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Wheeler: Between a Rock and a Hard Place

FCC Chairman Tom Wheeler is not having an easy week.

First, net neutrality activists barricaded his driveway (well, four protesters anyway). Then President Obama, while on a trip to Asia, comes out with a surprise announcement calling for strict Title II regulation of broadband service providers, putting even more pressure on Wheeler to act. (See Obama Backs Net Neutrality, Stuns Industry.)

A report by The Washington Post says Wheeler was "visibly frustrated" at a meeting with Silicon Valley business executives after the statement from the White House was released.

"What you want is what everyone wants: an open Internet that doesn't affect your business," Wheeler said, according to people who attended the meeting. "What I've got to figure out is how to split the baby."

Wheeler has previously said that he would consider reclassifying broadband services under Title II of the Communications Act, but he's also given indications that he'd prefer to stick with regulating the industry under the looser Section 706 rules with some additional requirements put in place. Officially, the Federal Communications Commission (FCC) chief responded to the White House statement Monday by saying he was "grateful for the input of the President." But, according to The Washington Post, he said privately that he "preferred a more nuanced solution" than the one that Obama proposed. (See FCC's Wheeler: 'Internet Will Remain an Open Pathway' and FCC Split on Net Neutrality Plans .)

Obama's statement comes amid growing concerns about broadband companies charging content providers for "fast lanes" on the Internet -- a fear that's been magnified since news broke that Netflix Inc. (Nasdaq: NFLX) is now paying five major US Internet service providers for direct network connections. However, there is still significant confusion over what a fast lane actually is, and when and where it might be beneficial to allow service providers to prioritize certain types of traffic. Wheeler tried to address that issue with a hybrid proposal that would split the Internet and require so-called net neutrality on back-end connections, but not on the connections taking place between carriers and consumers. But, so far, that proposal hasn't made anyone happy. (See Net Neutrality: Latest Proposal Will Make Everybody Unhappy and Comcast's Cohen: Define Internet Fast Lanes.)

Meanwhile, opponents of Title II treatment have argued that the regulatory framework currently used for utilities would wreak havoc on an industry where rapid change is a constant. Analyst Larry Downes in The Harvard Business Review articulated this position by saying "The effect of such rules would be to offset the speed and flexibility of entrepreneurial innovation with the plodding rigidity of federal and state bureaucrats, more focused on process than on outcomes."


Find out more about key developments related to broadband on Light Reading's dedicated broadband channel.


Long-time industry analyst Dan Rayburn takes the argument further by asking what Title II classification would even do to mitigate public concerns about paid agreements between content owners and ISPs, including those between Netflix and broadband providers like Comcast Corp. (Nasdaq: CMCSA, CMCSK) and Verizon Communications Inc. (NYSE: VZ). Title II doesn't cover interconnection deals, which is where Netflix is bumping up against ISPs. Rayburn has stated that instead of turning to Title II, "we need new language or better yet, a new law, not reclassification of an old law, applied to today's economy."

Regardless of what the right solution is for maintaining an open Internet, there's no doubt that President Obama's latest statement on the matter has made Chairman Wheeler's efforts to find a middle ground even tougher. With politics on both sides and complex technology in the middle, Wheeler is truly facing a difficult road ahead.

— Mari Silbey, special to Light Reading

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brooks7 11/18/2014 | 4:10:10 PM
Re: I would add Verizon stated in the 2003 RFP that it was going to do more than 50% of its network.  The numbers are exactly where they said they were going to.  As I said, people are mad because they are not going further.  Those plans have been the same for more than 10 years.

So, again - get over it.  People who have agendas write what they want post what they want.  For example, the article that you quoted made an assumption that budgets would have an uptick instead of a transfer.  Verizon said all along that they were not going to spend more they were just going to spend it on FiOS instead of other things.  

Rate hikes for broadband are not controlled expect by the market.  Tax credits are given to many companies.

Now if you want, please go build a FTTH network.  Given your viewpoint, you should be able to get funding without a problem.  There is absolutely nothing stopping you.  Not a single thing.  Just go hire some folks get the digging permits and start installing equipment.

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mhhf1ve 11/18/2014 | 3:47:15 PM
Re: I would add Verizon has gotten tax breaks and rate hike approvals... I count those as govt subsidies and the revenues from those activities aren't earmarked specifically for FIOS, so Verizon takes the money and invests it in whatever it wants to -- despite promises to deploy fiber more widely than it has.

http://www.niemanwatchdog.org/index.cfm?backgroundid=631&fuseaction=background.view
brooks7 11/15/2014 | 1:30:08 PM
Re: I would add  

The regular telco TDM network falls under Title II as does the TDM voice service provided by FiOS.  What part of the FiOS network receives subsidies?

