NEW YORK--Federal Communications Commission commissioner Jonathan Adelstein joined tech policy pundits, entrepreneurs, and venture capitalists Tuesday to launch a new initiative aimed at making broadband a priority in the U.S.
The group, which calls itself InternetforEveryone.org, officially launched at Free Press' Personal Democracy Forum here. The main purpose of the new initiative is to help organize public support for a national broadband policy.
Vint Cerf, Google chief Internet evangelist; Tim Wu, Columbia University professor; and Jonathan Adelstein, FCC Commissioner, at the launch of InternetforEveryone.org.
(Credit: Marguerite Reardon/CNET News.com)Prominent figures in the tech world, including Google Chief Internet Evangelist Vint Cerf, as well as law professors Larry Lessig of Stanford and Tim Wu of Columbia were on hand with Brad Burnham of the venture capital firm Union Square Ventures and Robin Chase, founder of Zipcar, to join Adelstein in becoming members of the group.
Adelstein, one of two Democratic commissioners on the FCC, has been a big proponent of a national broadband policy for some time. During his introduction, he admitted has been frustrated with the current administration's lack of focus on broadband. But he said he hopes this initiative will help provide a forum to allow the public's voice to be heard in Washington.
"We need to mobilize the public to make broadband an issue in D.C., so that broadband penetration and pricing rises to the top of the agenda," Adelstein said in an interview following the press conference. "It's important for us to make sure that the public's interests are served. We've already heard a lot from the cable and phone companies."
Broadband advocates have long complained that the U.S. is falling behind other countries in its ability to offer high-speed Internet service at affordable prices to all of its citizens.
Josh Silver of Free Press said during the press conference that the U.S. has slipped from 4th to 15th in the world in terms of broadband penetration. And he said that half the country doesn't subscribe to high-speed Internet. He and others in the group said it was time for a national policy framework to be established to ensure that government helps make broadband more accessible to people throughout the country.
But not everyone agrees that the U.S. is lagging in broadband or that a comprehensive national policy is even necessary. Verizon COO Denny Strigl said at the NxtComm trade show in Las Vegas said last week that it was a "myth" that the U.S. lagged behind other nations in high-speed Internet.
"It's time to put this myth to rest," Strigl said during a keynote speech. "What the communications industry has achieved in deploying broadband and mobile services is tremendous. And we've done this not through industrial policy, but through private investment delivering innovation. The benefits have rippled through the entire economy creating millions of high-tech jobs and billions of dollars in value."
Indeed, comparing the U.S. with other countries with much smaller geographies and populations is a bit like comparing apples and oranges. In much of the U.S., people have access to not just one broadband provider but two. And as Verizon deploys fiber directly to consumers' homes and AT&T upgrades its network to offer faster broadband and TV service to its customers, those companies have forced their cable competitors in those areas to increase speeds and in some places even lower prices.
So in many parts of the country, broadband competition is working. But the problem is that the competitive forces aren't working uniformly throughout the country. There are still pockets of the U.S., especially in rural areas, where broadband is only offered by one provider or by none at all. And prices per bit are still much higher than they are in other parts of the world.
"People have just accepted that bandwidth is something that American families will spend hundreds of dollars on per month," Columbia professor Tim Wu said. "People don't realize how much we pay for how little bandwidth we actually get."
Wu likened the broadband market to the energy market, saying bandwidth is a commodity controlled by a tiny cartel of phone companies and cable operators. He said that prices have been inflated and kept high, which has kept many people out of the broadband revolution.
"I agree that for most of the country, access to broadband is not the issue," he said in an interview. "But I'd say beyond that, the market has stalled. We need to make America a leader in broadband pricing and speeds. The attitude that it's just 'OK' to have access to DSL isn't good enough."
Members of the new "Internet for Everyone" initiative believe that a national broadband policy can help. That said, the group didn't announce support for any particular legislation nor is it backing a specific broadband policy proposal. But members of the group seem to agree that the reallocation of wireless spectrum should be a major component to any national policy.
