These comments are also available in PDF format.
Before the
FEDERAL COMMUNICATIONS COMMISSION
Washington, D.C. 20554
In the Matter of
Broadband Study Conducted by the Berkman Center for Internet and Society
International Comparison and Consumer Survey Requirements in the
Broadband Data Improvement Act
GN Docket No. 09-47
National Broadband Plan Notice of Inquiry
GN Docket No. 09-51
Inquiry Concerning the Deployment of Advanced Telecommunications
Capability to All Americans In a Reasonable and Timely Fashion and
Possible Steps to Accelerate Such Deployment Pursuant to Section 706 of
the Telecommunications Act
GN Docket No. 09-137
COMMENTS OF PUBLIC KNOWLEDGE, CCTV CENTER FOR MEDIA AND
DEMOCRACY, MEDIA ACCESS PROJECT, MEDIA ALLIANCE, AND U.S.
PIRG
ON NBP NOTICE # 13
November 16, 2009
Summary
Broadband competition leads to economic growth, more jobs, and lower prices for consumers. As the Berkman Study makes clear, unbundling increases broadband penetration, bringing more broadband to more people and businesses. As a result, countries with policies that encourage structural separation experience a growth in Gross Domestic Product (“GDP”). This growth comes from the increased productivity and opportunity that broadband provides. The Commission should recognize the benefits that structural separation has brought to the countries examined in the Study, and move to create similar beneficial policies here in the United States.
These policies should be as platform neutral as possible. There is no reason to apply unbundling rules to some platforms while excluding others. As the Berkman Study makes clear, unbundling benefits consumers. Consumers deserve this benefit on all platforms.
Once the Commission has developed its new unbundling rules it must commit to enforcing them. Unbundling rules without dedicated enforcement will guarantee both the failure of the unbundling policy and the continued decline of America’s international broadband standing.
Opponents who argue that broadband investment is fueled by the current deregulatory climate are undermined by the findings in the Berkman Study. Instead, just the opposite appears to be true: when governments implement a clear policy of unbundling it drives investment, access to broadband services, and ultimately GDP and job growth.
Unbundling is certainly not a silver bullet. The Commission will still need to vigilantly protect consumers in an unbundled environment. However, it will be a significant step towards solving a number of problems in the broadband industry.
In addition to unbundling, the Commission should encourage government efforts at every level to provide competition and solve market failures. Direct government investment can create critical infrastructure that can then be shared by private retail broadband providers. Government commitments to un- and underserved areas can draw attention to markets that private industry may have missed. Finally, government investment can help bring access to consumers who might never receive affordable broadband access without it.
There are a number of ways in which the Commission is empowered to implement unbundling. First and foremost, the Commission can act to reclassify all broadband services — no matter the platform — as Title II services. This would help bring a unified framework to all types of broadband services.
However, the Commission need not classify all broadband services as Title II services in order to impose unbundling. The Commission’s Title I ancillary authority empowers it to impose the types of rules discussed in the Berkman Study. Additionally, Section 706 of the Communications Act contains a directive from Congress to create a regime to encourage the deployment of broadband services. The Berkman Study suggests that unbundling is just such a regime.
Ultimately, the Berkman Study makes it clear that unbundling will provide the environment necessary for increased broadband competition, growth, and access. This will power critical economic expansion and create jobs. Once the FCC, using either Title I or Title II authority, creates an unbundling regime, both consumers and businesses will benefit.
Argument
I. UNBUNDLING, FUNCTIONAL SEPARATION, AND STRUCTURAL SEPARATION INCREASE ADOPTION AND COMPETITION IN BROADBAND SERVICES.
The broadband study conducted by the Berkman Center for Internet and Society[1] (“Berkman Study” or “Study”) provides useful insight into regulatory policies that have affected broadband penetration in many OECD countries. Based on these insights the Study concludes that “unbundling has a positive and significant effect on levels of penetration.”[2] In addition to unbundling, the Study also finds that open access policies such as bitstream access, collocation requirements, wholesaling, and functional separation facilitate competition in broadband markets.
The Study’s findings do not stand alone. Beginning with the first Notice of Inquiry, Public Knowledge and others cited to the experience of European and Asian countries that have adopted unbundling and other pro-competitive regulations such as structural and functional separation.[3] Nor is the Berkman Study the only study to conclude that unbundling encourages adoption without discouraging investment. The attached presentation by Professor Rob Frieden to the Japanese Ministry of Internal Affairs and Communications found that, in Japan, fiber unbundling did not negatively impact NTT’s investment in fiber.[4]
In view of these consistent findings, the Commission should recommend readopting open access policies such as unbundling and structural or functional separation for broadband services as part of the National Broadband Plan. Open access policies would increase competition in the market for broadband services and greatly improve the levels of penetration in this country.
