Politics and Law

The Federal Communications Commission is taking on difficult and controversial issues as it works toward developing a comprehensive national broadband plan.

On Wednesday the agency heard from an FCC task force on the progress that it's making in writing that broadband plan, which will be presented to Congress in February.

The FCC has been tasked with developing a plan that will get broadband services to all Americans. In working to come up with a comprehensive policy, the FCC has tackled several controversial issues, most notably reforming the Universal Service Fund, reallocating wireless spectrum, and forcing more competition in the market for cable set-top boxes.

One of the top items on the FCC task force's to-do list is reforming the $7 billion rural phone subsidy program called the Universal Service Fund. This program, which also provides funding for schools and libraries through its E-rate program, is funded by consumers, who are charged extra fees on their long-distance phone bills. Specifically, the agency wants to expand the program to help fund broadband service in parts of the country where private industry doesn't find it profitable to invest.

The task force didn't provide long-term recommendations for transitioning USF into funding broadband deployments. But in the short term, it suggested extending some current programs such as life-line link-up to schools and other public areas to provide more access to unemployed people who may not have Internet connectivity at home. The idea is that these individuals can use broadband in these public areas to look for jobs.

FCC Chairman Julius Genachowski said it will take time to get reforms in place. He noted that the national broadband plan won't directly affect USF, but he said the program, once it's expanded, will eventually help fund and become a key part of helping get broadband to underserved parts of the country.

"It's tempting to kick the can [USF reform} further down the road," he said. "But for many reasons it's important to begin tackling these issues now. We must make sure that the fund fully supports the technology of today and tomorrow, not just the technology of the past."

But the process is going to be a long one, he said. And he wouldn't comment on whether true reform could be achieved in his term as chairman.

The FCC task force also reiterated its plans to re-evaluate spectrum issues. Genachowski has said publicly that one of his top priorities is reallocating and finding more spectrum that can be used to build wireless broadband services. Both he and the CTIA, a trade group representing the wireless industry, say there is a looming spectrum crisis that could result in dire consequences without adequate attention now.

During its report to the commission, the broadband task force said it is working with Congress to inventory and assess current spectrum usage in the U.S. It is calling for Congress to also require periodic review of spectrum uses and to find ways to clear spectrum bands that aren't serving other uses, such as wireless broadband.

The task force also said during its presentation Wednesday that it's looking at ways to spur more competition in the cable set-top box market. The group said that a lack of competition in the set-top box market has also resulted in a lack of innovation. The agency feels that more competition in this market would spur companies to develop new Internet applications and services that could be accessed via TVs.

The FCC is considering requiring paid TV providers, such as Comcast, Time Warner Cable, AT&T, and Verizon Communications to supply a low-cost network interface device that would allow people to access the Internet on their TVs and to access cable TV without using a cable box.

Spanish officials said earlier this week that the government will require service providers to offer broadband with speeds of at least 1 Mbps at regulated rates to residents living anywhere in the country.

A frenzy over a new Sony Ericsson smartphone at the GSMA Mobile World Congress in Barcelona last February.

(Credit: Marguerite Reardon/CNET )

The Spanish telecommunications minister issued a statement Tuesday declaring that broadband would be added to the country's so-called "universal service," which guarantees reasonably priced telephone service to citizens, Reuters reported. The goal is to offer affordable broadband with speeds of at least 1 Mbps to residents by 2011.

To achieve this goal the Spanish government will require any service provider that gets universal service funds to also include broadband services to any home as part of its service.

Last month, Finland's minister of communications announced a similar plan. By July 1, 2010, every person in Finland will have the right to a 1 Mbps connection.

While the 1Mbps speeds don't sound like much, Spanish and Finnish officials say it's just the beginning. They hope this speed will serve as a starting point. And they believe that network operators will increase speeds over time.

Finland has already established aggressive public policies in place to encourage more ubiquitous and faster broadband deployments. In 2008, the Finnish government said it would pay a third of the cost to wire the country with fiber by 2015.

These mandates come at a time when the U.S. Federal Communications Commission is drafting a national broadband policy that outlines a plan for policies to help provide universal broadband to every American. The plan will be presented to Congress in February 2010.

