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FCC Commissioner Weighs In

Light Reading
News Analysis
Light Reading
2/26/2002

Are Internet data services the same thing as telephone services? It's a question central to the latest regulatory debate here in the United States.

Federal Communications Commission (FCC) Commissioner Kevin J. Martin maintains that the federal agency is not changing how regulators define Internet access -- they're just trying to define it more clearly. Martin spoke briefly with Light Reading last week after a rulemaking notice adopted by the FCC caused some grumbling among competitive carriers (see FCC Stirs Up Competitive Carriers).

Competitive carriers such as ISPs and CLECs currently depend on their competitors, the incumbent carriers (RBOCs), to share key parts of their networks in the form of co-location space in central offices. The Telecommunications Act of 1996 requires this, even though Internet access wasn't specifically addressed in the Act.

"It's not that [the previous administration] declared Internet access a telephone service. They only said it was more like an information service," says Martin. "We tentatively conclude that high-speed broadband Internet access over wireline is an information service, and we're asking the same [classification] questions regarding voice telephone services provided via cable modems."

This tentative decision upsets competitive carriers, because they fear they might lose their rights to access RBOC resources. But Martin says it may make more sense, because labeling Internet access as a telecommunications service would force the FCC to treat it as though it were a voice-based service, meaning that a different set of taxes and tariffs would apply. In the end, that might slow the deployment of broadband even more.

Martin says the FCC's not so sure RBOCs are dominant when it comes to providing broadband services. "I think about two thirds of the people who get high-speed Internet access do so via cable modems," he says. "That may have some implication in a whole bunch of our rules."

The FCC's own surveys show most Americans have some level of broadband access, or, as it defines it, Internet service with more than 200-kbit/s capability in at least one direction. Fifty-eight percent of the nation’s ZIP codes have multiple high-speed providers, according to an FCC report release in February that contained data as recent as June 30, 2001. To Martin's point, about 44 percent, or 3.3 million, of the 5.9 million broadband subscribers use a cable-based service, according to the FCC's data.

But does such data suggest that the rules for sharing facilities between competitive carriers and incumbents should be changed or thrown out? Martin says the FCC is looking into it.

"We need to make sure that our regulations don't stifle broadband deployments by requiring facilities to be shared with competitors at a cost that makes it so that the RBOCs can't recoup their [network] investment cost. We have to put the right incentives in place for incumbents to deploy new equipment and for competitors to deploy their own equipment as well."

Another thing that will help speed broadband deployments, Martin says, is if Internet access companies are not required to pay into the Universal Service Fund (USF), a fund that, in part, helps provide basic telephone services to the poor. The FCC is considering changes to the USF contribution system, and Martin says cable companies and ISPs shouldn't be lumped into what is essentially a voice-based concern.

"I'm very supportive of the USF, but I don't think any level of government should see broadband as an additional revenue stream that they can tap into to fund other projects. I'm concerned that at the local level some have done that, and such moves increase the cost and decrease the demand and slow the rollout of broadband.

"Regulatory parity doesn't exist now. [Cable providers] are paying some things that telecommunications carriers aren't. And the Universal Service charge does apply to cable providers when they offer voice service that competes with telephone companies."

— Phil Harvey, Senior Editor, Light Reading
http://www.lightreading.com

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The_Holy_Grail
The_Holy_Grail
12/4/2012 | 10:52:49 PM
re: FCC Commissioner Weighs In
Hi Phil
Interesting tidbit. However, I think the below article is more relevant to the broadband industry. I don't think the end user cares about the delivery medium (wireless, copper, fiber), they just want CHEAP broaband access.
_________________________________________________
http://lw.pennnet.com/Articles...
_________________________________________________
FCC chairman's subtle telecom bias

BY STEPHEN N. BROWN

On the subject of FTTH, Powell's loose lips could be sinking fiber's ship.

Several months ago, FCC chairman Michael Powell made an offhand remark about fiber-to-the-home (FTTH) infrastructure. The remark, when placed in the larger context of telecom policy and the chairman's actions, shows that he has a nearly hidden but strongly negative attitude toward FTTH. Musing on the state of telecommunications, Powell said in the Forrester Research Telecom Forum, "We're not really laying from scratch. . . an entirely new wired infrastructure, except in aspects of the long-haul, which I think are already coming along nicely." But he saw no need for the luxury of new infrastructure in local networks: "We're going to build this stuff on top of phone lines that already reach 95% of Americans. We're going to build this stuff on top of coaxial cable that reach 96-98% of homes in America already. . . And I'll sort of leave out whether fiber-optic will one day be the thing that we do have kind of a [rural] electrification project about."