The benefits of increased broadband penetration more than justify re-examination of the Commission’s policy of deregulation and elimination of the regulations adopted so successfully in other countries. The Berkman Study notes the strong correlation between economic growth and increase in broadband adoption. It cites a World Bank report that every 10 additional subscribers per 100 in high-income countries correlates to a GDP growth of 1.21%.[5] As the Study notes, the average growth rate in these countries between 1980-2006 was 2.1%.[6] Again, other studies confirm the Study’s conclusions. For example, a study of the impact of broadband in Germany found that increased broadband penetration would contribute 968,00 jobs over a period of 10 years.[7]
In other words, broadband penetration creates jobs, and the policies that facilitate broadband penetration and adoption — such as unbundling — create jobs.[8] If this were not enough, the Berkman Study also provides evidence that broadband penetration advances such positive benefits as telemedicine, telecommuting, e-commerce, as well as the hard to quantify, yet extremely valuable, social and political interactions.[9]
Finally, the Berkman Study observes that despite an early lead in broadband adoption, the United States has consistently lost ground in numerous international rankings.[10] Again, Berkman is not alone in finding that U.S. performance in broadband has declined over time.[11] Critics of individual studies fail to address that multiple studies find a consistent trend: since the United States abandoned unbundling in favor of a “deregulatory” approach, broadband deployment and adoption in the United States has fallen behind countries that adopted unbundling policies in key metrics such as general adoption, affordability, and utility.
II. THE COMMISSION SHOULD STRIVE TO SUCCESSFULLY IMPLEMENT A POLICY OF UNBUNDLING.
A. The Commission Should Enforce Unbundling Requirements Across Platforms.
Although the details of implementation may differ across platforms, the basic principle of creating competition via unbundling remains the same. The evidence demonstrates that requiring unbundling on some platforms and not others injures consumers and creates opportunities for “regulatory arbitrage” at the expense of consumer welfare. Especially in the absence of any pro-consumer benefits to permitting both unrestricted vertical integration, combined with the ability to exclude competitors from necessary physical facilities, the Commission should embrace the principle of unbundling in all wireline and wireless platforms.
Oftentimes, consumers’ access to broadband platforms is limited. To some degree, they are captured by the platforms actually available in their neighborhoods. If different policies are applied to different broadband platforms, such “stranded” consumers will be unable to switch to more desirable platforms. Even for those consumers with a choice of platform, the potentially high switching costs between platforms creates lock-in effects that are better addressed by permitting competition among providers sharing the same platform. Finally, the ability of providers of competing services to reach all potential customers regardless of platform will have positive effects on both adoption and consumer welfare.
Commentors recognize that the Study does not come to a conclusion about the result of unbundling fiber networks. However, as noted in the Study, this is due to the unique technical topography of fiber optic networks.[12] Additionally, the limited number of fiber-based options available to consumers today provided an inadequate sample size for the Study to confidently draw conclusions as to how to implement fiber unbundling. It is therefore not a question of whether the economic rationale for applying unbundling changes when applied to fiber, but rather how best to apply unbundling rules to fiber. Accordingly, while adopting the underlying principle of unbundling across all platforms, the Commission will need to initiate a separate proceeding to determine the proper approach to unbundling fiber.
For similar reasons, the Commission will need to separately study the question of unbundling in wireless. To some extent, licensees already provide wholesale access to spectrum. The fact that industry calls this “roaming agreements” rather than “wholesale access to spectrum” does not change the underlying nature of activity. However, the further question of how to unbundle the wireless platform poses sufficient technical differences from DSL and cable that the Commission should examine wireless separately.
B. The Commission Must Be Prepared to Enforce Its Rules For the Long Term.
No matter how the Commission ultimately decides to proceed with unbundling, it must be prepared to enforce its own rules. The history of the unbundling of voice calling vividly illustrates that incumbents have strong motivations to delay and undermine attempts to bring more competition to their markets.[13] It is critical that the Commission recognize that merely establishing an unbundling framework will not accomplish any of its goals. Unbundling requires a robust and ongoing enforcement regime to ensure compliance. In the absence of such ongoing enforcement incumbents will do as little as possible to comply, slowly undermining the policy with inaction.