Broadband advocates had hoped that the recent 700MHz spectrum auction, which reallocated spectrum that has been used for analog TV signals, would lay the foundation for a third national broadband provider. But at the conclusion of the FCC auction, it was incumbents, such as Verizon Communications, that came out the big winners in the auction, gobbling up key national licenses for spectrum.
"I think the commission missed a golden opportunity in the 700MHz spectrum auction to ensure there would be a third pipe into the home for broadband," Adelstein said in an interview.
The FCC is currently looking at freeing up more spectrum that could be used by new entrants to create new wireless broadband services, he added. One proposal on the table from a company called M2Z proposes that the FCC open up 25MHz of spectrum that could be used to build a free wireless network. Under the plan, the FCC would give the company access to spectrum for free. The company would build the network and fund the service through advertising. As part of the proposal, M2Z planned to give the FCC 5 percent of its gross revenue from the service.
The FCC originally dismissed the proposal, mostly because it asked the commission to allocate spectrum for free. But now the commission seems to be reconsidering it.
"Right now we are contemplating opening up about 20MHz of spectrum for free wireless broadband," Adelstein said in an interview. "There is a business plan on the table, so we will have to see what happens."
Another option for the FCC is to open up "white spaces", or the spectrum bands left vacant between broadcast TV channels.
Several companies, including Google and Microsoft, have been working on prototype devices that demonstrate that wireless devices can work within these bands without causing interference. But the broadcast TV industry has been opposed to any use of "white spaces." Still, broadband proponents see it as an important asset to be used in expanding the broadband market.
"Spectrum liberation in our time needs to be a priority for any national broadband policy," Wu said. "And the 'white space' spectrum is a good way to do that. It offers a ton of bandwidth."
T-Mobile USA is the latest mobile operator to make it easier to get out of those dreaded cell phone contracts.
On Monday the company said that it will pro-rate or reduce the cost over time of its early termination fees for contract customers. This means that customers will pay less to terminate their subscription as the end of their contract nears.
Beginning on June 28, customers with a one-year or two-year contract with T-Mobile will see their early termination fee drop from $200 to $100 if they end their contract with 91 to 180 days remaining on their agreement. If they end a contract with fewer than 91 days left on it, they will pay a termination of fee of $50. For customers who terminate their service in the last 30 days of their contract they will either pay the $50 fee or their standard monthly charge, depending on which one is cheaper.
The new policy only applies to new T-Mobile subscribers and subscribers who are renewing their contracts on or after June 28.
The battle over early termination fees has heated up recently as wireless operators face multimillion-dollar class action suits from consumers who say these fees are unfair and deter competition. Earlier this month a California state jury ruled that Sprint Nextel's fees were indeed legal in the first of these class action lawsuits.
Now the Federal Communications Commission is looking to get involved, and is considering making rules about early termination fees. Chairman Kevin Martin has included pro-rated contracts in his proposal, which he is hoping the commission will consider later this summer. Congress has also weighed in with proposed legislation.
Cell phone operators seem to have gotten the message. And the major players are starting to make changes. Verizon Wireless was the first major carrier to adopt a pro-rated policy almost two years ago. AT&T also announced it had changed its policy in October. Starting May 25 new AT&T subscribers will have their termination fees pro-rated over the life of their contract. The early termination fee will start at $175 and it will be reduced by $5 every month over the life of the one- and two-year contracts.
Sprint Nextel also said it will change its early termination fees. But the carrier has not implemented the new policy yet.
In addition to the new early termination policy, T-Mobile has also recently announced more options for customers who don't want a contract. The T-Mobile FlexPay plan offers T-Mobile customers its typical cell phone packages that include long-distance calling, roaming, and special rate offerings like MyFaves with no contract. Subscribers simply pay the retail cost of the phone and the regular monthly service charge for the service.
T-Mobile has also added more options for its pre-pay and pay-as-you-go customers. Consumers can choose a Pay By the Day plan. Under this plan, users pay $1 for every day they use their phone. They are given unlimited T-Mobile to T-Mobile calling and unlimited night calling from 7 p.m. to 6:59 a.m. For all other calls, users are charged 10 cents a minute. And they're charged 10 cents a minute for outgoing text messages and 5 cents a minute for incoming text messages.
