Politics and Law

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."

AT&T has taken off the boxing gloves in its fight against the Google Voice service and proposed changes to Net neutrality rules.

In a letter sent to the FCC (PDF) on Wednesday, AT&T went on the attack to portray Google as a powerful company that's trying to fool the FCC into believing that the rules shouldn't apply to it.

In the letter, AT&T is trying to cover all of its bases. This means that, at times, it's hard to follow which arguments it's trying to make--the one about Google Voice or the one about Net neutrality. And it doesn't help that AT&T stoops a little low by referencing a convent of Benedictine nuns in a list of those hurt by having calls to their numbers blocked to and from Google Voice numbers.

Read more of "AT&T to FCC: Close loopholes and write rules that apply to Google, too" on ZDNet's Between the Lines.

Should Google Voice have to follow the same rules as AT&T?

(Credit: Screenshot by Tom Krazit/CNET)

The Federal Communications Commission is looking into how Google Voice treats calls to certain rural areas that landline phone companies are required to connect.

AT&T placed this complaint before the FCC, accusing Google of failing to live up to the Net neutrality rules it has long supported before the U.S. government. On Thursday, several members of Congress implored the FCC to look into the matter, and their concerns have been heard, according to a report from the Associated Press that Google has confirmed.

The dispute is over Google's practice of blocking calls to certain rural phone networks that are allowed to charge a disproportionately high rate for calls connected to those networks. Some rural carriers, in a practice known as traffic pumping about which AT&T has long complained, partner with companies that draw a high volume of network traffic, such as phone sex operators and conference-calling firms, charge a much higher connection rate, then split the revenue with them.

AT&T is required to connect such calls because it is considered a "common carrier" that is required to ensure open access to networks that were created with public money. "By openly flaunting the call-blocking prohibition that applies to its competitors, Google is acting in a manner inconsistent with the spirit, if not the letter, of the FCC's fourth principle contained in its Internet Policy Statement," Robert Quinn, AT&T's senior vice president focusing on federal regulation, said in a statement last month when it filed its original complaint with the FCC.

Google argues that it is not subject to the same laws because it's a software company and because Google Voice doesn't replace phone service; it still requires phone service to work properly. It addressed the inquiry in a blog post Friday.

"AT&T apparently now wants Web applications--from Skype to Google Voice--to be treated the same way as traditional phone services," wrote Richard Whitt, Google's Washington media and telecom counsel. "Their approach is what a former FCC chairman has called "regulatory capitalism," the practice of using regulation to block or slow down innovation. And despite AT&T's lobbying efforts, this issue has nothing to do with network neutrality or rural America. This is about outdated carrier compensation rules that are fundamentally broken and in need of repair by the FCC."

So now it appears that the FCC will attempt to referee the matter. Google's no stranger to federal authorities at the moment, with just about everything it does falling under the watchful eye of an administration that seems determined to examine dominant companies in the tech industry.

New government rules that support Net neutrality, specifically rules that prevent Internet service providers from selectively blocking sites from their networks, are expected to be unveiled in Washington on Monday, according to a report in the Wall Street Journal.

During a speech on Monday, FCC chairman Julius Genachowski is expected to unveil a new rule that would require all Internet providers--including wireless carriers--to use "reasonable" network-management practices in dealing with Internet traffic, unnamed sources told the WSJ.

The carriers have argued against such rules, noting that not all sites are created equal and that some, with their heavy data usage, are creating network traffic jams. But open-Internet advocates say that Net neutrality rules are years past due. In a statement, Gigi B. Sohn, president of Washington-based Public Knowledge, said:

The Internet was created and grew up under strict non-discrimination rules. Those same ideas are as valuable today as they were 10 years ago. Having rules in place will bring a degree of certainty that will help both carriers and consumers alike. Carriers will know what is allowed and what is not; consumers will be relieved to know they will be able to have access to any content and service on a non-discriminatory basis. We are confident that Net Neutrality rules will not hamper investment, as some critics have charged. Rather, as in the past, they will encourage investment in the kinds of innovation and technology that will help move our economy forward.

The new rule would go before the full commission for a vote next month. The WSJ notes that the three democratic members of the five-person commission support Net neutrality.

This story originally appeared on ZDNet's Between the Lines.

The Federal Communications Commission decided unanimously on Thursday to review the state of "innovation" in the wireless industry, a move that could lead to greater regulation of carriers and government intervention in disputes such as one that recently erupted over Google Voice and the Apple App Store.

