and (with rare exceptions) built new facilities.


I believe your thinking is completely incorrect in this area.&nbsp; We are not going to get a 3rd wire to the home.&nbsp; So, now all we are talking about is improving the ones we have and making them work for the consumer.


&nbsp;


seven

Duh! 12/5/2012 | 4:31:44 PM
re: FCC Looks to Reclaim Its Broadband Mojo

Somebody's been listening to too much AM talk radio.&nbsp; The particular Kool-Aid you've drunk was stirred up by Dick Armey's right wing spin machine.&nbsp; Somebody worked extra hard to create this absurd alternate narrative, to deflect blame for the fiscal crisis from the amoral Wall Street bankers, slimy mortgage brokers, conflicted ratings agencies, repeal of Glass-Steagal, non-regulation of derivatives markets and so on, onto teh poorz, Barney Frank, ACORN and the CRA.&nbsp; A narrative made up from whole cloth, utterly, counter-factual and mindlessly parrotted by the right.&nbsp;&nbsp; As far as the BP disaster is concerned, read the article in today's New York Times about blow-out preventers and tell me that a couple of well-placed regulations (like requiring redundant blind shear rams, like requiring operators to prove that their blind shear rams would actually work, like shutting down operations to correct hydraulic leaks) wouldn't have prevented this tragedy.


Back on topic...&nbsp; application of some of Title II to broadband would indeed sharply curtail investment.&nbsp;&nbsp; Nobody is talking about doing that (except as a strawman).&nbsp; Under the Chairman's plan, they'd forbear from rate regulation.&nbsp; Forbear from unbundling.&nbsp; Forbear from reporting requirements.&nbsp; And so on.&nbsp; On the other hand,&nbsp; I could strongly argue that reforming pole attachment rules would be a great boon to investment, and to competition.&nbsp; I could argue that truth-in-advertising about broadband rates would be a huge competitive spur to investment. &nbsp; I could argue for carefully constructed regulations that rationalized the entertainment video market and ensured that operators got a reasonable return on a transition to over the top.&nbsp; I can certainly make the case that the old CPE rules created a vibrant and innovative market that advanced the technology and in the end benefited the telcos.&nbsp;


The reason why we have adversarial rulemaking proceedings is to try to bring out facts, so as to allow the regulations to optimize to the public interest.&nbsp;&nbsp; Certainly, the public interest includes continued investment, as well as ensuring that operators get a reasonable return and remain as going concerns.&nbsp; There are of course competing interests, and it is the job of the FCC to figure out how to balance them.&nbsp;

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