T-Mobile also offers a Pay As You Go plan, which had previously been called T-Mobile To Go. This plan allows customers to pay for minutes they use. If they top off their account with $100, they get a 15 percent discount.
And finally, T-Mobile renamed its Sidekick To Go plan simply the Sidekick Prepaid plan. This plan offers users unlimited domestic e-mailing, Web surfing, instant messaging, and text messaging for $1 a day. And nationwide calling under this plan is 15 cents per minute.
The Federal Communications Commission on Friday formalized its plans to auction off a section of wireless spectrum to buyers who promise to provide free Internet service that filters out pornography and other inappropriate content, and offers open access to third-party devices and applications.
The agency is seeking public comment on the plan details, of which are posted here. Winning bidders of the 25 megahertz of spectrum in the 2155MHz band would also be required to provide free wireless coverage to at least half of the United States within four years, and to at least 95 percent of the population by the end of the 10-year license, according to Reuters and the FCC posting.
The plan could face opposition from wireless service providers, who have traditionally opposed any stipulations imposed on wireless spectrum auctions. CTIA, the trade organization representing the industry, has already filed comments with the commission urging it not to put requirements on the spectrum.
Given that free wireless Internet business models have yet to be proven successful, it could prove challenging for the FCC to find bidders willing to take on the above stipulations.
The chairman of the Federal Communications Commission is expected to support the $5 billion merger of Sirius Satellite Radio and XM Satellite Radio, according to published reports.
FCC Chairman Kevin Martin's approval comes in exchange for concessions that include a three-year freeze on subscription prices and the turning over of 24 channels to noncommercial and minority programming, the Associated Press reported. Martin is expected to issue his recommendation as early as this week that the FCC should approve the merger.
"As I have indicated before, this is an unusual situation," Martin said in a statement. "I am recommending that with the voluntary commitments (Sirius and XM) have offered, on balance, this transaction would be in the public interest."
However, merger approval hinges on the approval of at least two of the four remaining commissioners, who have largely kept their opinions on the matter private.
The FCC is the final regulatory hurdle the companies need to move the merger forward. The deal, which was valued at $13 billion in February 2007 when it was announced, was approved by XM and Sirius shareholders last December.
Martin had indicated at the end of March that the agency was inching closer to a decision on whether the deal passes muster.
While the proposed merger sailed through a U.S. Department of Justice review without conditions, key congressional Democrats had urged the FCC to impose limits designed to protect consumers.
Early termination fees for wireless cell phone contracts came under fire during a Federal Communications Commission hearing Thursday as commissioners examined an industry-backed proposal that could soften the blow of these fees for some consumers.
The FCC held the hearing to gather more information as it considers a proposal that would give new cell phone customers a 30-day grace period to cancel their contracts without penalty. After those 30 days, early termination charges would then be prorated or reduced over the duration of the contract.
In exchange for accepting this proposal, wireless operators have asked to be absolved from ongoing lawsuits that could cost them hundreds of millions of dollars.
Wireless operators seem to have won at least the initial battle in their legal wars over early termination fees. Also on Thursday, a California State jury ruled in favor of Sprint Nextel in the first of these class-action lawsuits.
FCC Commissioner Kevin Martin acknowledged that early termination fees, which range from $150 to $225, were problematic, stating that "in practice (it) can leave people locked into a service that they really want to leave." He even joked that his wife, who apparently is unhappy about the fees, had volunteered to testify at the hearing.
But he said he was skeptical that the class-action lawsuits would resolve issues for all consumers. And he offered his own proposal, which was similar to the industry's proposal.
Martin proposes that fees be prorated, as the industry has suggested, but he also said that the fee should be based on the cost of the phone. For example, the fee for a service with a $50 phone would be lower than one for a $500 phone, he said. He also said fees should be reasonable, and that customers should be given a suitable time period to evaluate the service before being penalized for canceling service.