In a report this week to the FCC, the task force working on the national broadband policy highlighted several barriers to universal broadband, including problems with the U.S. Universal Service Fund. But taking action to change the system is difficult.

The U.S. Universal Service Fund subsidizes the cost of building telephone infrastructure throughout the country in places where it is too expensive to deploy such services. Much of the money from this fund, which is collected from consumers as part of their monthly phone bills, is still being used to subsidize regular telephony service. Many policy makers and government officials say the program needs to be revised to include broadband. And the funding mechanism also needs to be revised.

While many consumer advocates believe the U.S. government should take a more active role in directing policy in way similar to what is happening in Finland and Spain, it's important to note that the U.S. is a much larger country by population and geography than either of these countries. To put it in context, Finland has about 5.3 million residents, compared to more than 300 million people who live in the U.S.

Developing and funding universal broadband access in the U.S. will cost anywhere between $20 billion and $350 billion, according to government estimates. That said, establishing a clear policy road map could help pave the way to truly affordable high speed Internet access everywhere in the U.S.

The Federal Communications Commission met Wednesday to discuss obstacles to enacting a national broadband policy that will provide high-speed Internet access to every American.

President Obama has made universal broadband access a key goal. Grants and loans for helping make universal broadband access a reality have already started being doled out as part of Congress' economic stimulus package.

In an effort to ensure that new programs and policies work toward achieving the same goal, the FCC has been tasked with developing a national broadband plan to help direct policy makers in getting affordable broadband to every American. A task force, headed by Blair Levin, who had been chief of staff for former FCC chairman Reed Hundt, is developing the plan that will be presented to Congress on February 17, 2010.

Levin and his staff appeared before the FCC Wednesday to present what they see as gaps or obstacles that must be overcome to develop clear recommendations and policy for universal broadband.

Levin said that commissioners and policy makers must consider the broadband ecosystem if they hope to achieve the president's goals. This means taking into account not only consumer needs but also considering the needs of the industry, which will likely fund the bulk of the $20 billion to $350 billion that will be needed to build new infrastructure and develop new programs for spreading broadband throughout the country.

In considering these needs, Levin said it is important to identify and come up with ways to overcome some hurdles that stand in the way for achieving the ultimate goal of providing broadband to every American.

Obstacles to universal broadband access
One major issue has to do with the Universal Service Fund, a program funded through extra charges on consumers' phone bills. The USF was originally designed to provide subsidies to pay for phone service in rural communities. But the task force believes that more of the $7 billion that is allocated each year from the fund should also be used to help subsidize the cost of deploying broadband in rural areas.

Today, most of these funds are used for voice services and not broadband, the task force reported. And of the money that is used to subsidize broadband, the group noted it is often used inefficiently so that gaps in broadband deployment are still not filled.

The task force also reported that there is still a high level of disparity in income levels between people who subscribe to broadband service and those who do not. Nearly 90 percent of families with incomes of $100,000 or more subscribe to broadband services, compared to 35 percent with incomes of $20,000 or less. Rural households are less likely to subscribe to broadband service than urban households. About 65 percent of white households subscribe to broadband, while only 40 percent of Hispanic households subscribe to broadband and 46 percent of African-American households have broadband.

Another issue that was brought up by the task force during the meeting is the fact that broadband service providers tend to favor higher-income regions in more populated areas over low-income areas.

The data suggests that many low-income people in these parts of the country are offered only one broadband service option. The data also suggests that these consumers who have only one option tend to pay higher prices for service.

What this means is that lower-income people, who have less disposable income, are often the ones forced to pay higher prices, while people who have more money pay lower prices for service.

Deployments in rural areas are often affected by the high cost of building infrastructure and providing service. The task force noted that "middle mile" costs are almost three times higher than general network operations costs. This high cost is often a serious barrier to rural broadband deployments, the group said.

Blair Levin, head of the task force developing a national broadband policy for the FCC.

This "middle mile" infrastructure consists of equipment and fiber that connects local cable head-ends or telephone company central offices with bigger points of presence that connect those networks to nationwide networks. The task force said there was a lack of efficient coordination when carriers or other utility providers dig trenches for fiber infrastructure. The group also noted that these deployment gaps don't only affect rural consumers, but many residential neighborhoods and small business marketplaces as well.