Fiber left out
"Leave out" fiber optics is the operative phrase. Powell thinks only of preserving the incumbents' infrastructure, despite his recent emphasis that the incumbents' competitors build their own facilities instead of using the incumbents' local loops. Even when the fiber industry moves to protect its self-interest, he makes a "read between the lines" criticism: In the past year, the fiber business has lobbied loudly for an investment tax credit applied to fiber investments, and the FTTH Council publicly urged the Bush Administration to adopt that policy in any economic stimulus package. But last October, Powell spoke at the National Summit on Broadband Deployment and warned, "Be cautious not to embed inferior technology. Government is a notoriously bad investor. . . the market is the best vehicle designed by mankind for innovation, for technology change and evolution." Although he did not mention the tax credit and the fiber industry, he did not have to because no other industry has lobbied so visibly and so long for the tax credit, which is the only form of "government investment" being considered to stimulate the telecom sector.

Powell also associates fiber optics with extravagance despite its long-term durability and superior performance in comparison to legacy networks. In an interview with ABC reporter Sam Donaldson, the chairman commented on the government's practice of auctioning off spectrum to the highest bidder: "[The] problem is a consequence of looking to these things as a way of increasing [government] revenue, not because they're the smart communication policy. [T]o give you another example, Europe is going to crush itself over what it paid for third-generation wireless spectrum. . .it paid too much. . .British Telecom is sitting on $35 billion of debt with no service and no customers. . .Somebody pointed out to me how dramatic that was. For the same amount of money, you could have wired every home in England with fiber-optic cable. So when the money, when the billions, becomes the stars in your eyes of communication policy, that can be a big mistake. One that I. . . hope. . .we avoid."

A first-year psychology major would notice the stream of negative mental associations that Powell has made: fiber optics > billions > star in your eyes > big mistake > avoid > inferior > leave out. The chairman's fear of FTTH is a good reason why the industry should lobby Congress directly about a new national telecom infrastructure, rather than lobbying the agency. Also, if Powell were such a strong believer in free markets, he should not care if the private sector bids up the price of spectrum so that FTTH becomes an economic alternative to embedded infrastructure.

Sinking with NextWave
Powell's desire to hold down the private sector's payments for spectrum should be explored by Congress because of his role in the NextWave deal. Five years ago, the company bid $5 billion for "C-Block" spectrum licenses to offer "third generation" wireless services but delivered only $500 million to the government, declared bankruptcy, lost, then regained the licenses. Powell brokered a deal in which Verizon, AT&T Wireless, and Cingular were to pay $5 billion to NextWave for its licenses and $10 billion to the government. In December, the House Energy and Commerce Committee, headed by Powell's close ally, Rep. Billy Tauzin (R-LA), initiated legislation to accommodate the settlement.

Sen. Ernest Hollings (D-SC) opposed the legislation, saying in a letter to congressional colleagues, "[W]e are being asked to legislate a scam. . .to reward. . . speculators who put. . .down $500 million. . .and are now on the cusp of a $5-billion payment. Rather than attempt to settle. . .the FCC should vigorously pursue its appeal. . .If we are to consider legislation, why not emphatically clarify that bankruptcy claims do not prevail over the FCC's role as the trustee of our airwaves? Enactment of such a bill would give the government more than [the] $15 billion that was bid in last year's re-auction. . .the FCC has never met or approved anything. . .the. . .chairman, acting on his own, engineered this deal."

Questions of fiduciary responsibility
Did Powell counsel the private sector to restrain its bids for spectrum and its offer to the government in the NextWave deal? It is legitimate to ask because of his public statement that European companies "paid too much" for spectrum and that he hoped American companies would not. But shouldn't Congress want to know if the FCC chairman fulfilled his fiduciary duty, putting the interests of the U.S. Treasury ahead of the companies he regulates?

Powell's policies and public remarks indicate the incumbents' great influence on him, to the point he is unable or unwilling to see the public interest as separate and distinct from their interests. At his urging, the FCC has removed limits on the amount of spectrum any one company controls, a move industry analysts say will spark mergers between wired and wireless companies that will blanket the country with slow-speed, monopoly-priced services, another unfortunate side effect of Powell's telecom bias against FTTH.



jamesoid
jamesoid
12/4/2012 | 10:52:47 PM
re: FCC Commissioner Weighs In
Looks like we get screw again.
jamesoid
jamesoid
12/4/2012 | 10:52:46 PM
re: FCC Commissioner Weighs In
Correction, looks like we get screwed again.
optigirl
optigirl
12/4/2012 | 10:52:46 PM
re: FCC Commissioner Weighs In
I think that our industry has seen its fair share of over regulation. The government has sold off spectrum to the highest bidders only to see them go bust under the staggering debt loads. It has kept the RBOCs in th drivers seat while managing to stifle any real competition. And, let's not forget to mention all of the lobbying money the big boys employ to further their ends and the money that telcos spread arounf to impressionable comgressmen.