Consumer advocates and state regulatory officials said that even prorating fees is not enough. Anne Boyle, chair of the Nebraska Public Service Commission, called for these fees to be abolished altogether.
"The industry should do away with these contracts and let people purchase the products on their own and pay for service on a month-to-month basis," she said. "It's the most common method for providing products and services in this country."
Boyle and other state regulatory officials also argued that states--and not the FCC--should have authority over carriers and the fees they charge. Martin argued that a single, federal policy is needed to protect all consumers, especially in states where no policies are implemented.
"Don't you think that some kind of federal rules, even if it was a floor, is better off for the consumers who have none?" Martin said to the panel during the hearing.
Operators claim these fees are to recover the cost of cell phones, which they subsidize in exchange for customers signing up for long-term contracts. And they have long argued that without contracts or fees, customers would be required to pay more upfront for phones.
"If we didn't have early termination fees, we would be here today talking about how to lower the barrier to entry for subscribers," Tom Tauke, executive vice president of public affairs for Verizon, said of during the hearing. "(The current model) has proven to be a good business model giving consumers access to the latest devices and allowing wireless companies to offer them at subsidized prices."
But Lee Selwyn, an expert on telecommunications policy and economics, testified at the hearing that the early termination fees carriers charge is roughly 12 times higher than the cost of the actual subsidy. He said that, on average, carriers are only paying about $14.33 for each phone they sell to a consumer.
He also said that carriers have overstated the loss in profit they face when customers terminate contracts early. He said that operators build their level of churn (or customer turnover) into their forecasts for capital and operational spending. Ultimately, carriers only lose about $0.70 of profit per month on customers who terminate contracts early. So for someone who still has 13 months left on a 24 month contract, a wireless operator is only losing roughly $9 in profits, a far cry from the $150 or $200 it charges customers to leave its service early.
In general, wireless operators are reacting to the public outcry over these fees by revising their service plans. AT&T and Verizon Wireless, the two largest operators in the U.S., have already begun prorating cancellation fees. And the other major carriers have said they will do the same. Some operators have also stopped restarting contracts when customers make changes to their service plans. But so far, not one major wireless operator in the U.S. has said it will get rid of early termination fees altogether.
Instead, operators argue that customers who don't want contracts have other options. Most of them offer month-to-month plans for customers who buy their own cell phones. But Boyle and Selwyn pointed out in their testimony Thursday that these month-to-month plans are often more expensive than the plans offered with subsidized handsets.
"Common sense dictates that the customer that buys his phone outright would pay a lower monthly fee," she said. "But they don't. It's the funniest math I've ever seen."
But Verizon's Tauke said consumers have plenty of alternatives to contracts, and he said that his company is moving toward giving customers more freedom and choice.
"Today if you walk into a Wal-Mart, there are lots of options in terms of prepaid phones," he said. "And (at Verizon), we are moving toward an open development system so that you can purchase devices from people not affiliated with our company."
The Federal Communications Commission will discuss a proposal at an open meeting Thursday that could reduce the cost of getting out of your cell phone contract.
The industry-sponsored proposal would give new cell phone customers a 30-day grace period to cancel their contracts without penalty. After those 30 days, early termination charges would then be pro-rated over the life of the contract. This means customers who want out of their contract in month 20 would pay less than those cancelling their service after only four months.
Cell phone operators have argued that they must impose early termination penalties on contracts because they subsidize the cost of the handsets. And to recoup the cost, the operators must be guaranteed a certain amount of service revenue.
AT&T and Apple just announced this week that the new iPhone 3G will be offered in this way. AT&T customers will be required to sign a two-year contract in exchange for the subsidy, which brings the cost of the new 8GB of the phone down to $199.
Customers who bought the first iPhone were also required to have a two-year contract with AT&T despite the fact that the phones were not subsidized.
In the eyes of many consumers these early termination restrictions are unfair and hamper competition. And thousands of them have banded together to file class-action lawsuits.
Check back on Thursday for coverage of the FCC hearing, which begins at 7 a.m. PDT.
The transition to digital TV is not going as smoothly as some had hoped, according to some government agencies that testified to Congress earlier this week.