As the Internet and television markets converge, the task force also noted that a lack of innovation exists in the TV set-top box market. Specifically, the majority of consumers today use set-top boxes provided through their subscription TV providers. And only a very small number of devices are even available to purchase at retail. By comparison, there are hundreds of devices available in the mobile phone market. Due to a lack of competition, innovation has been stifled. And the task force recommends the FCC adopt policies to encourage a retail market for such devices.

That said, the FCC has tried to encourage the consumer electronics industry to develop set-top boxes that could be bought separately from cable services, but so far the efforts have largely failed.

More spectrum needed
On the wireless side, the key barrier is a lack of spectrum, the task force said. The problem is simple, as demand for mobile broadband increases, there is a need for more spectrum to support these services. Demand for these services comes from the rapidly growing market for smartphone wireless devices and Netbooks. By 2011, smartphone sales are expected to overtake standard mobile phones.

The task force said it is critical for the FCC to identify and reallocate available spectrum as soon as possible. The group said the nation could face a spectrum shortage as soon as 2013 or 2015, if nothing is done today.

The wireless trade group CTIA and the Consumer Electronics Association support this claim. And the groups sent a letter to FCC chairman Julius Genachowski on Tuesday urging him to investigate using broadcast TV spectrum for mobile Internet use.

The measure is opposed by the broadcast TV industry. But the FCC task force noted that as the need for wireless broadband spectrum increases, the need for broadcast TV spectrum is actually decreasing. Specifically, smartphone subscriptions have increased by 690 percent since 1998, while over-the-air TV viewership decreased by 56 percent. This proposal is already generating criticism from lawmakers supporting the TV broadcast industry.

Levin and his staff acknowledged there are many other barriers that exist in providing affordable broadband access to every person in the U.S. Levin said his staff is on track to meet its February deadline, but he said the process will remain open throughout the remaining 90 days that are left to incorporate new ideas. He also emphasized the fact that the ultimate success or failure of the national broadband plan will be in the hands of Congress and policy makers who must remain committed to implementing the plan.

"In my experience and seeing what has worked in other countries, you can plan all you want, but there really needs to be a long-term commitment for such plans to succeed," he said.

Also as part of the meeting, the five-member FCC unanimously voted to impose a "shot clock" for wireless tower applications to speed up the time it takes for wireless operators to deploy new cell phone networks.

Chairman Genachowski promised last month at the CTIA tradeshow in San Diego that the Commission would do what it could to speed up this process. And the Commission's vote solidified that promise.

"Tower siting is a vital piece of our industry," CTIA president and CEO Steve Largent said in a statement. "It enables mobile services, including voice and broadband, for consumers, public safety, and businesses. Both Congress and the Supreme Court recognized the importance of taking concrete steps to ensure that the zoning process does not become a barrier to the reasonable deployment of, and competition among, diverse wireless networks."

The average Internet download speed in the U.S. is slower than that in 27 other countries, according to a new report by the Communications Workers of America.

Web surfing in the U.S. averages around 5.1 megabits per second (mbps), lagging far behind top-ranked South Korea, where speeds average more than 20 mbps. In 2007, the U.S. download speed was 3.5 mbps, inching up only 1.6 mbps since then. At that rate, notes the report, it will take the U.S. 15 years to catch up with South Korea.

(Credit: Communications Workers of America)

The CWA's 2009 Report on Internet Speeds also compared Internet performance throughout all 50 U.S. states.

The report discovered that Internet users who live in the Northeast or Mid-Atlantic regions enjoy faster speeds than those in the South or West. The five fastest states included Delaware (9.9 mbps), Rhode Island (9.8 mbps), New Jersey (8.9 mbps), Massachusetts (8.6 mbps), and New York (8.4 mbps).

States on the slow end were Mississippi (3.7 mbps), South Carolina (3.6 mbps), Arkansas (3.1 mbps), Idaho (2.6 mbps), and Alaska (2.3 mbps).