The only subsidies that I know that are left are part of the High Cost Loop support which Verizon can't get because it has a low percentage of High Cost Loop Support lines in any LATA that I am aware of.  There are places where AT&T can get support in Nevada.

So, please point out what subsidy you are talking about.

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mhhf1ve 11/15/2014 | 2:02:44 AM
Re: I would add Btw, verizon has already labeled some of its broadband projects as under Title II when it was advantageous for subsidies. And plenty of other groups also think Title II is a reasonable classification. http://www.theverge.com/2014/11/14/7222899/ad-hoc-visa-ups-fcc-title-ii-net-neutrality
brooks7 11/15/2014 | 2:01:54 AM
Re: I would add First off, you should meet Dave Burstein before you quote him.  The situation in NY is the same in many large cities.  Building owners control risers and have to be negotiated with to get access.  In some cases, the answer is simply no.  Don't assume that the report is neutral - especially when you are being accused not in court but by a politician in a race.

And the announcement of Verizon's deployment came out of the 2003 JPC RFP and at this point (Q314)

• FiOS Internet subscribers
– 6.5M subscribers, 162K net adds
– 40.6% penetration
• FiOS Video subscribers
– 5.5M subscribers, 114K net adds
– 35.5% penetration

That 40% is off all Verizon subs.  Now, the largest mistake you make is that we are only talking about residential broadband access.  When the Comcast/TWC merger is complete, the combined company will have more subs than Verizon, AT&T and CenturyLink added together.  You can look up reports on that at your leisure.

Finally, neither cable nor large telcos are getting public funds.  So, I have no idea of what you mean by getting government aid.  Small telcos get that assistance.

Now what people DO get upset about with FiOS is that they have said they are not making any more FiOS Central Offices.  They want Verizon to build out to 100% of their lines.  That is something Verizon said they would not do straight from the beginning.  The numbers they have are essentially straight out of the 2003 RFP.

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mhhf1ve 11/15/2014 | 1:02:28 AM
Re: I would add The competitive threat of cable for telcos isn't quite as serious as you make it sound. Verizon is collaborating with cablecos more than directly competing. Telcos and cablecos have different customer bases -- with telcos serving large businesses as well as residential consumers. Cablecos have gained some SMB customers, but the geographic distribution of cablecos makes it difficult for them to get into larger enterprises with nationwide footprints.
mhhf1ve 11/15/2014 | 12:50:21 AM
Re: I would add It isn't hard to find evidence that Verizon has not deployed FIOS as it had promised -- and much more recently than 2003. http://www.dslreports.com/shownews/Verizon-Accused-of-Lagging-on-NYC-FiOS-Promises-124089 I don't hate telcos by the way. I simply think that they can look out for themselves just fine without govt aid. I don't think cablecos should be granted various merger monopoly deals either.
brooks7 11/14/2014 | 11:09:28 PM
Re: I would add Yes Verizon has done exactly what it said it would do in 2003.

My question is why should we protect cable company investments?

I can't help it that you hate the telcos....and seem to ignore the cable companies.  Remember FiOS was completely built out before Google Fiber even started.  So, you need to get your mind around that.  Take a look at:  http://en.wikipedia.org/wiki/Verizon_FiOS

Of course, the 2005 date is the broad launch.  The first installations were in Keller, Texas.  http://www.lightreading.com/ethernet-ip/verizon-announces-fttp-services/d/d-id/604413

The actual competitive threat was cable not Google.  Note, Google has not deployed in a single city in Verizon's territory.  Because the places that it would do so already have FiOS.

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mhhf1ve 11/14/2014 | 9:36:50 PM
Re: I would add What about FIOS? Do you think verizon has kept its promises to deploy FIOS as widely as it claimed it would? In exchange for states agreeing not to allow municipal fiber -- has the public gotten much tangible benefit in return? Care to elaborate on why we should try to protect the past investments of telcos when the public has been catering to them for decades and only Google fiber seems like a viable business threat to drive their promised fiber deployments.... https://www.natoa.org/events/BrokenPromisesGarcia.pdf
brooks7 11/14/2014 | 7:16:15 PM
Re: I would add What then is FiOS?

And remember 60% of the US is on cable modems.

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