In addition to enforcing its own rules, the Commission must have the courage of its own convictions. The unbundling of broadband will not be a simple process, and it will not be accomplished overnight. The most destructive step that the Commission could take would be to implement a policy of unbundling only to create a cloud of regulatory uncertainty by constantly reexamining, waiving, and rewriting its rules. The Commission must explicitly recognize that the transition to unbundling will not always be a smooth process, and that it will not be deterred by the efforts of incumbents to obstruct the process. As noted in the Study, the delay in implementation from litigation by incumbents, followed by an abrupt about face by the Commission in regulatory approach, significantly impacted the development of broadband domestically.[14]
III. PREVIOUS OBJECTIONS TO UNBUNDLING HAVE PROVEN TO BE GROUNDED ON INACCURATE ASSUMPTIONS.
A. The Assumption That Regulation Discouraged Investment To Facilities Based Competition Is Not Supported By Evidence And Is Contradicted By The Berkman Study.
1. The Berkman Study Finds a Positive Link Between Unbundling and Competition.
The Berkman Study finds that unbundling has not hampered facilities based competition. To the contrary, the report observes that facilities based competition usually complements access based competition.[15] For example, the report cites the example of the United Kingdom and New Zealand where functional separation resulted in “rapid effects on competitive entry, penetration, prices, and/or speeds.”[16] On the other hand, the report finds that in the U.S. and Canada, both of which have deregulated based on the assumption that it would encourage intermodal competition, cable and telephone incumbents offer the lowest speeds at the highest prices.[17] This is in contrast to Japan, France, and Sweden where all providers — cable, telephone, and unbundling based entrants — offer highest speeds and lowest prices.[18]
2. Other Studies Support This Conclusion.
The Berkman study is not alone in finding that regulation does not deter investment. A study conducted by Free Press finds that investment decisions are influenced by a number of factors, and that regulation in not one of the primary factors.[19] Further, the Free Press study finds that introduction of pro-competitive regulations in the Telecommunications Act of 1996 actually increased levels of investment by telecommunications companies and the dismantling of these regulations in the years that followed saw a decline in investment.[20]
3. Opponents Of Unbundling Consistently Fail To Prove The Connection Between Investment And Deregulation.
Opponents of unbundling regularly claim that the currently unregulated market is the best way to enable innovation and competition.[21] Oftentimes, they point to the billions of dollars per year that is invested in their networks.[22] However, these broad descriptions of capital expenditure fail to differentiate between previously planned expenditures, necessary upgrades, or other factors (such as potential competition) that might influence investment decisions.
Post Hoc Ergo Propter Hoc is not evidence. Merely because companies are investing in infrastructure in an unregulated environment does not mean that they are investing in infrastructure because they are in an unregulated environment. Broad clams that fail to take into account non-regulatory pressures to invest do not become proof that deregulation leads to investment merely because they are attached to large figures. Until and unless unbundling opponents are able to show a correlation between deregulation and investment — a correlation that is undermined by the conclusions of the Berkman Study — the Commission should not be impressed by the billions of dollars invested annually.
B. Investment Since Elimination Of Unbundling Raises Serious Doubts As To Whether Deregulation Encourages Investment.
As the Berkman Study makes clear, unbundling reduces consumer prices while increasing available broadband speeds. A policy that implements unbundling will improve broadband options available to consumers.
To date, the evidence from the United States does not support the conclusion that deregulation encourages investment in fiber. Of all of the deregulated ILECs, only Verizon has invested in fiber to the home, in the form of its FiOS service.[23] The elimination of loop unbundling does not appear to have created the type of widespread incentive for other ILECs to invest in this type of fiber to the home service.
Furthermore, current FiOS buildout patterns suggest that it is competition with cable, not deregulation, which has driven deployment. Buildout has been focused in affluent, densely populated urban and suburban markets, home to many of the most profitable customers.[24] A desire to win these customers from cable operators, not deregulation, may be driving Verizon’s investment in fiber to the home.
While it focuses on deploying FiOS to densely populated urban areas, Verizon is actively divesting itself of less dense (and less profitable) rural access lines.[25] As deployment slows,[26] it is also possible that some Verizon customers will have to wait years before having access to FiOS service — or never get the service at all.
FiOS illustrates the limits of deregulation as an incentive to increase broadband capacity and deployment. Although some customers have benefitted from FiOS — either directly though access to fiber to the home, or indirectly as competition forced their Internet provider to reduce prices — other customers have been left behind.
IV. WHILE IMPORTANT, UNBUNDLING DOES NOT RESOLVE ALL CONCERNS.
Unbundling policies alone are not sufficient to ensure that the benefits of broadband reach all consumers. Factors such as high switching costs between broadband providers and deceptive practices that reduce consumer confidence in these providers must also be addressed.