"Every American should have affordable access to high-speed Internet, no matter where they live. This is essential to economic growth and will help maintain our global competitiveness," said Larry Cohen, president of the Communications Workers of America. "Unfortunately, fragmented government programs and uneven private sector responses to build out Internet access have left a digital divide across the country."

The U.S. is the only country without a national policy to promote high-speed Internet access, noted the report. But that may be about to change.

Signed earlier this year, the American Recovery and Reinvestment Act includes a provision for a national broadband plan by spring of next year and grants of $7.2 billion to bring high-speed Internet to rural and remote locations across the country.

That's a step in the right direction, said the CWA. But the organization would like to see more specific improvements.

In the report, the CWA called for such measures as an Internet infrastructure with enough capacity for 10 mbps downstream and 1 mbps upstream by 2010, tax incentives for businesses to provide faster speeds, and grants to provide computers and broadband equipment to low-income households.

The 2009 report was compiled using data from the CWA's latest Speed Matters test, which measures the time it takes to communicate with the nearest server on the Net. Gathered from May 2008 to May 2009, the test tracked the speed of more than 413,000 Internet users.

Google has partnered with the New America Foundation to create a community feedback forum for ideas on how to improve broadband in the U.S. Users can submit their ideas, which are voted on by others using Google Moderator's yay or nay system.

The forum will be open for the next two weeks, after which Google is going to take some of the top-voted ideas to its proposal, which is being submitted to the Federal Communications Commission. The FCC will then take some or all of those ideas to congress early next year as part of the economic stimulus plan.

So far, there are a little over 70 ideas from some 270 registered users. Using the service requires signing up with a Google account, however any name can be provided when creating ideas.

Google is using its Moderator product to collect ideas on how to fix broadband.

(Credit: CNET)

Acting FCC Chairman Michael Copps released a report on broadband strategy for rural America on Wednesday.

The report was mandated as part of the 2008 Farm Bill. In that bill Congress asked the Federal Communications Commission to work with the U.S. Department of Agriculture to submit "a report describing a comprehensive rural broadband strategy."

The emphasis on forming a rural broadband strategy came several months before President Obama took office. Obama also sees broadband as a priority and included funding for broadband development as part of the stimulus package passed by Congress earlier this year.

In the American Recovery and Reinvestment Act of 2009, Congress appropriated $7.2 billion for broadband grants, loans, and loan guarantees to be administered by the USDA's Rural Utilities Service (RUS) and the Department of Commerce's National Telecommunications and Information Administration (NTIA). As part of this bill, the FCC is also required to file a report with Congress in February 2010 describing a national broadband policy.

Copps called this report on rural broadband strategy a starting point for developing a national broadband policy. And even with the $7.2 billion of money from the stimulus package, Copps said that more money will be needed to ensure that every American has access to broadband.

Copps identified several issues in this report that must be overcome to get broadband deployed in rural areas. These issues include technological challenges, lack of data about where broadband is available and who is accessing it, and high network costs. Despite these challenges, Copps said that the U.S. government must pour resources into solving these problems just as it did when building the U.S. Postal Service, the railroads, the nationwide electrical grid, the interstate highway system, and even the Internet backbone.

"From the country's earliest days, building the nation's infrastructure has required federal resources and leadership, and this federal role continues," he said in the report. "At their inceptions, some of these projects were controversial. Many considered them too expensive; others doubted their efficacy. Today, few would question their value, but each of these undertakings depended on a strong and coordinated national vision."

Comcast CEO Brian Roberts, Clearwire Chairman Craig McCaw, Suddenlink Communications CEO Jerald Kent, Cox Communications President Patrick Esser, and former FCC Chairman Kennard talk about the cable industry at the Cable Show in Washington, D.C.

(Credit: Stephanie Condon/ CNET Networks)

WASHINGTON--Many industries have come to Washington this year to repentantly seek government protection from a brutal economy. This week, though, the cable industry brought the 2009 Cable Show to the capital to defiantly show off its optimistic outlook for the future--a future, they say, best brought to bear by private sector innovation rather than government regulation.

"It is impossible for any of us to think about our customers or our businesses without also thinking about today's economic and financial backdrop," said Kyle McSlarrow, the CEO of the National Cable and Telecommunications Association, the organization that hosts the Cable Show. "Fortunately, we have every reason to believe that our industry will continue to be resilient and grow. And I would go further...and say that we have a central role to play in our economic recovery as well."

