Universal Broadband

It is irresponsible for the FCC to consider self-creating new legal authority to impose net neutrality on ISPs by re-classifying currently unregulated information services as regulated telecom services (in the event that the D.C. Circuit Court of Appeals rules that the FCC does not have the legal authority to regulate the Internet in the FCC-Comcast case). 

First, claims of justifying such a hyper-regulatory potential FCC reclassification based on "the pro-competitive 1996 Telecommunications Act" is upside-down logic, given that the well-known purpose of that act was "To reduce regulation and promote competition...".  [bold added]

• After over a decade of successful experience and legal precedents promoting competition by reducing monopoly-era regulation, it would be a big lift indeed to try and justify re-imposition of the monopoly-era regulation that the Congress and the FCC have spent so much time and effort reducing.     

  Second, if the Appeals Court overseeing the FCC concludes in the Comcast case that the FCC does not have the authority to regulate the Internet under current law, does the FCC really think that that same court won't see through, and overturn, an elaborate FCC political ruse to manufacture legal authority all by itself without new congressional authorization?

FOR IMMEDIATE RELEASE

Contact:  Scott Cleland

January 12, 2010

703-217-2407

NetCompetition.org Submits Comments on FCC Open Internet NPRM

“Preserving, not reversing, competition policy, best preserves the open Internet.”

In a filing to the FCC on the National Broadband Plan, the DOJ Antitrust Division, the U.S Government's leading expert in assessing the state of competition in communications markets, implicitly rejected net neutrality proponents' core thesis of broadband market failure.

• This DOJ filing, which represents the most recent U.S. Government expert assessment of broadband competition, could make it extremely difficult for the FCC to legitimately conclude in the coming months the factual opposite --  broadband market failure.
• Without a sound factual finding of broadband market failure, it also could be extremely difficult for the FCC to legally justify preemptively mandating common-carrier like regulations on un-regulated broadband information service providers in the FCC's pending open Internet proceeding.

Kudos to Pat Brogan of US Telecom for his first-of-a-kind analysis/ranking of how much different countries actually use the Internet per capita.

• It is outstanding work and adds a highly instructive and necessary new dimension to the discussion of the FCC's preparation of the National Broadband Plan and the debate over whether the U.S. is falling behind on broadband.  

The USTelecom summary description of the study's findings is below and can be found here. The letter communicating the study to the FCC is here.

"U.S. Among Top Nations in Volume of IP Traffic per User, New Analysis Shows

WASHINGTON, D.C.—While the debate rages on about the merits and limitations of various international broadband rankings that attempt to examine network performance and other factors, USTelecom today released fresh insights into an often-overlooked aspect of the national broadband debate—actual usage by Internet consumers. The analysis, based on data from Cisco’s Visual Networking Index and Internet World Stats, shows that the United States is among the top nations in the world in volume of Internet consumption per online user.

Kudos to Bret Swanson for his outstanding debunking of the approach and conclusions of the FCC's Berkman study on broadband policy lessons in his Real Clear Markets piece, "Harvard's Berkman Study Bungles Broadband." 

• To the extent that the FCC wants its decisions to be fact-based, data-driven, and respected, the FCC's National Broadband Plan conclusions can not rely on this exceptionally flawed Berkman study.
• The old adage is true: "garbage in garbage out."  

Kudos to the NCTA for putting the universal broadband focus where it should be -- on broadband adoption, and especially adoption where it can have immediate and maximum impact, i.e.  helping "middle-school-aged children in low-income households that do not currently receive broadband service" have the "opportunity to become digital citizens of the 21st century."  

The NCTA's innovative Adoption Plus initiative is an excellent example of voluntary public-private partnerships that can rapidly and effectively meet real public needs and forward the important goal of universal broadband for all Americans.  

The most effective use of scarce resources is to focus on broadband adoption in the 90+% of America that already has broadband facilities available and on greenfield broadband deployment to the single digit percentage of American households that are currently unserved.

Such a common sense cooperative strategy can produce the most good for the most people fastest.   

I commend The American Consumer Institute for their excellent new book of scholar essays, “The Consequences of Net Neutrality Regulations on Broadband Investment and Consumer Welfare.”

• It's refreshing and very useful to have a bipartisan collection of of 13 essays authored by 11 senior economists and public policy experts, both Republican and Democrat. 
  • "The book provides insight about consequences Net Neutrality regulations have on two economic concepts that affect broadband consumers: “price and demand” and “cost and supply.”

The net neutrality/open Internet debate needs more of this kind and quality of substantive professional analysis.

The FCC's non-competitive-bid, sole source contract with the Harvard Berkman Center to "conduct an independent review of broadband studies to assist the FCC" with the National Broadband Plan -- appears to have been a near complete bust.

• The quality of the Berkman study is so poor, so riddled with key factual errors, so devoid of balance or objectivity, and so dependent on fatally-flawed economic analysis, that the FCC should not risk dragging down the credibility of the entire National Broadband Plan by relying on it in any way.
• The National Broadband Plan is too important a purpose, process, and effort to get right for the Nation to cut corners like the Berkman study routinely did. 

A summary of some of the critical flaws/errors of the Harvard Berkman study follow:

NTT-Japan commented that the Berkman study was "seriously in error." Specifically NTT said: "First, facilities based competition, not unbundling, has been the key to broadband growth in Japan." ... "Second, the report mistates the importance of 'government-subsidized loans' to the success of broadband deployment in Japan." ... "Third, the Berkman Center's draft study is internally contradictory."  

Google, flush with a $22 billion cash horde and generating a whopping ~$10 billion in annual free cash flow, was the only original funder of Clearwire not to provide new investment capital for Clearwire's broadband deployment expansion, in a $1.5b fund raise announced this week.  

• Clearwire's CEO Bill Morrow, said: "Today's news is also further validation of the importance of our 4G network to our strategic investors."
• The open question here is why was Google the only original funder to not believe it strategically important to continue to invest in accelerating a cutting-edge, national broadband buildout to all Americans -- or to invest in more national broadband competition?

In these tough economic times and with much less cash on hand or free cash flow to invest, Sprint, Comcast, Time Warner Cable, Bright House, and Intel, all concluded it was indeed strategically important to continue to invest in accelerating broadband deployment to all Americans and increasing broadband competition.

Unfortunately, the hard-to-avoid conclusion here is that Google only invests in broadband when it has something specific to extract for Google's special benefit.