Broadcasting In The Wake Of Comcast

Posted on May 2, 2010 by Lee Petro

The aftershocks of Comcast could reach well beyond broadband and net neutrality

While most attention on the aftermath of the Comcast decision has tended to focus on the decision’s impact on net neutrality and the implementation of the National Broadband Plan (NBP), the seismic wave from Comcast and its aftershocks could reach well beyond those obvious targets. Local TV broadcasters, in particular, might want to pay attention to how Comcast might play out in their corner of the regulatory universe.

 For example, the NBP contemplates that spectrum currently in use by TV stations might be re-purposed for broadband. To wrest that spectrum away from the television operators who now hold it, the Commission has suggested that it might work some kind of deal in which: (a) the spectrum would be “voluntarily” relinquished by the broadcasters; (b) the re-captured spectrum would then be auctioned off; and (c) the broadcaster would be entitled to a portion of the auction proceeds.

But the FCC’s authority to cut this kind of deal in any event is far from clear. While the Commission is unquestionably authorized to conduct spectrum auctions, that authority does not obviously extend to cutting deals to kick-back auction proceeds to private parties. And any hope that such deals might be seen as “ancillary” to other authority is dimmed by Comcast.   That in turn means that the FCC’s ability to secure spectrum commitments from broadcasters is likely diminished. Why, after all, would a broadcaster commit to turning in its spectrum if the FCC is not in a position to guarantee any repayment that might be part of the deal? As a result, the Commission should not expect much enthusiasm from broadcasters unless and until the Commission can demonstrate that it will be able to make good on any payment deals it may try to cut.

Another possible ripple effect of Comcast on the broadcasting terrain: let’s not forget that Comcast, the folks who landed the knock-out punch on the FCC in the eponymous Comcast case, are also the folks who are currently trying to get the FCC to approve a massive merger with NBC Universal. Now that Comcast’s ability to restrict, legally, Internet traffic contrary to the FCC’s preference has been established (thanks to the D.C. Circuit), the FCC (and other governmental authorities) may not be especially gung-ho about giving Comcast even greater control of more media than it already holds. If Comcast’s practice of jiggering with its subscribers’ Internet access is deemed potentially anti-competitive, the Feds might be expected to be reluctant to increase any perceived competitive advantages for Comcast.

Of course, in light of such concerns, the Powers That Be (whether that might be the FCC, DOJ or Congress) might attempt to extract “voluntary” commitments from Comcast and NBC, much as they did in connection with the Sirius/XM merger. Could the Commission then impose conditions that look remarkably like net neutrality requirements – even though the FCC might not have the authority to impose such requirements industry-wide? Conceivably, since the FCC’s clear authority to act on the merger request would arguably provide it the related authority to impose conditions on any grant of that request. Such conditions could have an impact on competition in both the online media and the cable industries, not to mention the broadcast business – in all of which Comcast plays a major role.

On the other hand, even if the Commission were to offer grant of the merger in return for concessions or commitments from Comcast, who’s to say that Comcast would accept the deal? Presumably, Comcast would not do so unless the deal made good business sense.

Another possible impact zone from Comcast: retransmission consent. As has been widely reported, the cable industry has filed a petition for rulemaking seeking overhaul of the current retransmission consent process. Thus far the FCC has appeared to be receptive to the idea. But a large number of fixed broadband service providers are cable companies, and those companies can now restrict internet traffic (thanks to Comcast), giving them a potential competitive advantage. How eager will (or should) the Commission be to give the cable industry a further leg up over competitors in the retrans consent process?

At this point we can only guess about how any or all of this will shake out.  But it is important to recognize that the impact of Comcast is not likely to be limited to issues of net neutrality.  In any event, television broadcasters should keep a wary eye on their own situation.  They may still be looking at a decidedly unattractive future: packed tighter than ever in the broadcast band, stiffed by the FCC on any kick-back payments from spectrum auctions, and losing a steady source of revenue to the network, which just merged with the largest cable company.
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NBP Lift-Off!

Posted on April 21, 2010 by Jeff Gee

FCC launches five – uh, make that six – NBP-related items in one day

If you thought the FCC might have been kidding around when it promised quick action on the National Broadband Plan (NBP) agenda items, the FCC is working hard to move you off that thought. In an impressive display of regulatory shock and awe, the FCC has put a substantial dent in its NBP to-do list by launching six separate proceedings covering five discrete subjects. The items include:

The six items top out at a total of just over 250 pages in all, so you might want to start reading now.  If you just want to get a quick sense of what each involves, you might want to check out the public notices which recap each: Universal Service Fund; Roaming Obligations; Survivability; Cyber Security Certification; and Set-top Boxes.

 Each of the six items invites comments and reply comments, but don’t get your calendars out yet. The comment deadlines won’t be set until the various notices are published in the Federal Register. And to make it even trickier to start planning your early summer get-away, the Commission appears to contemplate an oddly diverse set of deadlines. For example, comments and replies in response to the Set-top Box NOI will be due a scant 30 days and 45 days, respectively, after that notice makes it into the Federal Register.  By contrast, comments/replies in the Cyber Security Certification proceeding won’t be due until 60/120 days after publication. And in between you’ve got the Set-top Box NPRM and USF combo NOI/NPRM (60/90 days for each), and the Survivability NOI and Roaming NPRM (45/75 days for each).

With this barrage – or is it a salvo? – the Commission is clearly signaling its determination to move forward with the ambitious campaign mapped out in the NBP, despite the major questions which loom large in the wake of the FCC’s setback in the Comcast case.  And don’t get comfortable, because these are just the beginning.  The NBP envisions more than 60 proceedings in the months to come.  Stay tuned . . .

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NBP: The FCC Springs Into Action

Posted on April 8, 2010 by Donald Evans

Implementation schedule for FCC actions released

The FCC has released its tentative calendar year 2010 schedule for implementing those aspects of the National Broadband Plan (NBP) that fall under its jurisdiction. We had complained when the NBP first came out that the FCC could usefully have identified those goals that it could achieve on its own and those objectives that require legislation or action by other administrative agencies to accomplish.  Now the FCC has thoughtfully and in detail resolved our complaint. 

