FCC Tackles What It’ll Take to Get National Broadband

No communications industry company came right out and said the FCC’s national broadband plan, released today, is either really good or really bad. Instead, most businesses and associations reacting to the year-long project patted the FCC (and themselves) on the back for its work, pointed out their favorite parts and that was that.

To be fair, the report, “Connecting America: The National Broadband Plan,” does number about 360 pages and 17 whole chapters, and lawyers have yet to dissect them all.

Still, it would seem that a study on America’s lagging broadband status would have come across as more hard-hitting and attracted equally passionate responses. After all, this is a nation where broadband speeds don’t even come close to those in the developing countries of Eastern Europe, for example. But the reason could be that the FCC doesn’t have much enforcement power – Congress must act on the recommendations and observers agree that’s not likely to happen until health care reform is addressed.

‘Move With Urgency’

“Connecting America” is a bit overwhelming in its scope. Pared down for service providers, some of the key bullet points include wholesale access, spectrum allocation, the Universal Service Fund and intercarrier compensation.

First of all, for incumbents worried the FCC would try to impose requirements such as network-sharing or net neutrality, well, any sleep lost was for naught. The agency pretty much avoided those issues; the furthest it went was to call for a “comprehensive review of wholesale competition rules to help ensure competition in fixed and mobile broadband services.” Stifel Nicolaus telecom analyst Rebecca Arbogast did say this portion of the plan “seems sympathetic” to some CLECs’ requests for wholesale access to Bell networks. What the FCC did not do, she added, was “prejudge the issues.”

If any topic turns into a debate in the near term, it probably will be spectrum. As wireless broadband access becomes the norm thanks to smartphones and other mobile data-greedy devices, the FCC wants to ensure there’s enough spectrum – “the oxygen for all of these devices,” FCC Chairman Julius Genachowski told the PBS NewsHour on Monday – to handle demand.

“We think we have to move with urgency to free up enough spectrum so that we can lead the world in mobile,” Genachowski said.

The FCC says it has a mere 50MHz of spectrum available, a fraction of what will be needed in just a few years. So, the FCC proposes to make 500MHz of spectrum available for broadband within 10 years, 300MHz of which it wants ready for mobile use within five years. Yet, the TV broadcasters that hold those assets, even after the move to digital, stand to put up a fight – like communications service providers, TV broadcasters hold immense lobbying power in Washington, D.C.

For now, though, the spectrum idea sounds good to the communications industry. It will “go a long way toward meeting the demand for new products and services,” Grant Seiffert, president of the Telecommunications Industry Association (TIA), said in a prepared statement. To be sure, spectrum is one the plan’s components ripe for “a strong consensus for action,” said Rob Atkinson, president of the Information Technology & Information Foundation (ITIF), in a press release.

Skepticism and Support

Other aspects of the national broadband plan brought praise from the industry, even though they came as little surprise since the FCC has leaked some details over the past few weeks. For example, the agency made good on its insistence that it wants to stop subsidizing high-cost landline buildouts. Instead, it wants to use the $4.6 billion in the Universal Service Fund’s (USF) high-cost coffers to pay for broadband deployments. These networks would provision at least 4mbps of actual, not advertised, download speeds, the agency said. And the high-cost fund would be renamed the “Connect America Fund,” or CAF. It also would shift up to $15.5 billion over the next decade from the existing USF to support broadband.

Matt Polka, president and CEO of the American Cable Association (ACA), said his organization was pleased because the proposal meshes with suggestions ACA has made. And Brian Roberts, chairman and CEO of Comcast Corp. (CMCSA), said the change would “fix and redirect outdated subsidy schemes.” If Congress redirects the USF, cable companies could then take advantage of billions of dollars traditionally given to wireline carriers.

At least one rural group is skeptical. The National Telecommunications Cooperative Association (NTCA) said it’s OK with giving some future USF support to the CAF. However, “to truly achieve the goal of universal broadband, the plan must accurately account for all of the costs associated with providing high-quality, affordable broadband to rural and remote areas throughout the country,” said CEO Michael Brunner in a press release. “Put simply, the plan fails to do this right now.”

NTCA’s biggest concerns are that the national broadband plan, as it stands, doesn’t let rural broadband providers adequately recover USF and intercarrier compensation costs; doesn’t account for the expenses of being a carrier of last resort; and eliminates the rate-of-return regime – income on which many rural providers rely – for all carriers.

CLECs, meanwhile, didn’t talk about the CAF since they tend to serve business customers in metro regions. But two of their larger rivals touched on the matter. In a blog post, AT&T (T) Chairman and CEO Randall Stephenson said USF reform is critical, yet noted it’s a “difficult and perplexing” issue the FCC has struggled with for the past 15 years. That doesn’t mean the industry can “shy away from addressing the hard issues,” though, he added.

Tom Tauke, one of Verizon Communications Inc.’s (VZ) top policy executives, said much the same. The company, which provisions some of its broadband over fiber-optic networks, is “encouraged by the call to reform the policies that subsidize some companies’ telecommunications services so the policies are focused on the technologies of the 21st Century.”

Steve Davis, senior vice president of public policy and government relations at Qwest Communications International Inc. (Q), said the the RBOC is  encouragent that the FCC’s plan is “recognizes the current market-based focus that has led to incredible innovation and deployment of broadband applications and facilities.” In addition, he said the carrier applauds the commission for addressing universal service reform.

 USTelecom – once the representative for incumbent phone companies that now bills itself as “the broadband association” also lauded the USF proposals. “We are pleased by the commission’s recognition of the important of … universal service support to the financial fundamentals of the broadband industry,” said Walt McCormick, president and CEO, in a press release.

Finally, the FCC wants to overhaul the intercarrier compensation system – another bullet point that comes as no shock. Officials have talked for months about the need to eliminate intercarrier comp altogether. And the recommendation in “Connecting America” is to get rid of per-minute charges over the next 10 years and enable adequate cost recovery through the CAF.

Reactions to that part were not immediate.

On the whole, “Connecting America” is chock-full of proposals for promoting pervasive broadband access. Of note, it does not call for the government to build networks, but to work with the private sector. The Bells praised that stipulation. The report also dives into mobile data roaming, set-top box requirements, digital literacy education, programs for public safety officials, and much more. To read the executive summary, click here, and to download parts of the 17-chapter plan, click here.


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