A. Consumers Face Significant Hurdles When Switching Platforms.
Switching cost is the cost to the consumer in terms of time, money, and inconvenience in switching providers. These costs result in consumer inertia, slowing the pace of switching between providers, thereby reducing competition. The Commission should consider the existence of these costs and examine regulatory tools to reduce them as an additional means to increase competition for broadband services and the benefits of broadband to consumers.[27]
1. Switching Between Providers Involves Significant Costs to Consumers.
Because broadband services are provided by cable, telephone, and to a lesser extent by wireless companies, installing a new broadband service often requires consumers to switch from their existing phone or cable providers. This process involves extremely high switching costs. Many cable and telecom providers require consumers to pay several fees in order to install the new service, pushing the price of these new services considerably higher than the advertised rate. These fees include: charges for renting equipment,[28] early termination fees,[29] and activation or installation fees.[30] In addition some of these services are only available when bundled with other telephone of video offerings.[31]
The problem of early termination fees (ETFs) and their effects on preventing consumer switching is particularly acute in the mobile industry, which will increasingly be used as a means to access the Internet. Consumers are generally tied to two-year service contracts with ETFs as high as $350.[32] While many providers justify ETFs on the basis that they allow carriers to subsidize equipment, these fees are charged even when the consumer is not getting any subsidy for the phone.[33] Furthermore, a new ETF period starts with every change to a service plan, further binding the customer to one wireless provider.
B. Despite Unbundling Requirements, Other Consumer Protections Will Still Be Necessary.
In addition to high switching costs, practices that obscure costs and misinform consumers reduce consumer confidence in service providers and reduce the effectiveness of competition in the market for provision of broadband service. As discussed above, carriers often obscure information about the true cost of obtaining broadband Internet service. They also do not provide clearly accessible information about actual speeds offered. Officials at a Commission presentation have observed that at peak hour actual speeds are 50% less than advertised speeds.[34] [35] Moreover, there are number of consumer protection issues that will not be addressed with unbundling. In a highly complex market, consumers are unable to effectively focus on all aspects of the transaction, which can result in limited market competition.[36]
In addition to obscuring actual speeds, carriers do not clearly reveal their terms of service. Many carriers reserve the right to monitor customers’ Internet usage, terminate service at will and impose other service limitations such as data caps, overage charges, restrictions on types of applications and off network usage.[37] While these types of limitations on terms of service may not be the primary factor that most consumers consider when purchasing broadband service, they can still harm consumers. Although the competition encouraged by unbundling may result in less oppressive terms of service, consumers will still need the Commission to patrol these and other similar areas.
V. GOVERNMENT EFFORTS TO ENHANCE COMPETITION SHOULD BE ENCOURAGED IN CONJUNCTION WITH UNBUNDLING.
A. Investment in Broadband Service by State and Local Authorities Can Provide Much Needed Competition at the Wholesale and Retail Level.
The evidence currently available indicates that government funds can help to encourage private investment in broadband services. This encouragement can come in a number of forms. Sometimes, government funds can be used to create the required underlying infrastructure for broadband deployment. In other instances, government investment establishes the existence of market demand for broadband. Additionally, government funds can be used to fix market failures, and make broadband available to individuals that the market has deemed unprofitable to serve.
The Study provides examples of successful government funding of broadband deployment. The Swedish model uses municipal government funds to build physical networks, and then relies on private providers to compete on services.[38] The Swedes use this model in major cities, towns, and rural areas, and have found that it is especially helpful in bringing underserved areas online.[39]
Similarly Amsterdam’s CityNet project used municipal funds to build an underlying fiber network, which was then made available on a wholesale basis to retailers to provide services to customers.[40] CityNet has become a model of how government and private industry can cooperate to bring broadband to consumers. By shouldering the burden of maintaining physical infrastructure, CityNet allowed numerous private companies to quickly create a competitive private market for broadband.[41]
There are also numerous examples of government investment in broadband networks spurring competition and increasing broadband availability in the United States. The experience of Monticello, Minnesota is telling. Monticello’s decision to create its own municipally owned fiber network motivated the private carrier TDS Telecommunications to substantially increase investment in its own private network, resulting in higher speeds and lower prices for Monticello residents.[42] Government investment served as a signal to TDS that a market for broadband did exist in Monticello.
The city of Lompoc, California currently offers residents a $16/month broadband subscription aimed at giving un- and underserved residents access to broadband.[43] Juno Beach, Florida makes broadband service available without requiring residents to purchase year-round service, thus allowing the large number of winter-only residents to economically purchase access for the time they spend there.[44] Faced with the realization that many residents could not access the services it had moved online in an attempt to better serve it citizens, San Francisco, California created a community broadband network to provide low-income housing units with free broadband access.[45]
All of these examples, be they attempts to bring access to low income households, underserved rural populations, or major cities, show that government investment can be critical in accelerating and broadening broadband deployment. When combined with unbundling policies, government investment effectively brings more, faster broadband service to more households.