The “2010 Broadband Action Agenda” lists more than 60 different rulemakings or other agency actions which are or will soon be in the pipeline in furtherance of the Broadband Plan.   The items are helpfully color-coded and related by cool icons to the FCC office that is responsible for the item.   We especially appreciate the blank box that sits next to each item waiting expectantly to be “checked off” when the item is completed. (For a less glitzy but more colorful PDF version of the agenda, click here.)

While it is wonderful to see the FCC moving aggressively to issue orders and initiate proceedings in furtherance of its Plan, we need to remind ourselves that launching a Notice of Proposed Rulemaking (NPRM) is a far cry from actually reaching a final decision. Some of the rulemakings on the agenda, such as USF Reform and Intercarrier Compensation, have stumped the FCC for nearly a decade. There is no reason to be particularly hopeful that placing them on an agenda – even a color-coded one with actual calendar quarters on it – will cause them to be resolved quickly.  Indeed, the very breadth of the NBP and the major across-the-board restructuring of the telecommunications landscape it contemplates may require starting over from scratch on some industry issues that have proven remarkably intractable in the past.  

It’s especially disheartening to see that some of the most difficult issues will not even be teed up as NPRMs until the 4th quarter of this year.   If it takes that long to get an NPRM out with a plan already in place to guide you, how much longer will it take to arrive at an actual final decision? Just checking the block on issuance of the NPRM may make people feel good, but nothing will have been accomplished.

Further, the Agenda comes with its own fine-print footnote that reads like a disclaimer for some new medicine. The footnote reminds us that the Agenda reflects “only proposed FCC actions, not those of other government agencies” – a major carve-out, given the significant elements of the NBP which are controlled completely by other government agencies. The footnote also cautions that the timelines described in the Agenda are merely “a series of targets that may be adjusted to respond to changing conditions as appropriate.” It goes on from there, but you get the picture.

So we wish the Commission Godspeed as it embarks on its implementation plan, and we earnestly hope that the effort does not get bogged down in the usual administrative inertia that so often sinks bold new initiatives in this town.

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NBP And Energy: There's A Great Big Beautiful Tomorrow

Posted on March 27, 2010 by Peter Tannenwald

FCC envisions broadband-based "Smart Grid" to facilitate energy conservation

Can’t make it out to Disneyland for the 2010 version of “Walt Disney’s Carousel of Progress”? No problem. Just take a quick gander at Chapter 12 of the National Broadband Plan (NBP). A Jetsons-like future is, apparently, just around the corner for all of us.

The NBP, of course, is touted as promoting a wide range of society-improving interpersonal communication uses – like telemedicine and long-distance education. But the elaborate broadband infrastructure necessary for those communications could also be harnessed with innovative technology to enhance energy efficiency and safe transportation. Hence, the “Smart Grid”.

In the NBP’s vision, a national broadband “Smart Grid” would connect to most energy-consuming devices. It would enable the reduction, or at least evening out, of their consumption, and inform consumers of the extent, and cost, of their energy use (thus, ideally, encouraging them to stop being energy hogs).

Smart homes and buildings are the starting point – buildings equipped with devices that provide their occupants with information about their energy consumption, allowing them to make real-time adjustments in consumption patterns. 

Traditionally, consumers have received information about energy consumption only after-the-fact, when they receive their monthly utility bills. The FCC envisions systems that could monitor and report on energy use on a real-time basis, with pricing information included, thereby enabling consumers to avoid or to reduce consumption during peak demand periods. Since a significant portion of energy production plant is needed only during peak hours, less plant would be needed if peaks were leveled out. For example, if the power grid were under strain at a particular time, and you happened to be cooling your home enough to wear a sweater, your TV might flash dollar signs before your eyes to warn you that it is time to let the place warm up a little if you don’t want a rude surprise when your electric bill comes. Or you might receive a warning from your smartphone, leading you to change your thermostat using – yes – your smartphone, even if that thermostat is in your home in Washington and you happen to be surfing in California.

Appliances are now being developed that can connect to a home network and gather and report information about community-wide power demand. Those appliances might discourage operation during peak periods, by sounding a warning or even refusing to function. Appliances with time flexibility might include washers and dryers and charging stations for future electric vehicles, which will tax the power grid significantly if charging is not confined to overnight hours. One manufacturer claims that all of its appliances will connect to the Smart Grid by 2015.

Telecommunications network sharing should be encouraged, the FCC says, to avoid construction and operation of duplicative energy-consuming systems. Sharing between public safety and commercial entities should also be encouraged. The FCC suggests that studies be undertaken of the reliability and resiliency of commercial broadband networks and recommends that the networks be hardened so that they are less likely to fail during a storm or other emergency. Cable TV, for example, is known in many areas as one of the earliest systems to go out during a storm. Obviously, utilities don’t want to rely on systems which fail when most needed. The more reliable commercial networks become, the more likely public safety agencies and utilities will become interested in sharing those networks. The FCC also suggests that privately owned utilities be qualified to share public safety wireless networks. Today, they usually do not qualify because they are not government entities.

Financial incentives are suggested to encourage utilities in turn to provide incentives to their customers to conserve energy. These incentives would be different from today’s incentives, which encourage building facilities and selling more power, especially for utilities which have a guaranteed rate of return on their plant investment.  The FCC suggests that utilities be rewarded for investing in ways to reduce consumption, not just investing in more generating plants.

Standardization is an important element in encouraging both the use and the usefulness of the Smart Grid. The FCC suggests mandatory open and interoperable standards, along with standardized access policies which would accord all customers access to the Smart Grid – and, thus, the ability to acquire and use information to reduce consumption wherever they may be physically located. The FCC suggests that if states do not require utilities to provide consumers with access to energy consumption information within the next 18 months, the federal government should step in with national pre-emptive legislation.

The NBP also encourages more efficient design and operation of telecommunications networks themselves, including deploying virtual servers which allow a single server to perform the function of multiple servers, as well as using energy-efficient components. 

Moving to the transportation side, the FCC extols the energy savings which would accrue if everyone had a communications link that knew where traffic were congested and suggested alternate routes in real time. So much for listening to your favorite radio station traffic personality.  And finally, a nod of the head is given to collision avoidance technologies, which require spectrum to operate but do not require a link to the Smart Grid except to report when they have failed and the vehicle has been smashed.

