Regulating for the Sake of Regulation

Posted by: Bob Quinn on July 2, 2010 at 9:16 am

I was struck over the last several days by a series of pronouncements coming out of the Commission. First, on Tuesday, June 22, the FCC released an Order denying Qwest’s request for forbearance from wholesale and retail regulations in the Phoenix MSA.  Then, on Friday, June 25, the Commission released the latest version of its mislabeled “Local Telephone Competition Report.”   I say mislabeled because the Report actually includes only wireline services in calculating its Local Competition numbers (to be sure, there are tables that include fixed wireless and CMRS statistics, but those figures are buried in the Report and are not included in the Local Competition analysis).

Taken together, these two reports demonstrate all that is wrong with the analysis going on over at the Commission and how it is counter-productive to the goals of the National Broadband Plan. I am going to take these releases in reverse order. With respect to the Local Competition Report, I was surprised that even with the skewed way the FCC looks at Local Competition (by excluding wireless), the nationwide Incumbent local telephone provider (voice) market share had fallen to 73% (Local Telephone Competition Report, Table 1).   Now standing alone that number — 73% — isn’t remarkable, but when you start doing some number crunching including the wireless substitution data ignored by the Commission, you really start to understand why the focus of the National Broadband Plan is on finding ways to incent – and remove barriers to – investment in infrastructure, particularly wireline infrastructure.

In Qwest, the Commission cited a December 2009 Federal Report (the “2010 Center for Disease Control Wireless Substitution Report“) which concluded almost 25% of consumers had “cut the cord,” meaning the consumer only has a mobile voice service.  And that makes sense given the data in the FCC’s Local Competition Report which shows that the number of residential wireline voice connections in the last nine years has declined from just over 143 million in December 1998 to about 97.4 million in December 2008 (Table 2).

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Whispering Voices
In the Field of Dreams

Posted by: Frank Simone on June 29, 2010 at 4:59 pm

In the movie Field of Dreams, Ray Kinsella (Kevin Costner) hears a voice tell him, “If you build it he will come.” What does this have to do with telecom policy you ask? Everything. Carriers build communications infrastructure in much the same way – without the whispering voices at night of course. Facilities-based providers are forward looking — investing and deploying so consumers and businesses will come and enjoy the next generation services.

And today’s explosion of data traffic, especially in the wireless market, gives facilities-based providers every incentive to peer into the future and invest to keep up with demand. Infrastructure investing today means deploying fiber or other advanced high capacity technologies as closely as possible to residences and businesses to unlock high bandwidth services.  The Field of Dreams for policymakers is where multiple providers make those infrastructure investments to provide business and residential consumers not only with needed capacity, but also with competitive choices.

Which brings me to the wonkish issue of special access.

As a part of our merger with BellSouth, we voluntarily agreed to offer temporary, but significant reductions on our interstate special access services (purchased primarily by businesses).  After 3 ½ years, that merger commitment expires tomorrow, June 30th. These rates will then revert to our original tarriffed rates.

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Obama Administration’s Spectrum Policy

Posted by: Jim Cicconi on June 28, 2010 at 3:17 pm

Today’s Presidential Memorandum on spectrum policy, and the public comments of the President’s top economic advisor, are both encouraging and timely. At AT&T, we are already dealing with phenomenal increases in mobile broadband use — a whopping 5,000 percent over the last three years. However, the potential of wireless broadband to drive innovation and connect every American to the Internet will be limited without bold action to address the spectrum crunch that all providers face, and today’s action signals this Administration’s commitment to do just that.

Spectrum deficiencies, if left unaddressed, will limit job growth and investment, harm consumers, and hobble innovation. And just as all wireless carriers will face these spectrum deficiencies, all carriers should be allowed a fair chance to acquire the spectrum their customers need. We look forward to working with the Administration as it moves to meet the spectrum goals outlined in the National Broadband Plan, and now endorsed by the President.

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Hiding the Internet Ball

Posted by: Hank Hultquist on June 28, 2010 at 12:47 pm

“To define is to limit.” Or so said Oscar Wilde in The Picture of Dorian Gray.

When it comes to regulating the Internet, however, the FCC is apparently unwilling to define its regulatory limits.

In its “Third Way” NOI, the FCC did not define the Internet transmission service (what it dubs “Internet Connectivity Service”) that it proposes to regulate under Title II of the Communications Act.  Instead, the NOI simply describes it, “at a high level,” as the service that “enables users to transmit data communications to and from the rest of the Internet.”

That’s all we get.  What could that definitional blob mean?

Well, it appears to encompass a broadband Internet access provider’s entire Internet infrastructure – from the first mile copper, fiber or cable lines that connect each end user to a network node in their neighborhood all the way to the provider’s backbone routers, high-capacity links, servers, and backbone peering relationships that enable the broadband Internet access provider’s customers to connect with customers of other networks.

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The Third Way: The Unpacked Director’s Cut

Posted by: Bob Quinn on June 24, 2010 at 11:43 am

The problem with the Open Internet fight generally and the Title II fiasco specifically is that fiction tends to trump facts in the debate.  It’s understandable.  It’s easier sometimes to understand and write about the vague and empty rhetoric than it is to unpack the facts and legal framework that lie at the heart of the dispute.

But, with the FCC proposing, unfortunately, to dip the Internet into the sugar-coated world of Title II regulation – light touch or not – specificity and clarity are really essential to understanding the extent and limits to the regulation that the FCC and particularly its General Counsel are advocating.

So, starting today, and over the coming days, we will do the hard work of unpacking the complex and esoteric legal issues of this debate so you won’t have to.

It’s been said repeatedly that the FCC must examine Title II regulation to put the Open Internet on a “solid legal foundation.”  See here and here.

I will begin our examination by noting that the absence in the Notice of Inquiry (“NOI”) issued last week of that “solid legal foundation” is a very large problem which is compounded by the notion that the FCC might actually attempt to go directly from NOI to Final Order in this proceeding.  

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