B. Federal Funding Can Also Induce Competition.
As the Study describes, national-level governments have also committed to funding broadband deployment. Since the mid 1990s, the government of Japan has used a series of grants, loans, loan guarantees, and tax deductions to encourage private investment in critical broadband infrastructure.[46] Similarly, South Korea’s combination of government loans and a high-profile Cyber Building Certificate system has encouraged infrastructure deployment.[47]
The Federal Government has already taken a significant step towards increasing competition. The American Recover and Reinvestment Act of 2009[48] explicitly requires that all recipients of stimulus funds comply with non-discrimination and interconnection obligations.[49] By increasing interconnection and decreasing the ability of providers to discriminate, this provision encourages competition between providers.
These types of obligations can be extended to other government programs. Entities that receive public funding do so to serve the public interest. Openness encourages competition and reduces unnecessarily duplicative capital expenditure. As the Commission moves to integrate more federal programs into the National Broadband Plan, such as the Universal Service Fund, it should apply these types of obligations to recipients. There is no reason that all federally administered dollars cannot come with obligations of non-discrimination and interconnection, or even of open pole attachments and tower sharing.[50]
VI. FCC HAS THE AUTHORITY TO REQUIRE UNBUNDLING ACROSS PLATFORMS.
The National Broadband Plan is meant to provide a roadmap for expanding broadband adoption and penetration. In analyzing the Berkman Study and its recommendations, the Commission must consider how to implement the unbundling policies the Study found effective in promoting broadband adoption and deployment. Although the Commission could simply recommend that Congress enact legislation to address broadband unbundling, it is important to note that the Commission has regulatory tools at its disposal to accomplish these ends without the need to seek additional legislative action.
A. The FCC Should Reclassify All Broadband Services as Title II Services.
In order to effectively implement an unbundling regime, the Commission should eliminate current regulatory distinctions that separate broadband services based on delivery method. These current distinctions should be replaced with a single classification of all broadband services under Title II. Classifying all types of broadband as Title II services would allow the Commission to extend the unbundling policies that currently apply to voice communications[51] to broadband.
Although these broadband offerings are currently regulated under Title I ancillary authority,[52] there is nothing preventing the Commission from reclassifying them under Title II. In fact, such a change is not subject to a higher standard of review than the original determination.[53] As the Supreme Court recently noted, the Administrative Procedures Act “makes no distinction, however, between initial agency action and subsequent agency action undoing or reversing that action.”[54]
While the Commission must proffer good reasons for its policy, “it need not demonstrate to a court’s satisfaction that the reasons for the new policy are better than the reasons for the old one; it suffices that the new policy is permissible under the statute, and the there are good reasons for it, and that the agency believes it to be better, which the conscious change of course adequately indicates.”[55]
The conclusions of the Berkman Study, in addition to the points enumerated above, provide ample basis for the Commission’s reevaluation and recategorization of broadband services as Title II services and initiation of an unbundling regime.
Further, the concerns regarding competition in broadband markets that animate the unbundling discussion are not new. The Commission faced the same concerns beginning with the first Computer Inquiry.[56] From the initiation of the Computer Inquiries in 1968 until the Commission abolished the Computer III obligations in 2005, the Commission relied upon structural separation and unbundling to create a robust and competitive information service market protected from the danger posed by vertically integrated carriers. The hope of the Commission that abolishing these requirements would encourage facilities based “intermodal” competition that would provide greater benefits to consumers has demonstrably failed, whereas the wisdom of the Computer Inquiries approach has been vindicated. The Commission has ample evidence to conclude that bringing all broadband services under the unified umbrella of Title II and then unbundling the services will maximize possible competition between eventual service providers.
B. The Commission Can Impose Unbundling Requirements Without Reclassifying All Broadband Services as Title II Services.
1. The Commission’s Ancillary Authority Grants it the Power to Impose Unbundling.
Courts analyze the Commission’s ancillary authority under a two-pronged test. “First, the subject of the regulation must be covered by the Commission’s general grant of jurisdiction under Title I of the Communications Act, which … encompasses ‘all interstate and foreign communication by wire or radio.’ Second, the subject of the regulation must be ‘reasonably ancillary to the effective performance of the Commission’s various responsibilities.’”[57]
There is no doubt that broadband Internet fits within the general grant of jurisdiction under Title I of the Communications Act, as it is “communication by wire or radio.”[58]
In addition to being within the general grant of jurisdiction under Title I, in order to invoke ancillary authority the Commission’s “rules must be reasonably ancillary to something.”[59] As the Commission itself has pointed out, that ‘something’ could be any number of statutes that relate to broadband deployment and communication.[60] Thus, as unbundling of broadband services involves both “interstate and foreign communications by wire or radio”[61] and the type of broadband communication described in relevant statutes,[62] Commission rules imposing unbundling requirements would be well within its ancillary authority.