The FCC’s aspirations are ambitious. But few people dispute that the nation consumes more energy than it need consume, and most agree that we would be better off if we were less dependent on foreign oil. Thus, moving in the directions the FCC suggests should result in cleaner air and more economic freedom for the nation. There are obvious “Big Brother” issues with amassing and distributing too much information, but the FCC does recognize privacy concerns and recommends that while consumers should have access to full information about their consumption patterns, they should also be able to control who else has access to their individualized data.

To paraphrase the classic theme song of Walt Disney’s Carousel of Progress:

There’s a great big beautiful tomorrow, And tomorrow’s just an NBP away.

[Blogmeister note: This is one in a series of posts describing the range of regulatory and societal areas in which the National Broadband Plan could, and likely will, affect us all. Click here to find other posts in this series.]
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NBP And Infrastructure: Lots Of Questions, Not So Many Answers

Posted on March 25, 2010 by Tom Dougherty

FCC Plan offers bold suggestions, few details

The FCC's National Broadband Plan (NBP) correctly recognizes that improved broadband to the end-user cannot be achieved without significant changes to certain critical “behind the scenes” elements of the nation’s broadband “ecosystem” – including the resale of facilities to competitors; the cost of “backhaul” (i.e., the radio or wired paths between and among the cell towers and the cellular switching office); availability of “data roaming” (i.e., the ability of a mobile wireless user to receive and transmit data traffic when outside of the data service coverage of its own carrier); and transition of the telephone network away from copper to fiber. While short on details, the NBP (in particular the section titled “Competition in Wholesale Broadband Markets”, in the “Broadband Competition and Innovation Policy” chapter of the NBP) suggests a return to regulatory schemes that, in addition to being troublesome and cumbersome, simply haven’t ever worked in the past.  

Nevertheless, no one can accuse this FCC of lacking boldness.

Resale. Historically, the FCC has attempted to use competition to regulate markets in two ways: (a) by establishing a regulatory environment conducive to competitors who own their own facilities (so-called “facilities-based competition”); or (b) by forcing facilities-based carriers to make their facilities available to non-facilities-based companies at rates that will allow the latter to earn a reasonable profit (a “resale market” approach).  

Facilities-based competition tends to promote a wider diversity of consumer choices, greater responsiveness (in time and substance) to consumer desires, and lower service rates – while avoiding the various downsides of direct regulation. Still, the Commission sees a role for the resale market approach in promoting broadband because, in the agency’s view, “well-functioning wholesale markets can help foster retail competition”, particularly in view of both (a) the economies of scale, scope and density of telecom networks, and (b) the economic and practical infeasibility of building out competitive facilities in all geographic areas.

This may ultimately prove, like third marriages, a triumph of hope over experience.

The history of the resale approach is long and not especially happy. Beginning in the 1970s, the FCC embraced that approach, apparently convinced that forcing incumbent telcom companies to resell to competitors would serve as an effective alternative to rate and service regulation.  Resale was in such vogue that Congress incorporated it as a central feature of the competitive policies of the Telecom Act of 1996. (which relied upon the resale of network elements by incumbent telcos (ILECs) to competitive carriers (CLECs) at below-cost prices.)

Many, perhaps most, observers would agree that the government’s efforts along those lines have failed. Indeed, over the last 10 years the FCC itself has quietly, and gradually, dismantled the ILEC-to-CLEC resale program. For example, the FCC ended the right of resellers like Covad to gain unbundled access to the high frequency portion of the subscriber access line (that is, the twisted copper pair running from the telco switching office to your home), thus spelling the end to competition in the provision of Internet access via the subscriber access line (xDSL). While dismantling the resale regime, the FCC pursued a “hands-off” approach to broadband regulation.

But in the NBP the FCC now wants to resurrect its resale policies for broadband providers. Recognizing that it lacks coherent and tested resale policies geared to today’s IP world, the FCC acknowledges that careful evaluation of the data and the many complex related issues will be necessary. The Commission also admits that the pursuit of other policy goals, such as retiring the copper plant used for over 100 years by telcos, cannot be ignored in the analysis. So resuscitating the resale market approach for broadband will require consideration of a range of difficult issues over and above the fact that the resale approach historically hasn’t worked – making an already complex method of promoting competition even more difficult to implement. The FCC surely recognizes that there are legal and political tensions inherent in restoring resale as a competitive tool after having largely abandoned it.

Backhaul and other special access services. Wireless carriers need to connect their various facilities (cell sites, switching and router systems). For that purpose they use either microwave radio systems or LEC facilities. The latter are now referred to as “special access” services. (Think, for example, of a T-1 or an OC-3 line that is always on and not shared with other users.) But the need for wireless backhaul is old news – why should it be an NBP issue now?

Wireless carriers complain that the FCC’s microwave radio rules make radio-based backhaul too expensive. But the wireless carriers complain that the alternative – i.e., special access services – is also prohibitively expensive because the FCC’s deregulation (or non-regulation) of such services has allowed the incumbent, often monopolistic, telcos to charge sky-high rents for backhaul services. And exacerbating the burden of this cost factor is the brutal fact of increasing demand. With more and more cell phones using more broadband apps requiring higher data rates, the amount of wireless traffic is skyrocketing, which necessarily leads to dramatically increased backhaul volume – for which those sky-high rates will be charged, making the cost of backhaul an even larger issue.  This same complaint is made by (a) businesses who rely on special access services to get to the Internet and (b) Internet access providers who use special access services to connect their points of presence or extend their services to areas they cannot otherwise serve.

Given the FCC’s lackluster history with resale, we are not surprised that the NBP makes no concrete recommendations for regulating the special access through resale.    Instead, in a throwback to days of yesteryear, the FCC appears to be proposing old-style rate regulation. That’s right: tariffs, not competition.

Wireless data roaming. By wireless data, the FCC is referring to the use of the cell phone to access the Internet and use data applications – oh, and voice too, as it's all data now. The FCC has for years required wireless carriers to allow the customers of other carriers to roam on their networks (although that rule is limited to voice traffic). But while the FCC has been happy to impose that requirement, it has been loathe to regulate roaming rates charged between carriers (even though the FCC has the authority to do so). The FCC’s regulatory reluctance has opened a path for avoiding the roaming access mandate: if Carrier A does not want to let Carrier B’s subscribers roam on Carrier A’s system, Carrier A simply imposes rates that carrier B can’t afford to pay.