The cable industry gained 7 million net customers in 2008 and this year will invest $14 billion in network upgrades and expansions. As its continues to adopt new technologies and develop new business models, the cable industry should attempt to ensure it is allowed to grow unfettered, McSlarrow said.

"We should tread cautiously before assuming that traditional regulatory responses apply in a marketplace that is experimenting, growing, and changing before our eyes," he said.

Congressman Eric Cantor (R-Va.), who has been praised for his understanding of the tech industry, said the cable industry has showed how innovation can lead to economic growth. He said the industry should take a stand against political moves to restrain innovation.

"There is consensus here in Washington (that) we have to do something to turn this economy around," Cantor said. "Much of the discussion focuses on putting in regulations that are allegedly needed. I hope your message here can counter that."

"I believe it's not regulation that preserves what America is about," he continued. "It is much more about entrepreneurialism and investment and innovation, and they occur best when we have functioning free markets."

Comcast CEO Brian Roberts acknowledged the industry faces many uncertainties, such as how to offer content online without crippling cable television. Yet those uncertainties offer as many opportunities as dilemmas, he said.

"I don't think we should put our head in the sand," he said. "We should allow customers to get video wherever they want. We have to have really thoughtful conversations with our partners in content and make it a win-win outcome for customers and programmers, and I think we can do that."

He said Comcast has to take certain steps to ensure its future success, such as continuing to expand its DOCSIS 3.0 wideband service and offering content in different formats.

"Everything changes in an all-digital world, and if we have the fastest Internet and an unlimited appetite to take some risks, I think we're going to have a fabulous future," he said.

One highlight of the Cable Show is the "broadband nation" exhibit, which shows what the near future may look like with the widespread adoption of broadband through cable.

Commerce Secretary Gary Locke officially opened the exhibit, noting that the telecommunications industry may pull the country out of the recession, just as rural electrification helped end the Great Depression.

"The advent of broadband and cable and all variants of telecommunications is the next great economic development that will rival electrification of rural America," he said. "When we think about the opportunity of broadband, I don't think any of us really understand the full potential of this technology."

WASHINGTON--A diverse group of organizations Tuesday agreed that the criteria for choosing which broadband projects to fund with stimulus dollars should be largely based on the potential for job creation, but they could not agree on the degree of risk the federal government should take in its broadband investments.

The departments of Commerce and Agriculture have a combined $7.2 billion from the stimulus package to dole out for broadband deployment and expect to receive more than 10,000 applications for funding. The departments gathered together a number of different organizations at a public meeting Tuesday to discuss how to distribute those funds effectively and fairly, and how to hold grantees accountable.

The most important criteria, the panelists said, should be a project's potential for job creation. Other items mentioned included timeliness, sustainability, cost, and interoperability. There was dispute, however, over whether the stimulus funds should focus on clear, immediate benefits, or potential long-term results.

Jeannette Wing, assistant director of the computer and information science and engineering directorate at the National Science Foundation, suggested the government should invest not only in projects that will have short-term economic impact but also those that will pay off decades down the road.

"Broadband investments should be a strategic down payment on our future," she said. "Today's students are tomorrow's workforce and tomorrow's customers."

Since the stimulus funding is seen as a down payment on universal broadband access, the program provides a good opportunity to form a broader deployment strategy, said John Muleta, the CEO of M2Z Networks.

"You want some level of diversity to see what will work to reach underserved and unserved communities," he said. "By its very nature, (the stimulus is) trying to do projects that otherwise wouldn't be funded. This is a bit like venture capital where you'll fund 10 ideas to get one that really breaks out."

Others insisted the funding criteria should focus more strictly on jobs.

"We're talking about taxpayer money, we're not here to try experimental projects," said Lisa Scalpone. "This is a one-time jump-start and needs to be viable in the long term."

In either case, panelists said, clear objectives for grantees will make it easier for the government to provide effective oversight of the broadband stimulus funds.