All five FCC commissioners, including the two Republicans, voted to approve a pair of investigations into the wireless industry. One will look broadly at the state of competition and innovation, and the other, as CNET News reported last week, will evaluate whether truth-in-billing rules ensure subscribers know what they're paying for on their monthly phone bills.

Thursday's vote represents only a small first step toward more federal rules. While not all formal inquiries result in new regulations, FCC Chairman Julius Genachowski did stress that his agency should be "relentless" in its pursuit of wireless innovation. CTIA, the organization which represents the big wireless operators in the U.S., has said that the industry is very competitive and innovative.

One possibility is that the FCC could force mobile providers to sell subsidy-free phones, which a Democratic bill introduced last year would have required. Another is ending exclusive deals between carriers and handset makers, which would target deals such as the one Apple made with AT&T.

The FCC has intervened in Google's so-far unsuccessful attempt to include its Google Voice application in the App Store. Last week, AT&T told the agency that it was not involved in the Google Voice decision; Apple claims a decision is still pending.

CNET News has posted a redacted version of Google's reply to the FCC, which doesn't explain why its application has not been approved.

If AT&T was not involved in the decision, the FCC may not have the legal authority to intervene. As a federal appeals court in Washington made clear in the broadcast flag case, the agency's authority does not usually extend to computer hardware, at least in cases that Congress has not explicitly authorized.

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."

When it comes to broadband, Australia isn't messing around.

Earlier this week the Australian government announced a new plan to build a new fiber-optic communications network that will cost the government about 43 billion Australian dollars or roughly $31 billion in U.S. money. The new national network, which will be built by a yet-to-be-named state-controlled company, will provide broadband speeds of 100 Mbps to about 90 percent of Australian homes, schools, and businesses by 2018. The other 10 percent will get broadband access via wireless technology.

The new network will be fast enough to allow Australians to watch multiple high-definition videos at once and download loads of other multimedia content all at once. Only a small number of countries today offer speeds that high to consumers, including South Korea, Japan, France, and Germany.

Prime Minister Kevin Rudd said the government is taking this aggressive step because he believes a fiber-optic network is essential to stimulate the ailing economy. He also believes it will increase Australia's productivity and competitiveness with respect to other nations.

U.S. President Barack Obama also believes that broadband is crucial to keeping America competitive in the world. The U.S. has consistently fallen short of other nations when it comes to broadband. A year ago, the International Telecommunications Union ranked the U.S. 15th in the world when it comes to broadband. Australia was ranked 12th.

Even though both countries see broadband as an important way to stimulate the economy and a good investment for future productivity and innovation, they are going about it in very different ways. Instead of controlling the deployment of new telecommunications infrastructure, the U.S. plans to provide funding to the private sector as well as local and state governments to build infrastructure and invest in new services as they see fit.

Congress has allocated $7.2 billion as part of its overall economic stimulus package to increase broadband penetration and coverage and to provide faster, more affordable service to as many Americans as possible. As part of the new legislation, the Federal Communications Commission has also been tasked with coming up with a national broadband policy.

On Wednesday, the FCC opened up discussion to help establish a national broadband policy. While the stimulus investment is certainly a start, the U.S. government has made no strides to build infrastructure itself. Instead, it will rely on a public/private partnership to improve the national broadband network.

It will be interesting to see which approach proves to be most successful. Will Australia move more quickly up the ladder of productivity and technological innovation due to its investment in broadband? Or will the government sink billions of dollars into a project that is unsustainable in the free market?

On the flip side, will the approach taken by the U.S. really improve broadband access, penetration and speeds? Or will the investment only boost already affluent and broadband-rich regions, such as large cities? I'm very interested to hear what readers think about Australia's plans with respect to what the U.S. is doing, so please share your thoughts in the comment section below.

Updated at 10:20 a.m. PDT with additional analysis and comments

WASHINGTON--As other government agencies race to dole out $7.2 billion in stimulus funds for broadband deployment, the Federal Communications Commission on Wednesday began the process of developing a holistic plan for improving broadband access nationwide.

The commission adopted a notice of inquiry that will seek out comment on a wide variety of issues affecting broadband deployment from diverse parties across the country. Under the American Recovery and Reinvestment Act, the FCC has until next February to consider these issues and develop a national broadband plan.

"This commission has never, I believe, received a more serious charge than the one to spearhead development of a national broadband plan," acting FCC Chairman Michael Copps said.

The notice of inquiry will ask for input on numerous issues, including: effective and efficient mechanisms for ensuring broadband, how to define and measure portability, affordable pricing and quality of services, the broadband program's impact on universal service programs, adoption and digital literacy rates, and how to advance policy goals such as public safety and the improvement of health care services through broadband.