While the FCC seems more than happy to jump back into rate regulation of special access, it is still struggling with how to ensure universal data roaming on reasonable terms – a goal it never quite achieved with voice roaming. Perhaps that’s why the NBP proposes to encourage voluntary roaming agreements among carriers while continuing to study the issue of whether to make data roaming access mandatory. It makes no concrete recommendations for regulation.

Transition from switched-based services to IP-based services. We are all familiar with regular telephone service. It is “switched”, meaning that a whole circuit is created for each call, and that call and that circuit are created by the switching process. The two common forms of call switching are analog and time division multiple access (TDMA). We are all familiar with voice over IP service (VoIP). This service uses IP and session initiated protocol, rather than switching, to move, send and receive voice calls.

Recently, AT&T proposed to transition from the twisted pair and circuit switched technology to fiber and IP technology. The FCC supports that transition, seeing the greater public and consumer benefits that will arise when we rely upon fiber rather than the twisted pair.

But the transition will cause dislocations, particularly to DSL providers (like Covad) who rely on access to the high frequency portion of the twisted pair. The NBP concedes that using copper to provide DSL can be beneficial. But the NBP appears to see a greater good in “copper retirement”, i.e., transitioning from the twisted pair to fiber-to-premises. While the NBP does not provide any final answer, it’s probably safe to say that copper-reliant competitive DSL providers should count their days.

Interconnection also is a problem. The FCC sees a need to clarify that the Telecom Act of 1996 requires rural ILECs to interconnect with CLECs. The Commission also plans to study the interconnection challenges and opportunities that the Nation will face as we transition to all IP networks.

[Blogmeister note: This is one in a series of posts describing the range of regulatory and societal areas in which the National Broadband Plan could, and likely will, affect us all. Click here to find other posts in this series.]
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NBP And Broadband Spectrum: Desperately Seeking 500 MHz

Posted on March 24, 2010 by Mitchell Lazarus

Candidate sources include TV and satellite frequencies

Everybody reading this on a wireless device, raise your hand. We thought so! Our readers are unusually up to date. Those old-style Ethernet cables into the wall are so Twentieth Century.

The FCC has noticed all of us using our phones like little laptops and TVs, and our wireless laptops for everything else we do online. All of that data has to ride on radio waves. Other things being equal, more data will require more radio spectrum. As part of its ambitious National Broadband Plan, the FCC is looking to find some.

The FCC will have to look hard, because we are going to need a lot of spectrum. Recent increases in demand are impressive. AT&T, with its ubiquitous iPhones, shows an annual growth in service of 268%. The other major carriers are close behind. Analysts expect continued sharp growth over the next several years.

What is driving the demand? The FCC politely calls it “users engag[ing] with data-intensive social networking applications and user-generated video content.” Judging from the people at Starbucks, we think it’s mostly Facebook videos of college kids horsing around. But if people are willing to pay for it, the carriers will try to deliver, and the FCC will work on helping them find enough spectrum.

The goal is 500 MHz, newly available, of which 300 MHz should be between 225 MHz and 3.7 GHz. The FCC does not explain these boundaries, but we will. Lower frequencies need bigger antennas; 225 MHz is around the lower limit for a hand-held device. And frequencies that are too high do not propagate well; anything much above 3.7 GHz is not practical for mobile applications.

The most-discussed proposal – and most reviled, in some circles – would convert 120 MHz of TV broadcast spectrum, 20 channels’ worth, to wireless broadband applications. After all, the FCC may have reasoned, auctioning just 52 MHz of the former 700 MHz TV spectrum brought in $19.6 billion. So let’s do it again, but more so. Only 10% of households still depend on over-the-air TV, so where’s the problem – especially since the broadcasters can all stay in business, once we arrange for them to share whatever channels remain. And those who give up spectrum voluntarily will be in for a cut of the auction revenues. Everybody wins, right?

Such is the gist of the FCC’s thinking.

Another 90 MHz would come from mobile satellite spectrum. Those licensees can offer terrestrial cellphone-like service on their frequencies, so long as they also provide service through satellites. The FCC could improve access to their spectrum by easing the satellite requirements. The traditional wireless providers, which have opposed similar moves in the past, might come around if they are allowed to participate in offering service.

Where it cannot displace incumbents by offering money (see broadcast spectrum, above), the FCC plans to try the opposite tactic: taking money away. The idea is to charge a “spectrum fee” for shared frequencies that are used for a single purpose. Those would include much two-way radio, most fixed microwave, and possibly satellite services. One proposal is to start with a low fee and gradually raise it until the fee is unaffordable for present uses, thus encouraging licensees to shift to other, presumably more valuable uses. No details on how this would work. Government spectrum users would be subject to a similar fee; no details on that, either. 

Nor has the FCC overlooked unlicensed applications, which now include Wi-Fi, Bluetooth, and a vast array of consumer, commercial, and industrial equipment. Goals include “free[ing] up a new, contiguous nationwide band” for unlicensed use – assuming such a swath can be found somewhere; encouraging spectrum-agile radios that can use temporarily empty spectrum; and finishing the long-running “white space” proceeding on unlicensed use of vacant TV spectrum (which may be in short supply, if the FCC auctions off large numbers of TV channels).

Finally, the FCC acknowledges the need for more “backhaul” spectrum to move broadband data between cell towers and network facilities. (Read more about that here.) It proposes some technical rule fixes that might help providers to backhaul services more efficiently.

The FCC’s calling this document a National Broadband “Plan” is a bit of stretch. On the spectrum issues, at least, it is more of a rough outline of how to develop a plan. The proposals are missing key details. Many will take years to work through; spectrum allocation proceedings are typically among the very slowest at the FCC. Some key steps will require action by Congress, which rarely comes swiftly.

We’ll check back on the outcomes later in the decade – with any luck, on our ultra-high-speed handheld using newly available spectrum. Or, if all else fails, we can always plug the Ethernet wire back in.

[Blogmeister note: This is one in a series of posts describing the range of regulatory and societal areas in which the National Broadband Plan could, and likely will, affect us all. Click here to find other posts in this series.]
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NBP and Education: Broadband Goes To School

Posted on March 22, 2010 by Jeff Gee

FCC encourages use of broadband by schools and funding of broadband by government.