A report issued by the Government Accountability Office showed that nearly half of the households that could lose TV service after the transition to digital broadcasting are still unprepared for the switch.
About 84 percent of consumers were aware of the transition, but many didn't know what they had to make sure their TV service wasn't interrupted, the GAO report said. More than half of those surveyed said they were aware of the government's voucher program to subsidize the cost of converter boxes that are needed to view digital TV on older analog TVs. But about two-thirds of those people didn't know how to get a coupon.
Even consumers who won't be affected by the switch were confused, The Washington Post reported. Roughly 30 percent of those who don't actually need a converter box said they were getting ready for the transition.
The confusion is occurring despite broadcasters and cable operators airing public awareness campaigns on TV.
The vouchers, which cover $40 of the cost of the converter boxes, started being sent in February. But they expire after 90 days. The agency overseeing the program reported that more than 40 percent of the 800,000 vouchers that have already been sent out have not been redeemed. And the agency doesn't have enough money to pay for the postage to resend these vouchers.
In February 2009, TV broadcasters will vacate wireless spectrum used to broadcast analog TV signals. Instead, broadcasters will transmit digital TV signals, which use spectrum more efficiently and provide better picture quality. The transition to digital means that some older TVs, and TVs with analog-only tuners, will have to be retrofitted to tune into digital signals.
Preparation for the switch to digital TV is being closely watched since some older TVs that have not been retrofitted won't work after the analog signals stop broadcasting.
Many of the 70 million or so analog TV sets that rely on over-the-air signals belong to minorities, senior citizens, low-income individuals, and people who live in rural areas. The fear is that these individuals will not be ready for when broadcasters stop transmitting analog TV signals in February 2009.
The Motion Picture Association of America is looking to make a deal with the Federal Communications Commission to get the latest Hollywood movies on TV much sooner after their original release. But there's a catch.
In exchange for the faster release, the MPAA wants the FCC to change its rules to allow the industry to prevent these movies from being recorded on DVRs and viewed on some high-definition TVs.
The MPAA filed its petition last week. The FCC is currently asking for comments on the proposal, and it could make a decision on the petition later this summer.
Even though it looks like there could be some benefits for consumers under the MPAA proposal, I think it might be a wolf in sheep's clothing.
The MPAA states in its proposal that movie studios are interested in opening a new distribution channel through cable and satellite TV providers, which could offer new movies before they're available on DVD. This means that people at home will be able to see movies months earlier than they could under the current schedules.
Today it often takes studios three to four months before they release movies on DVDs. Sometimes the wait is longer for hit movies. And cable video-on-demand services typically get movies a month or so after the DVD release.
Of course, studios would likely charge a premium for delivering these early release HD movies at home, but it might be cheaper than taking the whole family to the theater.
But here's where the catch comes in. The MPAA says that this type of distribution increases the risk of piracy, which is already rampant thanks to high-speed broadband networks and file-sharing technology. In an attempt to discourage piracy, the MPAA has proposed that the FCC make an exception to a 2003 rule in order to allow the studios to block certain movies from being recorded by a DVR or viewed on certain high-definition TVs.
In technical terms, the MPAA wants to use "selectable output controls" or commands embedded in the programming that allows the industry to block recording capabilities, unilaterally turn off digital outputs deemed "unsafe," and degrade the quality of high-resolution signals coming out of analog outputs.That means it could turn off analog connectors to TVs and DVRs that use digital connectors. And it also means that it could disable connectors for some digital TVs that don't have copy protections.
In 2003 the agency, then under FCC Chairman Michael Powell, banned the use of these "selectable output controls," because it feared that some consumers would not be able to access high-definition content. The consumer electronics industry argued that consumers would be reluctant to buy high-definition digital TVs if they were unsure whether they'd have access to all content.
Satellite provider DirecTV filed its own petition during the original debate, arguing that without these controls it would be unable negotiate deals with studios for early access to premium content.