2. Section 706 of the Communications Act of 1996 Specifically Empowers the Commission to Encourage the Deployment of Broadband Services.
In addition to general ancillary authority over broadband communications, Congress has imposed a specific separate responsibility upon the Commission. In Section 706 of the Communications Act of 1996, Congress directed the Commission to “encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans … by utilizing, in a manner consistent with the public interest, convenience, and necessity, … measures that promote competition in the local telecommunications market.”[63] For the purpose of the section, Congress defined “advanced telecommunications capability” as “high-speed, switched, broadband telecommunications capability that enables users to originate and receive high-quality voice, data, graphics, and video telecommunications using any technology.”[64] Broadband services easily fit within this definition. Importantly, this section authorizes regulatory, as well as deregulatory, action by the Commission.[65]
As the Study suggests, unbundling of services does encourage the deployment “on a reasonable and timely basis” of broadband services. Imposing unbundling rules specifically designed to encourage this reasonable and timely deployment is precisely the type of Commission action called for by Congress in Section 706.
3. The Commission Can Require the Unbundling of the Telecommunications Component of Broadband Services.
Even if the Commission is reluctant to impose unbundling requirements on all broadband services, it can impose them on the telecommunications components of those services. In the Brand X decision,[66] the Supreme Court concurred with the Commission’s conclusion that “[c]able companies in the broadband Internet service business offer consumers an information service in the form of Internet access and they do so via telecommunications.”[67] As previous actions by the Commission and interpretation by courts have demonstrated, the Commission can identify and regulate the telecommunications component as a separate element.
In MediaOne Group, Inc. v. County of Henrico, Virginia,[68] the court found that, regardless of the regulatory treatment of cable modem service, the facilities used to provide broadband access constituted telecommunications facilities within the meaning of the Communications Act.[69] This finding is consistent with the Commission’s own finding that although broadband access as offered to consumers is an information service, providers of broadband access are “telecommunications carriers” for purposes of CALEA and that broadband access provided by these carriers does not fall within the statutory “information services” exception to CALEA.[70]
4. The Commission Can Make Unbundling a Prerequisite for the Inclusion of Voice Packages in a Triple Play Offering.
If the Commission would like to maintain the distinction between telecommunications and data service, it could force providers to treat them differently. The Commission could allow providers to offer a video and data package, classifying it as an information service, without imposing unbundling requirements. However, if providers desire to include a telecommunications service — voice — they would have to open their networks and accept unbundling requirements. This would force all telecommunications service providers to comply with existing unbundling requirements, while allowing existing information services to remain beyond the scope if they so wish.
Conclusion
As the Berkman Study makes clear, a policy in support of unbundling has the potential to accelerate the availability of high speed, affordable Internet to the public. Whether by incorporating all broadband services into Title II, exercising ancillary authority, or separating the telecommunications and information services elements out from broadband offering, the Commission has the authority to implement such a policy. Once it implements an unbundling policy, the Commission should strictly enforce its rules and grant the policy time and resources required before evaluation.
Respectfully Submitted,
Public Knowledge
CCTV Center for Media and Democracy
Media Alliance
Media Access Project
U.S. PIRG
________/s/__________
Harold Feld
Rashmi Rangnath
Michael Weinberg, Law Clerk
Public Knowledge
1818 N St. NW
Suite 410
Washington, DC 20036
[1] Center for Internet & Society, Harvard University, Next Generation Connectivity: A Review of Broadband Internet Transitions and Policy from Around the World (Oct. 2009).
[2] Berkman Study at 115.
[3] See Reply Comments of Public Knowledge, In the Matter of A National Broadband Plan for Our Future, GN Docket No. 09-51 (July 21, 2009). See also Comments of Free Press, In the Matter of A National Broadband Plan for Our Future, GN Docket No. 09-51 (June 8, 2009).
[4] Rob Frieden, “ICT Policy In Japan” (April 16, 2009) at slide 8.
[5] Berkman Study at 21. The details of the study are available in Information and Communications for Development 2009: Extending Reach and Increasing Impact (World Bank 2009) at 35-50, available at http://allafrica.com/sustainable/resources/view/00011823.pdf.
[6] Id.
[7] Raul Katz, Stephan Vaterlaus, Patrick Zenhausen, Stephen Suter, and Philippe Mahler, The Impact of Broadband on Jobs and the German Economy, available at http://www.elinoam.com/raulkatz/German_BB_2009.pdf.
[8] As discussed in greater detail below, the argument that unbundling will eliminate jobs through failure to invest has no empirical evidence and, in light of the evidence that unbundling has no impact on investment, must be considered highly suspect.
[9] Id. at 23-24.
[10] Id. at 26.