Among the array of ills which the FCC’s National Broadband Plan (NBP) addresses is the insufficiency of broadband in our schools.  The NBP therefore devotes considerable attention to Education. It begins by noting studies showing American students lagging far behind their counterparts in other advanced nations in math and science. The NBP’s solution, unsurprisingly, is more broadband. The NBP promotes the use of broadband-enabled resources for students, teachers and educational intuitions and proposes increased investment in broadband infrastructure. Specifically, the NBP recommends a collection of initiatives designed to: (1) support and promote online learning; (2) unlock the value of data and improve transparency; and (3) modernize educational broadband infrastructure.

The NBP strongly embraces online learning tools as both an in-class resource and a means of extending learning beyond the classroom. To promote online learning, the NBP’s recommendations include creating and implementing new standards and formats so that educational content can be more easily located and shared by educators. The plan also urges Congress to consider certain changes to copyright law to “encourage copyright holders to grant educational digital rights of use.” 

On the state and local level, the NBP recommends changes to accreditation programs to allow for more online instruction to count towards primary, secondary and post-secondary programs – allowing students in rural high schools, for instance, to take online AP courses from larger schools or even schools from other states. State and local school systems are also encouraged to include more “digital literacy” elements in their curricula. Finally, the NBP recommends increased funding from the U.S. Department of Education (DOE) and other federal agencies for research and development of online learning systems and teacher training in digital literacy.

The NBP notes that not only can information technology improve education but information about education can improve education. In that vein, it urges new and improved measures for capturing, storing and utilizing information about students, teachers, schools and educational resources. The NBP therefore recommends that DOE encourage the adoption of standards for electronic educational records, including standards for information sharing, privacy and data security. The NBP also recommends greater financial data transparency, with the goal of making educational spending and related data more publicly available to encourage analysis that may improve educational policy. 

Finally, the NBP includes a series of recommendations, many targeting the use of E-rate funding, to increase spending on educational broadband infrastructure. The E-rate program (or the Schools and Libraries universal service support program) allows schools and libraries to receive telecommunications services at discounted rates. Recommendations include:

  • Removing barriers to off-hours community use of E-rate funded resources.
  • Prioritizing E-rate support for broadband connectivity for schools and libraries.
  • Providing E-rate support for internal connections to schools and libraries.
  • Greater spending flexibility for E-rate applicants so that applicants can seek the lowest cost solutions.
  • Raising the cap on E-rate funding to account for inflation.
  • Streamlining the E-rate application process.
  • Collecting and publishing more information on E-rate spending.
  • Encouraging more cost-efficient broadband expenditures through the E-rate program by encouraging increased information sharing and collaboration among federal, state and local agencies.
  • Lowering barriers to E-rate eligibility for Tribal libraries.
  • Awarding E-rate funding to programs that incorporate broadband connectivity into the educational experience.
  • Using E-rate funding to support wireless connectivity to portable learning devices.
  • Congressional allocation of funds to provide and maintain broadband connections to public community colleges.

As with all elements of the NBP, the plan’s recommendations on education may see many changes as they proceed through the various rulemaking and legislative processes. Indeed, this may be even more true for education, which has a long history of local control and local policy taking precedence over federal plans and proposals.

[Blogmeister note: This is one in a series of posts describing the range of regulatory and societal areas in which the National Broadband Plan could, and likely will, affect us all. Click here to find other posts in this series.]
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The National Broadband Plan: An Overview

Posted on March 21, 2010 by Donald Evans

The FCC's much ballyhooed National Broadband Plan (NBP) was finally announced on March 16 after weeks of titillating leaks from the Commissioners and staff about what was in the plan. By any measure, the NBP is an ambitious and far-reaching initiative which places the advent of broadband somewhere between the invention of fire and the Second Coming on the scale of human historical importance. With the postings immediately below, we start a series of blogs on various aspects of American life which the FCC expects will be improved by broadband access.  (Check back for additional such posts in the future.)   With Commissioner Tate's departure from the Commission, there is, sadly, no analysis of how broadband can fight obesity, but that is about the only facet of life that is not potentially touched by broadband.   We address the various thematic elements of the Plan with a view toward assessing where there may be risks and opportunities for the constituencies involved.    

To be sure, the NBP was an enormous undertaking, and the FCC is justly to be commended for completing  it in record time – to the extent it has not already repeatedly commended itself.   The NBP makes findings and bold recommendations in such areas as jobs, telemedicine, healthcare, energy, public policy, and other areas of commerce that will be affected by broadband – with telecommunications being a means to those ends.   While this was all part of the FCC's broad commission from Congress, we and the Commission are now left to sort out how these worthy goals are to be accomplished.  

The NBP is not a proposal per se. It is not even a blueprint.   It is more of a "things to do" list. Scores of actual notices of proposed rulemaking are in the works to implement certain aspects of the plan are that are within the Commission's jurisdiction.   But many important aspects of the plan require new legislation to change existing law, action by other independent states or federal agencies, or even new treaties with foreign countries.   The FCC can only advise as to those actions. In this respect, it would have been very useful for the Commission to explicitly identify those elements which it plans to implement on its own authority and those which require action by others. An undertaking of this magnitude requires a clear division of labor, with all parties having clear marching orders. If the NBP is to have as dramatic an impact as it could, there must be buy-in to the Plan by a broad range of regulators and legislators.   Unfortunately, the Plan is a stirring call to action on pages 1-7, but by page 338, the reader is less likely to be aroused than to be asleep.

None of this is to disparage the Plan. It is full of useful insights and information, and we recommend it to everyone. We also recommend that interested readers review the topical treatments posted below.

[Blogmeister note: This is one in a series of posts describing the range of regulatory and societal areas in which the National Broadband Plan could, and likely will, affect us all. Click here to find other posts in this series.]

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NBP And Health Care: The FCC Plays Doctor

Posted on March 21, 2010 by Christine E. Goepp

Need a comprehensive approach to broadband-based health care? Take two aspirin and call the FCC, or Congress, or the FDA, or HHS, or the States, or . . .

