Improve Data Collection on Special Access Market August 27th, 2010

A new government report advises the Federal Communications Commission to improve the data it collects on the special access services market so it can measure the state of competition in the wireless industry. More detailed data and analysis of prices, special access rates and capital expenditures would help the commission oversee the market, the Government Accountability Office said. We support that recommendation.

Special access services are high capacity dedicated transmission links used to distribute voice and data traffic. The services are sold by wireline, cable and fixed wireless companies. Multiple providers compete in this market. Surveys show there are as many as 65 national and regional providers of competitive special access services. These providers include traditional CLECs, cable companies, and wireless broadband providers.

Prices for wireless services have continued to fall even as services are improving, GAO observed. The study also noted a trend toward consolidation in the industry. But a “high concentration of firms in an industry does not necessarily mean that the interest of consumers are poorly served,” the report said.

GAO’s conclusions that wireless prices are falling supports the evidence we have provided to the commission demonstrating that special access prices have also declined since the FCC implemented pricing flexibility. As GAO points out, many wireless companies either provide their own alternatives to special access or rely upon competitive alternatives from cable, micro-wave and CLEC providers. The GAO report makes it clear that providing these services to wireless companies is a complex market with a broad range of competitors. For that reason we have been supportive of the FCC’s plans to gather detailed data about the extent of all competitive offerings, as GAO recommends.

No Legal Basis for Title II Regulation August 12th, 2010

There is no legal basis for regulating broadband Internet access service under Title II of the Communications Act, USTelecom said in comments filed today with the Federal Communications Commission. The comments are the second round of feedback being provided to the FCC in response to its June proposal seeking input on the “best legal framework for broadband Internet access.”  Numerous entities including USTelecom  told the commission in July that its regulatory paradigm is not legally defensible and would have a detrimental impact on broadband investment and deployment.  Today’s filing argues that the proposal would violate the Administrative Procedure Act, contravene the commission’s statutory authority, and run afoul of the Constitution.

In response to Commission proposals to regulate only the “part” of the Internet it deems to be broadband Internet service, USTelecom emphasized the strong consensus in the initial round of comments about the impracticality of drawing such a demarcation line. Claims to the contrary ignore the technical realities of today’s Internet.

Providers today offer multiple integrated services to consumers, including e-mail, security, online storage, the domain name system and – increasingly – access to unique content offerings. These offerings are not functionally separate from the broadband service. And just because a provider might advertise a particular feature, like price or speed, does not magically transform the integrated information service into a stand-alone transmission offering.  If anything, today’s broadband Internet access services are more functionally integrated than they were when the commission first considered the appropriate regulatory classification a decade ago.

Broadband industry private investment has put the United States among world leaders in the use of the Internet and the availability of facilities-based broadband choices, the filing notes. Consumers report extremely high levels of satisfaction with their services, with 90 percent or more saying they are satisfied or very satisfied with their service. The commission should think long and hard before radically changing its current approach to the broadband policies that have supported such success.

Cybersecurity and the FCC August 3rd, 2010

The Department of Commerce has just begun what promises to be a fascinating look at the intersection of cybersecurity and Internet innovation, recognizing the threat that cyberattacks play to the growth and usefulness of the Internet. The Department’s Internet Policy Task Force includes experts on cybersecurity, communications policy, intellectual property, international trade and business who will take a deep dive into evaluating how to harness governmental, industry and academic resources to improve cybersecurity consistent with enabling continued growth in Internet innovation and commerce.

The Department’s broad and thoughtful approach to this issue is to be commended. Something that could upset the apple cart, however, is the current FCC’s rush to judgment that may effectively strip intelligence and computing power from broadband Internet service.  This includes the intelligence necessary to defend consumers and businesses against cyberattacks.

A recent FCC notice that proposes to apply old-fashioned telecommunications regulations to the Internet depends on classifying a “transmission component” of broadband Internet service as a “telecommunications service,” which, under the governing statute, must exclude computer processing capabilities as well as any capabilities to store, process or transform information. Yet it is only because of sophisticated computer analysis, information storage, processing and transformation that cyberthreats can be identified and mitigated. Tomorrow’s broadband Internet consumers are likely to require more and more tightly integrated security as threats evolve.