If I were advising the FCC, I'd say be careful. Changing these rules is a slippery slope. The MPAA says it's only asking for an exception to the rule for recently released movies, but movie release dates are changing anyway. And it's no secret the movie industry doesn't like home recording devices. Who's to say that the industry won't push the envelope and restrict more content from being recorded?
Federal Communications Commission Chairman Kevin Martin said Thursday he expects the agency to make a decision soon about the Sirius Satellite Radio merger with rival XM Satellite Radio.
Martin said during an interview on CNBC's Squawk on the Street Thursday that he expected the commission to "do something soon." But he defended the long review process by saying that the deal was "extraordinary" and raised difficult issues. Specifically, he said the FCC already had a rule in place that prohibited the merger of the two satellite radio companies.
Originally, the agency barred satellite radio companies from combining. But the rule could be changed, especially as satellite radio faces more competition from Internet music services, music playing phones, and online music stores like Apple's iTunes that allow people to play music on iPods.
Martin acknowledged that the two companies had made pricing concessions in order to get the deal approved by regulators. In March, the Justice Department concluded that the deal would not "substantially lessen competition."
The FCC is the final regulatory hurdle the companies need to move the merger forward. The deal, which was valued at $13 billion in February 2007 when it was announced, was approved by XM and Sirius shareholders last December.
Martin had indicated at the end of March that the agency was inching closer to a decision on whether the deal passes muster. But two months later, the FCC still hasn't announced a decision.
Meanwhile, XM and Sirius have been burning cash as competition from online video and music sites has grown over the past year and a half. Critics wonder what's taking the agency so long to decide. When asked during the CNBC interview if the commission was under an obligation to make its decision sooner rather than later, Martin had this to say:
"I think we are under an obligation, but this is an unusual circumstance...This was unlike any other merger that's come in front of us. We have a rule that would prohibit it from going forward. I think they're asking for something extraordinary, and the commission is taking a look at it. We'll get back to them soon."
Comcast will start testing a new method for managing traffic on its network this week that targets heavy Internet users.
Starting Thursday, Comcast will test a new system that will throttle back or slow down traffic during times of congestion for heavy bandwidth users. The initial tests will be conducted in Chambersburg, Pa. and Warrenton, Va. Later this summer the company plans to expand testing to Colorado Springs, Colo.
Comcast, the largest cable provider in the U.S., has been under fire for months after it was discovered the company had been slowing down peer-to-peer traffic on its network. The company claimed it had singled out peer-to-peer, file-sharing traffic, because it was eating up an inordinate amount of bandwidth, which caused degradation across the rest of its customers.
Consumer groups were incensed by the tactic, and the blogosphere filled with criticism. The Federal Communications Commission is currently looking into the situation to see if Comcast has violated any of its Net neutrality principles.
Comcast has since begun working with peer-to-peer providers and has said that it will not target specific applications on its network. But the company contends that it still must find a way to better manage traffic on its network. And these latest tests, which will run in each market for a month, are meant to help the company figure out the best method for managing its network.
This latest approach is focused on individual users and does not target a specific application. If the network is congested, Comcast will slow down traffic for customers who are using over a certain threshold of bandwidth, regardless the applications they are running.
Comcast isn't the only cable operator struggling to keep up with bandwidth on its network. Time Warner Cable, the second largest operator in the U.S., has expressed similar concerns. The company said earlier this week that it will begin testing a new metering system in Beaumont, Texas.
The way it works is that subscribers who go over their limit for uploading and downloading material will be charged $1 per gigabyte. The test will only apply to new customers in the test region. The tiered pricing will work this way for the Internet portion of subscription packages that also include phone or video use: At the low end, users will pay $29.95 per month for service at a speed of 768 kilobits per second, with a 5GB monthly cap. At the high end, users will pay $54.90 per month for service at 15 megabits per second, with a 40GB cap.
It will be interesting to see how customers react to the both tests. Will the Comcast broadband hogs even notice their traffic has been slowed? And will Time Warner's customers take a beating if they go over their limits? I guess we'll know more when these tests are completed. Until then, if you're a customer in either of these tests, please let me know how it's going. You can reach me at maggie.reardon@cnet.com or feel free to post your comments on this blog.