In the health care chapter of its National Broadband Plan (“NBP”), the FCC envisions nationwide availability and use of electronically gathered, exchanged, and archived medical information to improve individual and public health care. Getting there from here (noting that the United States is at the back of the pack within the developed world when it comes to electronic health care) will require a vast, coordinated effort on the part of many different players. Looking at the big picture, the NBP identifies three major gaps:  adoption, information utilization, and connectivity. It goes on to formulate a comprehensive plan to fix all three before apparently realizing that the FCC only has jurisdiction over one – connectivity.  Undeterred, the NBP creates a “honey do” list for Congress, the States, the Secretary of Health and Human Services, the Centers for Medicare & Medicaid Services, the Food and Drug Administration, and the Office of the National Coordinator for Health Information Technology.

Having put the rest of the government on the right track, the FCC also sets itself a few tasks:

  • Establish Health Care Broadband Access and Infrastructure Funds within the Rural Health Care Program. The FCC proposes to establish two health care broadband funds, a “Health Care Broadband Access Fund” and a “Health Care Broadband Infrastructure Fund.” The Health Care Broadband Access Fund would replace the existing Internet Access Fund, supporting bundles of services for eligible health care providers. It would be available to both rural and urban health care providers, based on need.  The Health Care Broadband Infrastructure Fund would subsidize network deployment to health care facilities where existing networks are insufficient. 
  • Allow broader participation in the Rural Health Care Program. The FCC plans to authorize participation in both funds by long-term care facilities, off-site administrative offices, data centers and other similar locations. To further expand the reach of the programs, the FCC recommends that Congress make funding accessible to private for-profit institutions that serve particularly vulnerable populations. The FCC also proposes to increase participation by increasing the amount of support and simplifying the application process.
  • Establish outcome-based performance measures.  To protect against fraud, waste, and abuse, the FCC proposes that participating institutions will have to meet outcome-based performance measures to qualify for the above funding, on the model of Health and Human Services’ “meaningful use” criteria.  
  • Publish a biennial Health Care Broadband Status Report. This report will discuss the state of health care broadband connectivity, review industry trends, describe government programs and make reform recommendations. The FCC will analyze the progress of its own programs and, we hypothesize, give Congress, the States, and other federal agencies letter grades for performance and effort.
  • Collaborate with the Food and Drug Administration on regulation for medical devices. The FCC seeks to address and clarify the regulatory approach in areas where communications and medicine converge, such as medical devices that use radio frequencies. Such devices might include wearable sensors for monitoring a patient or smartphone applications that give fetal heartbeat and contraction information to an obstetrician. The FCC proposes, within the 120 days following release of the NBP, to seek formal public input and conduct – wait for it – workshops.

In a similar vein, on Friday, March 19, 2010, the Rural Utilities Service of the Department of Agriculture released a Notice of Funds Availability and Grant Application Deadlines for its annual Distance Learning and Telemedicine grant program application window.  This program primarily funds end-user equipment used for distance learning and telemedicine, such as video conferencing or teleradiology equipment. Therefore, in NBP terms, it addresses the adoption gap.  (The deadline for applications for funding from this NOFA is May 18, 2010.)

[Blogmeister note: This is one in a series of posts describing the range of regulatory and societal areas in which the National Broadband Plan could, and likely will, affect us all. Click here to find other posts in this series.]

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NBP and Public Safety: Revamping the Public-Private Partnership

Posted on March 21, 2010 by Robert M. Gurss

FCC vision stops short of specific reallocation of D Block for public safety broadband use

The National Broadband Plan (NBP) suggests some bold steps to develop a nationwide public safety broadband network. These include new federal grant programs, roaming and priority access on commercial broadband networks to add capacity, a common technology standard, a new federal office within the FCC to address interoperability issues, and incentives for public-private partnerships. However, to the great disappointment of those who have asked Congress to reallocate the 700 MHz D Block for public safety broadband use, the NBP suggests that the D Block auction proceed as required under current law.

The NBP does not recommend any fundamental changes to the current 10 MHz of spectrum in the 700 MHz band already allocated for public safety broadband. However, national public safety organizations and others have argued that additional spectrum (the adjacent D Block currently slated for auction) will also be needed to accommodate future public safety requirements, especially once first responders have the capability to stream live video to and from the field. The NBP suggests instead that public safety have priority access to commercial spectrum when dedicated public safety spectrum is unavailable, for example during a major emergency.

To make priority access and roaming work, the NBP recommends that the Commission mandate use of LTE as the broadband standard for both the D block and the adjacent public safety spectrum (LTE has already been selected by other 700 MHz commercial licensees such as Verizon and AT&T). This will allow devices to roam across the band and, pursuant to rules yet to be proposed, provide the mechanisms for priority access to be implemented. The big question for public safety, however, is whether commercial licensees would be willing to provide first responder agencies with seamless priority access to their networks, potentially disrupting (or at least slowing) their commercial customers’ communications. The NBP does propose that commercial providers be allowed to charge public safety for priority access, and some FCC staff have suggested that charges be limited to something like a “most favored customer” rate.

The federal grant programs are intended in part to provide funding for the deployment of the dedicated public safety spectrum, based on assumptions that existing public safety land mobile radio transmitter sites and, through partnership agreements, existing commercial cellular sites are used for the build-out.   Federal grants could also be used by public safety entities to “harden” shared commercial sites to meet public safety requirements (e.g., to add back-up power and reinforced towers). Part of the money for these grants could come from new commercial broadband fees proposed in the NBP, similar to the Universal Service Fund.

Tying all of this together will be the Emergency Response Interoperability Center (dubbed “ERIC”) that will reside with the FCC’s Public Safety & Homeland Security Bureau, but will also have input from DHS and other federal agencies. There will be some type of advisory body to ERIC consisting of public safety representatives, though its composition and exact role are yet to be defined. Similarly, the NBP does not address how ERIC will interface with the Public Safety Spectrum Trust, which holds the national license for dedicated public safety broadband spectrum.

Finally, the NBP contemplates that the FCC will soon address long-standing petitions for waivers from various state and local governments seeking authority for “early” deployments of 700 MHz public safety broadband systems. On March 17, the FCC issued a Public Notice seeking comment on a set of recommendations as to how to maintain interoperability among those systems and the yet-to-be deployed national broadband network.