[11] See, e.g., Rob Frieden, “Lies, Damn Lies, and Statistics: Developing a Clearer Assesment of Market Penetration and Broadband Competition In the United States,” 14 Virginia Journal of Law & Technology 100 (2009).
[12] Berkman Study at 119-120.
[13] Id. at 82-83.
[14] Id.
[15] Berkman Study at 76.
[16] Id.
[17] Id. at 80.
[18] Id.
[19] S. Derek Turner, Finding the Bottom Line: The Truth About Network Neutrality and Investment, Free Press (Oct. 2009) available at http://www.freepress.net/files/Finding_the_Bottom_Line_The_Truth_About_NN_and_Investment_0.pdf.
[20] Id.
[21] See, e.g. Comments of Comcast Corporation, In the Matter of A National Broadband Plan for Our Future, GN Docket No. 09-51, at 22-3 (2009) available at http://fjallfoss.fcc.gov/ecfs2/document/view?id=6520219851.
[22] Id. at 33.
[23] See http://www.verizon.com/fios.
[24] See John Windhausen Jr., Big Broadband Connectivity in the United States, EDUCAUSE Review, vol. 43, no. 3 (May/June 2008), available at http://www.educause.edu/EDUCAUSE+Review/EDUCAUSEReviewMagazineVolume43/BigBroadbandConnectivityintheU/162886.
[25] See Stacey Higginbotham, Verizon Sells Rural Access Lines to Frontier for $8.6B, Gigaom, May 13, 2009, available at http://gigaom.com/2009/05/13/verizon-dumps-rural-access-lines-for-8-6b/.
[26] See Karl Bode, Verizon’s FioS Deployment Enters A New Chapter: Carrier Will Likely Pause Deployment to Market to Existing Footprint, Broadband DSL Reports, Oct. 20, 2009, available at http://www.dslreports.com/shownews/Verizon-Blames-Low-FiOS-Additions-On-Crappy-Ads-105237.
[27] See Jackie Krafft and Evens Salies, Why and How Should Innovative Industries With High Consumers’ Switching Costs be Re-Regulated (2007), available at http://hal.archives-ouvertes.fr/docs/00/23/92/89/PDF/ConfWilliamson2007.pdf. See also Joseph Farrel & Paul Klemperer, Coordination and Lock-In: Competition with Switching Costs and Network Effects, Handbook of Industrial Organization (2007).
[28] For example, Comcast’s terms and conditions for its $19.99 base rate high speed Internet service states that the company may charge extra for equipment installation and taxes without mentioning how much those charges might be. See http://www.comcast.com/shop/buyflow2/products.cspx?SourcePage=Internet&profileid=85485456-6CF6-48AE-AFE5-2AAC7939C070&lpos=Nav&lid=2ShopHSI&=& (click Terms and Conditions under “Performance”).
[29] For example, Verizon charges a $99 early termination fee on its high speed Internet service with a monthly fee of $19.99 and a one year agreement See http://www22.verizon.com/Residential/HighSpeedInternet/Plans/Plans.htm.
[30] For example, the activation fee for Verizon’s 1 Mbps High Speed Internet service is $19.99. See http://www22.verizon.com/Residential/HighSpeedInternet/Plans/Plans.htm.
[31] For example, Verizon’s $19.99 high speed DSL service offer is only available to customers who already have a Verizon voice service. See http://www22.verizon.com/Residential/HighSpeedInternet/Plans/Plans.htm. Similarly, Comcast’s $19.99/mo 15 Mbps high speed Internet offer is available only to customers who already subscribe to either Comcast telephone of cable service. See http://www.comcast.com/shop/buyflow2/products.cspx?SourcePage=Internet&profileid=85485456-6CF6-48AE-AFE5-2AAC7939C070&lpos=Nav&lid=2ShopHSI&=& (click Terms and Conditions under “Performance”).
[32] See Andrew Munchbach, Confirmed: Verizon Wireless to charge up to $350 early termination on ‘advanced devices’, Boy Genius Report, Nov. 4, 2009, available at http://www.boygeniusreport.com/2009/11/04/confirmed-verizon-wireless-to-charge-up-to-350-early-termination-on-advanced-devices/.
[33] A Discussion Draft on Wireless Consumer Protection and Community Broadband Deployment: Hearing Before House Subcommittee on Telecommunications and Internet, Committee on Energy and Commerce, 110th Congress. (2008)(statement of ChrisMurray, Senior Counsel, Consumers Union on behalf of Consumers Union, Consumer federation of America, Free Press and Public Knowledge), available athttp://www.publicknowledge.org/pdf/cm-testimony-20080227.pdf.
[34] Commission Open Meeting Presentation on the Status of the Commission’s Process for Development of a National Broadband Plan, Slide 26 (Sept. 29, 2009).