The “Title II” proposal, which appears to have substantial support among FCC commissioners, raises some difficult and complex questions.  If security can’t be included in their broadband service, how and where will consumers obtain security capabilities?  Will broadband providers be allowed to bundle any free security software with the broadband service they offer consumers and businesses?

The Department of Commerce is rightly enquiring into whether businesses and consumers have sufficient incentives today to invest in the right levels of Internet security.  Can it really be in the public interest to shift more of the security burden to consumers to cobble together, maintain and pay separately for their own security solutions?  And won’t this shift make it more likely that those consumers that cite security concerns as a reason not to adopt broadband will continue not to participate in the broadband Internet?

Surely the FCC needs to provide more details and ask more than a single question about security features and spam filtering in a 48-page notice to receive the informed public comment that it needs to understand how this proposed course may affect the security of the Internet today and in the future. The Department of Commerce is investing in a thorough and thoughtful approach to these difficult cybersecurity issues, an approach the FCC would do well to emulate.

FCC Moving the Broadband Goal Posts July 23rd, 2010

A recent report on the state of broadband in America suggests that our nation is behind the curve, according to the Federal Communications Commission. The report’s finding that U.S. broadband is no longer being deployed in a reasonable and timely fashion reverses ten years of precedent.  The FCC’s biannual “Section 706 Report” found that all [their emphasis] Americans do not have access to broadband, newly defined to include only services providing at least 4 megabits per second downstream and 1 megabit per second upstream. Under this new  standard, approximately 5% of the country is now “unserved” by broadband.

USTelecom strongly supports bringing broadband to everyone, but we dispute the FCC’s finding regarding reasonableness and timeliness. Here is why.

First, the FCC raised the number Americans potentially unserved to 24 million from the 14 million it estimated in the National Broadband Plan (NBP).  There was no explanation of the need for this new estimate.  For example, is the methodology that produced the higher number more accurate than the broadband availability model used in the NBP?  Regardless, the population unserved is proportionately a very small but real problem—5% to 8% of the country—which requires narrowly targeted solutions.

Second, the FCC redefined broadband, on the premise that 4/1 mbps is the minimum speed required for high quality video.  It seems reasonable to acknowledge that the old standard of 200 kbps is insufficient for the majority of subscribers. But the new standard based on high quality video capability points up a disturbing tendency among proponents of more regulation—defining competitive availability for the whole range of consumers in terms of a small portion of high end consumers.  As the FCC states, “no more than half of those that purchase high-speed Internet access service actually purchase services capable of delivering 4 Mbps download speeds.”

From an analytical standpoint, we do not want this new definition to result in disjointed data series that render historical analysis impossible.  For example, see the FCC’s recent release of redefined mobile broadband subscriber data without restated historical data.  It would make more sense to track a range of speed tiers rather than redefining broadband to exclude certain services, as FCC Commissioner Meredith Baker suggests.

More important, the tendency to focus on the high end as a gauge for policy understates competition for the mass market, providing a false premise for regulatory intervention.  For example, the NBP projects that in 2012 very high speed cable DOCSIS 3.0 will be available to 90% of the country, and fiber-to-the-home will only be available to 15% of the country. Based on this data, the plan concludes that 75% of the U.S. will have only one choice of very high speed provider.  The statistic has been misused to falsely imply that we are headed to a non-competitive market, illogically turning progress on its head and turning investment in new technologies into a liability.

• Never mind that broadband is a dynamic industry characterized by persistent, if uneven, competitive upgrade cycles—especially in the U.S. where 82% of the country has at least two competitive wired platforms.
• Never mind that 2012 represents a static snapshot in FTTH availability and that FTTH is not the only way to compete with DOCSIS 3.0 (fiber has been driven further into networks and DSL technological capabilities continue to improve).
• Never mind that multiple wireless and satellite networks, covering nearly all of the country, are projected to expand capacity over the next several years.
• Never mind that the great majority of the market at a given point in time will not demand the very highest peak speeds available.
• Finally, never mind that gloomy projections about competition by proponents of greater regulation are (a) circular, given the negative capital investment impact surrounding Title II and net neutrality and (b) self-serving, given the goal to regulate.