"We're going to have programs that are going to be funded from all different shapes and sizes, and it's important they all have to meet the same goals," said Amina Fazlullah, a media and telecommunications attorney for U.S. Public Interest Research Group.

The broadband provisions of the stimulus package included an initial set of criteria for the two departments responsible for the funds to consider, such as whether a project will increase affordability and subscribership, whether it will provide the greatest broadband speeds to the greatest population, and whether it will enhance service for health care delivery and education.

Meeting those goals--not to mention a host of others numerous groups would like to see addressed--means the Commerce and Agriculture departments will be in the business of picking winners and losers, panelists acknowledged.

"There's going to be an enormous amount of subjectivity," Muleta said. "What we have to do is have some discretion for the people developing the program to determine how to mechanize this."

WASHINGTON--Two government agencies have 19 months to distribute $7.2 billion in stimulus funds for broadband deployment projects in all 50 states--and already thousands of potential grant recipients are knocking at their doors.

President Obama's economic stimulus package dictated that all of the money set aside for broadband will have to be allocated to worthy projects by September 30, 2010. To meet that goal, the federal government will need the help of "the best and the brightest," Mark Seifert, one of the people responsible for the broadband funds, said Tuesday.

"I invite you to work very hard--and very fast--to reach our goals," said Seifert, a senior adviser to the National Telecommunications and Information Administration, the federal agency responsible for distributing $4.7 billion in grants for broadband.

The NTIA on Tuesday, in conjunction with the Federal Communications Commission and the U.S. Agriculture Department, held the first in a series of meetings to engage the public in a discussion about ways to distribute the broadband grants and loans. The agencies decided on this format to solicit public input after receiving more than 2,000 requests for individual meetings from states and other groups interested in the funding.

Acting FCC Chairman Michael Copps on Tuesday addressed hundreds of potential applicants for broadband stimulus funds.

(Credit: Stephanie Condon/CNET)

"It's going to have to happen very fast," said Bernadette McGuire-Rivera, an NTIA administrator. "Everyone needs to work together to make sure we do this and we get it right."

Before a crowd of hundreds packed into an auditorium at the U.S. Commerce Department, the agencies announced they are holding six more public meetings--four in Washington, one in Las Vegas, and one in Flagstaff, Ariz.--between March 16 and March 24 to give the public a chance to influence how the broadband grant and loan programs are shaped. The agencies also released on Tuesday a formal request for information (PDF) soliciting input on a range of topics including the role of the states in the grant programs, selection criteria for grant awards, financial contributions from grant applicants, broadband mapping, and benchmarks to evaluate the success of the programs.

The FCC, which is charged with formulating a strategy for nationwide broadband deployment within one year, will also kick off a process of public inquiry for that project at its next public meeting on April 8.

"This will be a truly inclusive process," acting FCC Chairman Michael Copps said at the meeting. "The goal of our national strategy must be to bring value-laden, high-speed broadband to all our citizens, no matter who they are or where they live...'All' must mean everyone."

The officials at Tuesday's meeting acknowledged that numerous issues that will impact the grant awarding process remain unclear. For instance, the broadband stimulus funds were expressly approved for "unserved" and "underserved" locations, but those terms remain undefined.

McGuire-Rivera said that these are the sorts of issues the request for information and the public meetings are intended to resolve. In the meantime, the stimulus bill was prescriptive enough that prospective grant recipients "can start working on your grant application as soon as you walk out the door," she said.

The NTIA plans to make grants available in three rounds. The first notice of availability will be published sometime between April and June, with subsequent grant application rounds taking place around October of this year, and then between April and June of 2010. The agency is required by the stimulus bill to award at least one grant per state.

The Agriculture Department's Rural Utilities Service, which is responsible for distributing $2.5 billion in grants, loans, and loan guarantees for broadband, plans to start making its funds available within the next 60 days. After that first notice of availability, the RUS will have at least two more grant application periods.

As the agencies configure the grant and loan programs, they will be obligated to consult with the states, establish open-access principles, and create a database of all the grant applications. The stimulus bill also set aside $10 million specifically for audits and oversight of the broadband programs.

"It's sort of unusual for (Congress) to set aside money like that," McGuire-Rivera said. "We will be watching these grants very carefully."