[35] The United States ranks in the middle of the third quintile in terms of average actual download speeds. Berkman Study at 50.
[36] See, e.g. Comments of Consumer Federation of America, Consumers Union, Free Press, Media Access Project, New American Foundation, and Public Knowledge, In the Matter of Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993; Annual Report and Analysis of Competitive Market Conditions with Respect to Mobile Wireless including Commercial Mobile Services, WT Docket No. 09-66, at 7-22 (2009).
[37] See Comments of Consumer Federation of America et al., Consumer Information Disclosure, CG Docket No. 09-158, at 16 (2009) available at http://www.freepress.net/files/Truth_In_Billing.pdf.
[38] See Berkman Study at 165.
[39] Id.
[40] Id. at166.
[41] Id.
[42] See Nate Anderson, Want 50 Mbps Internet in your town? Threaten to roll your own, Ars Technica, Oct. 27, 2009, available at http://arstechnica.com/tech-policy/news/2009/10/want-50mbps-internet-in-your-town-threaten-to-roll-out-your-own.ars.
[43] See Comments of Tropos Networks, In the Matter of NPB Public Notice #7, Contribution of Federal, State, Tribal, and Local Government to Broadband, GN Docket Nos. 09-47, 09-51, 09-137 (Nov. 6, 2009), available at http://fjallfoss.fcc.gov/ecfs2/document/view?id=7020247053.
[44] Id.
[45] See Comments of the City and County of San Francisco on National Broadband Plan Public Notice # 7, In the Matter of NPB Public Notice #7, Contribution of Federal, State, Tribal, and Local Government to Broadband, GN Docket Nos. 09-47, 09-51, 09-137 (Nov. 6, 2009).
[46] Berkman Study at 195.
[47] Id. at 203.
[48] American Recovery and Reinvestment Act of 2009, Pub. L. No. 111-5, 123 Stat. 15 (2009).
[49] Id. at § 6001(j).
[50] See The Mother of Invention, The Economist, Sep. 24, 2009, available at http://www.economist.com/surveys/displaystory.cfm?story_id=14483880.
[51] 47 U.S.C. § 251(c)(2).
[52] In re Inquiry Concerning High-Speed Access to the Internet Over Cable and Other Facilities, 17 FCC Rcd. 4798 (2002) (declaring cable-based broadband service to be an information service). Report and Order and Notice of Proposed Rulemaking, FCC 05-150, Aug. 5, 2005 (declaring DSL an information service).
[53] See FCC v. Fox Television Stations, Inc. 129 S.Ct. 1800, 1810 (2009).
[54] Id. at 1811.
[55] Id. (emphasis in original).
[56] Regulatory and Policy Problems Presetned by the Interdependence of Computer and Communications Services and Facilities, Notice of Inquiry, 7 F.C.C. 2d 11 ¶ 15 (1966).
[57] American Library Ass’n. v. FCC, 406 F.3d 689 at 692-93 (D.C. Cir. 2005) (quoting United States v. Sw. Cable, 392 U.S. 157, 178 (1968)).
[58] 47 U.S.C. § 152(a).
[59] Midwest Video Corp. v. FCC, 571 F.2d 1025, 1040 (8th Cir. 1978), aff’d, FCC v. Midwest Video Corp., 440 U.S. 689, 696 (1979).
[60] In the Matters of Formal Complaint of Free Press and Public Knowledge Against Comcast Corporation for Secretly Degrading Peer-to-Peer Applications; Broadband Industry Practices — Petition for Free Press et al. for Declaratory Ruling that Degrading and Internet Application Violates the FCC’s Internet Policy Statement and Does not Meet and Exception for “Reasonable Network Management,” 23 F.C.C.R. 13028 at ¶ 15-21 (adopted Aug. 1, 2008; released Aug. 20, 2008) (“Comcast Order”).
[61] 47 U.S.C. § 152(a).
[62] Comcast Order at 15.
[63] Section 706 of the Telecommunications Act of 1996 (codified as 47 U.S.C. § 157 nt).
[64] Id.
[65] Id. (b).
[66] Nat’l Cable & Telecomms. Ass’n v. Brand X Internet Servs., 545 U.S. 967 (2005).
[67] Id. at 989.
[68] MediaOne Group, Inc. v. County of Henrico, Virginia,[68] 257 F.3d 356 (4th Cir. 2001).
[69] Id. at 363-65.
[70] See American Council on Educ. v. FCC, 451 F.3d 226 at 232 (D.C.Cir. 2006). See also Ad Hoc Telecomm.Comm. v. FCC, 572 F.3d 903 (D.C.Cir. 2009) (distinguishing between residential broadband service and business access, classifying the later as Title II).