As with other parts of the NBP, the public safety issues have already generated debate and will inevitably lead to contentious rulemaking proceedings and perhaps legislation in the months to come.

[Blogmeister note: This is one in a series of posts describing the range of regulatory and societal areas in which the National Broadband Plan could, and likely will, affect us all. Click here to find other posts in this series.]

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NBP And Privacy: Whose Job Is It Anyway?

Posted on March 21, 2010 by Davina Sashkin

NBP identifies on-line privacy as important – but questions abound as to what steps to take and who to take them

The FCC’s National Broadband Plan calls for the extension of broadband into virtually every facet of American life.  While ubiquitous connectivity has many benefits, it also raises questions about how to maintain the privacy of those who enter this brave new world.   The FCC astutely recognized that people’s concerns in this regard could be a significant barrier to adoption and utilization of on-line systems, and it has therefore offered some recommendations on how to create an on-line environment which will provide more consumer protections. But lest you think the FCC has suddenly gone soft and consumer-oriented, the National Broadband Plan (NBP) recommendations for on-line privacy place a hefty emphasis on the need to encourage commercial services which harness “digital identities” to provide customized services (and make a lot of money). These seemingly contradictory goals actually serve the same common purpose, according to the plan: firms with greater access to greater amounts of personal information can offer better targeted services, which in turn increase consumer use and utility.

So how do we reconcile these apparent cross-purposes to reach the FCC’s goal? Generally, the theme seems to hinge on two notions: (1) ensure competition and innovation in the data-collection and data-mining industry, and (2) ensure that individuals can manage their own “digital identities”.

Noting that the “existing regulatory frameworks provide only a partial solution to consumer concern and consist of a patchwork of potentially confusing regulations”, the NBP suggests, but does not outright recommend, that someone (Congress? It is unclear.) should sort out and clarify the roles of the FTC and FCC with respect to on-line privacy.  In a side-bar, the FCC tiptoes around asking Congress to help, but suggests that maybe the legislative branch ought to look into revision of the Privacy Act to, at the very least, grant consumers more control over their personal data.

Whichever branch of government or executive agency actually acts, the FCC makes recommendation is in the following areas:

Federal Framework – First, the FCC calls for laws or regulations that more specifically address the obligations data-collection and data-mining firms have to consumers with respect to use, sharing, collection, and storage of personal data. 

Second, the FCC thinks Congress should help develop trusted “identity providers” to assist consumers in managing their data. Apparently the FCC believes that Congress is the best vehicle for adopting a regime in which safe harbor provisions, guidelines and audits could permit companies to become “trusted” safe-guarders of personal information. The FCC feels that Congress should also ensure that such companies can get insurance for their trouble.

Finally, the FCC recommends that it work with the FTC to develop principles to require consent before broadband service providers share certain personal data with third parties. Why this concept falls under the rubric of “principles” rather than “rules” is not explained, nor are potential enforceability issues.

Identity Theft and Fraud – Given that the FTC is mandated by Congress to act as the identity theft complaint clearinghouse and consumer guidance counselor, the FCC is all too happy to let the FTC continue to bear that burden.  The NBP does recommend some changes: first, the FTC should be given additional resources to battle identity theft and fraud.  These efforts should include amping-up OnGuard Online (an FTC-administered website that provides practical tips to consumers on internet privacy), maintenance of a database sorting out which agency is responsible for what when it comes to consumer protection on-line (back to that hot potato problem), and greater education and outreach.  Finally, the FCC recommends that the FTC coordinate more closely with the national security apparatus.

Child Protection – Citing the lesson that the best way to make swimming pools less dangerous for children is to teach children how to swim, the FCC recommends that the federal government (presumably the White House) create an interagency working group to coordinate child on-line safety and literacy efforts, and to spearhead a national education campaign.

 [Blogmeister note: This is one in a series of posts describing the range of regulatory and societal areas in which the National Broadband Plan could, and likely will, affect us all. Click here to find other posts in this series.]

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NBP, USF and Intercarrier Compensation: Altering The Course Of The Money Flow

Posted on March 21, 2010 by Paul J. Feldman

NBP envisions overhaul of compensation/distribution schemes to fund $24 billion to close broadband “gap”

One of the problems which has vexed the FCC for more than a decade is how to adapt the Universal Service Fund (USF) and Inter-Carrier Compensation (ICC) regime to the world of the internet.  The USF and ICC were 20th Century constructs which patched up subsidy and traffic exchange problems arising from the AT&T break-up.  The need for reform in these areas has been stymied by the inability of policy-makers to resolve the competing, but more or less legitimate, demands of all the players.  The advent of broadband offers the FCC an opportunity to break the logjam in the context of a migration to all-digital, all-IP networks.

In this cause, The FCC’s ambitious National Broadband Plan (NBP) to facilitate universal access to broadband is inspiring, but as Rod Tidwell and Jerry McGuire (portrayed by Cuba Gooding, Jr. and Tom Cruise, respectively) famously insisted: “Show me the money!” The NBP asserts that it will cost $24 billion to close the “broadband availability gap” and provide the targeted level of affordable broadband service to currently unserved areas.

Where will this money come from?

The FCC proposes to transform and re-purpose the major source of funding currently used to facilitate the provision of telephony in unserved areas, i.e., the USF, into a new Connect America Fund (CAF) to facilitate provision of broadband services. And because, for historical reasons, the USF programs are deeply connected to the way that telecommunications carriers make payments to each other for carrying telephone traffic, the NBP also proposes revisions to the ICC system. With broad proposals to “comprehensively reform” the complex mechanisms through which billions of dollars per year are collected and disbursed, revisions to USF/ICC will be a hotly contested process that will raise some difficult questions.

Currently, three out of the four federal USF programs are not designed to support broadband services directly, though some carriers that receive USF use that funding to construct facilities that can be used for broadband as well as tradition voice services.  In addition, the largest of the USF programs, the High Cost Fund (HCF), supports only certain components of a network, such as wires and switching equipment, but not other components necessary for broadband. Thus, rather than “tweaking” the existing USF programs, the NBP proposes that the FCC pull $15 billion out of the HCF over the next decade and re-purpose that money into the CAF to facilitate (wireline) broadband development. 