I don't sit here and profess to know the ultimate answer as telecom is a lifeline service. However, the capital intensive nature of this business means that you can have very few players per market. Asking the government to get involved has never worked and never will. What we need are lower taxes, a better ecomomy and a reason to spend more money through the use of communucations infrastructure.

big daddy
big daddy
12/4/2012 | 10:52:42 PM
re: FCC Commissioner Weighs In
count me in
StartUpGuy1
StartUpGuy1
12/4/2012 | 10:52:41 PM
re: FCC Commissioner Weighs In
The RBOC's will use the Tauzin-DIngle bill that allows them to count DSL as an "Information service" as a starting point to eliminate all of their CLEC competition. If you look at their T-1 and above services, almost all of them carry both voice and data. It is just a matter of time before they go back to congress and ask for relief against the "mean cable companies".

What they are after is to be granted all the privileges of the cable companies without any of the downside, ie. losing their franchise agreements and having to leave an area because of it. Do you really think they would agree to be FIRED from the State of Texas by the government? Dont think so..

The RBOC are saying they cant depoly broadband because they have to share the access with anyone.
99% of the CLEC's out there are trying to sell service to business customers only. The RBOC have NO competition for the residential customer from these CLEC's. They have no excuse for not depolying, other than their goal is eliminate any competion for the cherished business customer.

Cable broadband services residential customers almost exclusively. Since the RBOC's have no competition from CLEC's for the "Residential customer", why cant they roll out the broadband service, just like the cable boys? Because there is no money in it... They want to eliminate any competition for the business customer. Residential customers are not the issue...

One note.. If you look at Cox Cable and Charter COmmunications, you will find that less than 10% of their total subscriber base uses broadband services for Internet access. This is the "residential customer" that the RBOC's are leading congress on that they are trying to serve..

Sorry for the long post.. I have just spent the last 3 months dealing with CLEC/RBOC issues with a small business. I have had 9 outages of my T-1 service and all have been due to RBOC issues. My CLEC is powerless to do anything. The RBOC has NO incentive to provide a decent level of service for the CLEC or anyone else.
hemmingway1
hemmingway1
12/4/2012 | 10:52:40 PM
re: FCC Commissioner Weighs In
From the article: "We need to make sure that our regulations don't stifle broadband deployments by requiring facilities to be shared with competitors at a cost that makes it so that the RBOCs can't recoup their [network] investment cost. We have to put the right incentives in place for incumbents to deploy new equipment and for competitors to deploy their own equipment as well."

Amazing these FCC guys actually believe this crap the RBOCs dish out. The FCC's own latest report on the state of broadband said all their numbers indicate progress is good. Another discussion of these topics with a little more activity is here, if you're interested:

http://www.siliconinvestor.com..., with a few other topics sprinkled inbetween. Some good links to other stories about the FCC and RBOCs in those messages. See messages 5081,5086, 5089, 5091, 5093-96, 5098-5110 so far.

It seems the trade press, overall, is not being very balanced in their presentation of these issues. Very skewed toward the RBOC side, yet only the RBOCs and their equity and bond holders would benefit from that side.

hemmingway1
hemmingway1
12/4/2012 | 10:52:39 PM
re: FCC Commissioner Weighs In
From the article: "We need to make sure that our regulations don't stifle broadband deployments by requiring facilities to be shared with competitors at a cost that makes it so that the RBOCs can't recoup their [network] investment cost. We have to put the right incentives in place for incumbents to deploy new equipment and for competitors to deploy their own equipment as well."

Amazing these FCC guys actually believe this crap the RBOCs dish out. The FCC's own latest report on the state of broadband said all their numbers indicate progress is good. Another discussion of these topics with a little more activity is here, if you're interested:

(looks like that comma at the end screwed up the link...corrected version below)
http://www.siliconinvestor.com... , with a few other topics sprinkled inbetween. Some good links to other stories about the FCC and RBOCs in those messages. See messages 5081,5086, 5089, 5091, 5093-96, 5098-5110 so far.

It seems the trade press, overall, is not being very balanced in their presentation of these issues. Very skewed toward the RBOC side, yet only the RBOCs and their equity and bond holders would benefit from that side.

raypeso
raypeso
12/4/2012 | 10:52:37 PM
re: FCC Commissioner Weighs In
This whole thing kills me. I work for a CLEC and most of our customers came to us because they hate the RBOC's. 80%of our network is entirely on our fiber but the other 20% use the RBOC local loop. Do you want to take a guess at where 80% of our work load comes from? The terrible lines that the RBOC's give us. It seems the loosers on this one will be the customers and the CLEC employees.
rjmcmahon
rjmcmahon
12/4/2012 | 10:52:32 PM
re: FCC Commissioner Weighs In
FYI, on the Tauzin-Dingle bill.

http://www.c-span.org/capitols...

"One aide called it a "free vote," in that members can garner the campaign benefits of having the Bells in their corner while incurring little danger of being held accountable by AT&T, since the Senate will kill it."

I don't see how any of this helps to get more fiber deployed nor how it helps to guarantee the content producers get paid for their works.
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