FCC Workshop on Special Access Services July 20th, 2010

Yesterday the FCC held a workshop to discuss approaches for evaluating “special access” pricing flexibility rules. Special access services are just one of several types of high capacity dedicated transmission links used to distribute voice and data traffic. These services are sold by wireline, cable and fixed wireless companies directly to businesses and other communications services providers that need to transport large volumes of voice and data traffic.

For some time, the FCC has been gathering input on this issue. Yesterday’s workshop grew out of a suggestion in the National Broadband Plan, which recommended the Commission bring together experts to discuss the analytical framework the FCC should use to assess the effectiveness of its existing special access rules.” The workshop featured presentations from four economists:  Dennis Carlton of Compass Lexecon; William Taylor of NERA Economic Consulting; Bridger Mitchell of Charles River Associates; and Lee Selwyn of Economics and Technology, Inc.

From USTelecom’s viewpoint, high-capacity services are only becoming increasingly competitive, as industry strives to accommodate the considerable growth in demand for high-capacity services. We believe that the FCC, before considering any rule changes, must perform a thorough data collection and analysis to determine the effectiveness of its current rules.  We believe such an analysis will show ample competition in the vast majority of the country.

Watch a replay of the workshop.

Speed Matters — Does Happiness? June 1st, 2010

Most Americans are satisfied with the broadband speed they are getting, says a survey the Federal Communications Commission released today. That’s positive news, but it takes some sleuthing to find it. Buried as the second-to-last paragraph in a news release, readers discover that 91 percent of broadband users actually are “very” or “somewhat” satisfied with the speed they get, according to the survey of 1,742 home broadband users from April 19 to May 2. The survey polled 3,005 Americans in English and Spanish.

The FCC, in a glass half-empty approach, highlighted findings that 80 percent of Americans don’t know what broadband speeds they are getting. Just as the nation’s drivers do not have to be able to tell you exactly how much horsepower their car generates to have a strong opinion about whether their car serves their needs, knowing your broadband “speed” may not matter much to understanding whether your service is good or not. Presumably the FCC is focusing on “speed,” not satisfaction, because this provided a better premise for the commission’s announcement that it plans new studies to measure speeds.

Clearly, the fact that consumers are largely satisfied with their service was an inconvenience. The jarring discrepancy wasn’t lost on the press. A Congress Daily report linked the two findings: “The FCC survey found that 80 percent of Americans do not know the speed of their broadband connections. Despite this, 91 percent of broadband users say they are ‘very’ or ‘somewhat’ satisfied with the speed they get at home.”

To be fair, the point of the release was to announce new studies allowing consumers to compare the speed they get against what broadband providers advertise. That’s reasonable. Consumers should be able to find out if they are getting what they pay for. There are many sites that consumers can use to measure the “speed” of their connection and there are software applications available that will measure speed and usage on a second-by-second basis.  But rather than being obsessed with checking a speed meter, maybe it makes more sense to study whether people are happy with their service. A 91 percent satisfaction rating suggests that most people are.

FCC, Top Executives Discuss Broadband Plan March 23rd, 2010

The FCC will lay out a number of proceedings in a few weeks that spell out how to achieve goals set out in the national broadband plan, said the agency’s broadband team leader Blair Levin. Speaking at a Technology Policy Institute program today, Levin said the agency “early on” concluded that private investment would be a key factor in attempting to achieve universal deployment.  The government is in no position to subsidize the billions it would take to get all Americans connected to high-speed services, he said. But Levin added that the plan is still in the “beta” phase, and there will need to be adjustments in the course of implementing it.