In addition, the FCC would create a Mobility Fund to facilitate the development of broadband mobile wireless networks where the market would not otherwise support such development.  Lastly, between 2012 and 2020, the FCC would beginning phasing down and ultimately eliminating the HCF – first by eliminating payments to competing providers in certain areas (primarily cellular companies) and then by phasing out payments incumbent telcos for traditional voice services. After 2020, the only voice services eligible for federal support would be broadband voice services.    

As noted above, the NBP also proposes broad reform of the ICC system. This is because prior to the deconstruction of the Bell System in 1984, universal service was largely funded by a complex set of internal AT&T price and cost cross-subsidies, shifting costs from rural to urban users, from residential to business users, and from local to long distance users. After the break-up of the Bell System, those cross subsidies were replaced with direct payments between phone companies, with rural and smaller phone companies charging ICC rates designed to reduce the cost of providing service to their residential customers.  

When the Telecommunications Act of 1996 was enacted, it mandated that federal subsidies for universal service be funded explicitly, through USF. Nevertheless, the business structures of many telephone companies still rely heavily on the profits received from ICC, and to the extent their ICC declines, those companies would either have to receive more USF, or raise fees on customers. Thus, ICC still plays an important role in making service affordable for customers, a key universal service policy goal. Nevertheless, the NBP recognizes that due to changes in technology (reduced costs of switching and transport of digital data) and increased competition, the existing ICC regulatory structure does not function well and leads to destructive market and behavioral distortions. Indeed, notwithstanding the huge growth of VoIP, many parties claim that the current ICC regulatory regime does not provide for payment of ICC for carriage of VoIP traffic, leading to extensive litigation and under-recovery of ICC by incumbent carriers.

Accordingly, the NBP proposes a staged transition of ICC between 2012 and 2020.

Initially, intrastate per-minute compensation rates would be reduced to the typically lower interstate levels. Then, set per-minute ICC rates for origination or termination of traffic would be completely phased out, leaving companies to negotiate “reciprocal compensation” agreements, where in many cases, no money would be paid between companies in either direction. If enacted, this would radically transform the economics of the telecommunications business.  In a related matter, the NBP also appears to endorse FCC action to ensure “fair and reasonable” (read “reduced”) “special access” charges, which are paid to local exchange carriers by large end users, ISPs, and competing carriers, for dedicated high-capacity transport. 

A number of big questions are raised by the above proposals. Here are some of them:

  1. Section 254(e) of the Communications Act states that USF payments can be made only to “telecommunications” carriers, and other provisions of that Section suggest that funding is primarily for the purpose of facilitating provision of “telecommunications” services, though there is some mention of “information services”. At this time, the FCC has ruled that broadband Internet services are not classified as “telecommunications” services, and it has refused to rule on the regulatory classification of VoIP. Does the FCC need to get Congress to revise the Act in order to defund USF and repurpose that money for provision of “broadband” services through the CAF? A good argument can be made that there is no need for any such legislation, and the NBP does not suggest any such need. But the answer is not 100% certain, and this issue could get caught up in the debate over whether the FCC should reclassify broadband Internet as a “telecommunications” service to facilitate its attempts to promote an “open” Internet. Alternatively, will Congress step in and address the matter? 
  2. Does the FCC need legislation in order to set up the Mobility Fund?
  3. The NBP proposes that the CAF would support only one provider in any particular geographic area, and the use of “market-based” mechanisms (read “reverse” auctions) to determine the one recipient of support. While such approaches have been discussed for some time, they have not been enacted. Would such approaches survive an attack by proponents of funding multiple providers (primarily wireless carriers) and opponents of the auctioning of federal support (primarily wireline carriers)? 
  4. While the current ICC system is clearly dysfunctional, previous attempts by the FCC to enact the changes proposed here ground to a halt after years of FCC proceedings and industry negotiations, though a negotiated solution was apparently undercut by the actions of former FCC Chairman Kevin Martin. In the previous rounds of proceedings and negotiations, it was widely supposed that USF disbursement would increase in order to cover the reduction of ICC income by smaller carriers. Yet in the NBP, the FCC proposes not only to eliminate ICC per-minute payments, but also to reduce (and ultimately eliminate) the HCF at the same time. Is this approach wise or even workable? What can the FCC do at this time that would make this version of ICC reform more palatable to all major industry segments than it has been in the past? In addition, the NBP proposes to reduce the level of intrastate access charges, a matter that state commissions are likely to claim is in their sole jurisdiction. What, other than holding out “incentives” to carriers and state commissions, can the FCC do to address intrastate rates?

It is far too early to know how all of this will play out, but here are some potential winners and losers if USF/ICC reform proceeds as set out in the NBP:

Losers: 

Rural and small/mid-size telephone companies (and their customers) that do not or cannot move to all-broadband networks by 2020. ICC revenues get zeroed-out, as does the HCF. Will CAF provide sufficient funding for these companies to move to all-broadband networks, and to survive after that transition? Will revenues from providing multichannel video services make up the difference?

Winners:

AT&T and Verizon radically reduce their ICC payments and their contribution to the USF. Furthermore, they may receive more CAF funding than the USF funding that they currently receive.

Winners and/or Losers: 

Cellular Companies (including Verizon and AT&T) will lose some of their current funding if USF only funds one entity per area, and in order to obtain new USF funding, they may have to be the lowest bidder in an auction. But they will be the primary beneficiaries of the proposed Mobility Fund (though it is unclear how much funding this would provide, in what locations, and for how long). More important, they will likely benefit greatly from reduced “special access” payments. 

Internet Content, Application and Service Providers:   If the NBP accomplishes the proposed goals, ubiquitous high-speed broadband will likely greatly enhance the development and profitability of on-line providers. But there is also a possibility that some of these providers could be dragged into making large contributions to the USF and/or CAF funds. 

Wireline competitive local exchange carriers (CLECs) could greatly benefit from suggestions in the NBP regarding the unbundling of incumbent LEC broadband fiber facilities and reduction of special access charges. It is harder to see whether CLECs will win or lose in ICC reform.

Execution of the USF/ICC proposals will generate a large number of extensive and hard-fought battles at the FCC and perhaps in Congress. Put on your helmets.

[Blogmeister note: This is one in a series of posts describing the range of regulatory and societal areas in which the National Broadband Plan could, and likely will, affect us all. Click here to find other posts in this series.]
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