FCC Chairman Michael Copps

(Credit: FCC)

"Our notice of inquiry seeks to be open, inclusive, out-reaching and data-hungry," Copps said. "It will go outside Washington, D.C., to rural communities, the inner city and tribal lands. It will go where the facts and the best analysis we can find take it."

The commissioner noted that the notice of inquiry will also consider the complications and challenges of implementing broadband, including ensuring openness, avoiding invasions of people's privacy, and ensuring cybersecurity.

Both Copps and Commissioner Jon Adelstein emphasized the need for the government to take a stronger role in fostering nationwide broadband access and adoption.

"Real economic and social progress needs to be fueled by both vigorous private enterprise and enlightened public policy," Copps said. "The missing ingredient until this year has been the enlightened public policy."

The media reform organization Free Press praised the FCC for beginning the process for increasing government guidance in the telecommunications sector.

"The blind deregulatory regime that we have today is a blueprint for what to avoid in the future," said Derek Turner, research director of Free Press. "Under the last administration's wait-and-see approach, competition disappeared, speeds stagnated, prices went through the roof, and the open Internet was placed in jeopardy."

Commissioner Robert McDowell said the FCC should take care to acknowledge the telecommunications industry's successes as well as its shortcomings.

The sector, he noted, "has positive momentum at a time when other sectors are struggling."

Susanne Guyer, Verizon's senior vice president of federal regulatory affairs, said in a statement that the company looks forward to working with the commission.

"Given its importance to economic growth, job creation, and international competitiveness, creating a climate for investment in advanced broadband networks should be job one at the FCC," she said. "Through this plan, the FCC can take a major step toward ensuring that all Americans have access to broadband networks and have the skills and devices necessary to access the economic and social benefits available through broadband connections."

Bumpy road ahead?
But some telecommunications policy experts say that the road toward a comprehensive broadband policy could be a bumpy one. The main reason is that the Commission has opened the inquiry up to a wide array of participants. And it is asking a broad range of questions and even asking respondents to share any other thoughts about what the policy should entail.

And unlike previous FCC inquiries, this one has a hard deadline of February 2010. This means that the FCC staff will have to work quickly to compile what is likely to be a tsunami of comments on a broad range of topics. Melding these comments into a cohesive set of policies will be a huge challenge.

"At the end of the day someone has to write something up," said Glenn Richards, a partner in Pillsbury Winthrop Shaw Pittman's communications law practice. "What concerns me is that the FCC will get so many comments from so many different entities, it might be hard to come away with something that is useful."

There are also expected to be big battles among different groups as the comment cycle progresses. The most obvious may be the fight for Net Neutrality laws or regulation. Supporters of Net Neutrality regulation believe that there should be protections to ensure that applications are not blocked or degraded on the Internet. But service providers say that new regulation could hinder their ability to manage their networks.

Richards also believes another big fight between incumbent service providers and consumer advocates and others may center on defining what is considered an "under-served" region. One of the goals of the new broadband policy is to get affordable broadband to as many people as possible.

"When we talk about under-served regions, you have to define what that means," he said. "Is it sufficient to have one provider in an area? Or is two enough? Do we need to set policy and provide funding to regions for three providers, when some areas of the country don't have any broadband? These are going to be some of the tough questions that will be asked and debated."

But when it comes to doling out the money from the economic stimulus package, most of it will already be allocated by the time the FCC gets around to finishing its national broadband policy.

The National Telecommunications and Information Administration and the U.S. Department of Agriculture are in charge of distributing the $7.2 billion in stimulus funds for broadband. And these distributions will happen in three phases, with the first phase occurring between April and June and the last phase occurring by September 30, 2010.

Meanwhile, the FCC's broadband policy is due to be finished in February 2010, which means two-thirds of the stimulus money will have already been allocated by the time the mapping and policy issues have been defined. Obviously, this is not an ideal situation. Advisers to President Obama have said they would have liked to have had the policies in place before allocating money, but the economic crisis is too severe to wait.

Watchdog groups have expressed concern that money could be wasted without achieving the ultimate goal of improving broadband access, speed, and affordability for all Americans.

But Richards said that this should not take away from the importance of the policy that will be set under these new guidelines.

"Chairman Copps said during the hearing that he has wanted to establish a national broadband policy for years," Richards said. "And it would have been nice to have most of this in place before they started handing out the money. But the policy they are defining now will really be important in terms of setting a roadmap for future regulatory policy. And that is really important."