The institute invited several top industry executives and experts to provide views on the plan, which the FCC released last week. Most found things to like, praising the plan’s focus on expanding deployment in hard-to-reach areas, and educating those don’t subscribe to broadband. Some didn’t like the plan’s hint of broad regulation. Verizon Executive Vice President Tom Tauke expressed concern about the plan’s “tone” suggesting there is a major problem the government needs to solve. He and others said the plan’s own data doesn’t support that premise. And AT&T Senior Executive Vice President James Cicconi said the plan’s intent to launch numerous regulatory proceedings could lead to a freezing of investment.

USTelecom CEO Walter McCormick praised the FCC for going to great lengths to gather data “to get a real snapshot of where we are today.” Speaking on a panel that discussed why people don’t subscribe to broadband, McCormick said industry is participating in a number of efforts to teaching people how to use broadband.  The FCC is right to focus on the people who don’t have access to the services, he said.  But industry also has built out broadband networks to just about everywhere where there is a business case.  Everyone agrees reaching the remaining parts of the country will require a substantial investment, he said, so it’s important that the FCC not rule out the possibility of innovative business plans that could help bridge those costs.

Jobs & Innovation on the Line in FCC ‘Open Internet’ Proceeding October 22nd, 2009

Proponents of Regulation Face ‘High Bar’ Demonstrating Public Interest in U.S. Policy Reversal

Today, the Federal Communications Commission held its monthly public meeting in which it voted to proceed with a notice of proposed rulemaking “to preserve the free and open Internet.” The following statement can be attributed to USTelecom President and CEO Walter B. McCormick, Jr.:

“The nation’s broadband service providers fully support the notion of a free and open Internet. While we look forward to constructively participating in what the chairman promises to be a data-driven process, we simply point out the irrefutable fact that all Americans enjoy today a free and open Internet in the absence of more regulation. It is equally true that no industry invests more in the U.S. economy than broadband service providers.  And, no segment of our economy created more jobs last year than the broadband-fueled information, communications and technology sector.

“All sides support an open Internet.  All sides want to see continued investment, job creation and innovation in this vital sector of our economy.  Where we differ is when it comes to whether a greater government role in the day-to-day operations of the Internet will help or hurt this important progress.

“We agree with several Commissioner’s comments that this rulemaking must look carefully across the entire Internet ecosystem, encompassing not only broadband providers, but also applications and content providers.  At the end of the day, ‘neutrality’ must, in fact, be neutral.

“Innovation—both within the network and on the edge—can and does coexist today with a free and open Internet.  Those calling for greater government intervention face a high bar in demonstrating the public interest in reversing a course that has been so successful for consumers, our economy and our national security.  We believe it would be a mistake to replace today’s open and dynamic environment with a government-managed  ‘mother may I’ approach to innovation.”

Washington Post Joins Growing Chorus of Concern on Net Neutrality Regs September 28th, 2009

Add another influential voice to the mounting dissent surrounding Federal Communications Commission Chairman Julius Genachowski’s proposal to dramatically expand and codify so-called net neutrality principles into regulation.

In its editorial this morning, The Washington Post asks the fundamental question at the center of the gathering storm:  “Is this intervention necessary?”

Read the editorial here.

USTelecom Statement on Google Voice Call Blocking September 25th, 2009

Today, AT&T filed a letter with the Federal Communications Commission pointing out that Google Voice is blocking calls to certain numbers that would incur access charges to Google.  Traditional telecom and wireless companies are required by law to connect these calls, despite the exorbitant access charges often associated with them.  The AT&T letter points out the need for a level and pro-investment playing field for all competitors in today’s broadband world.

The following statement is from Walter B. McCormick Jr., President and CEO of USTelecom:

“The hubris of Google’s ‘do as I say, not as I do’ approach to public policy would be laughable if it were not so serious.  In offering voice service, and then engaging in call blocking – effectively assuming the power to decide who its customer can call and what content they can access – the nation’s number one promoter of increased broadband regulation has arrogated to itself freedom from existing telecommunications regulation, a personal exemption from the FCC’s internet principles, and a pass on the public interest in competitive parity. If the FCC’s rules, principles and precedent are to have any meaning, it is imperative that they be applied equally.”