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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 (8^th 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
(4^th 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).