By Paul Barbagallo
Broadband has become widespread, and Congress and the Federal Communications
Commission must act to update regulations that were put in place largely in the
1930s to protect consumers from the local telephone monopoly, participants said
in a Nov. 27 panel discussion organized by the Brookings Institution.
The FCC currently regulates telecommunications providers under Title II of
the Communications Act of 1934, as amended; wireless carriers under Title III;
and cable operators under Title VI. But the distinctions between these companies
have blurred, as telecom providers now offer video service, cable operators now
offer voice service, and wireless carriers offer both voice and data
“The proper objective of the FCC, as the regulator in a broadband world, is
to maximize consumer welfare,” said Hal Singer, an economist with Navigant
Economics. “What that means is removing barriers that discourage competition and
refraining from imposing artificial barriers that do the same.”
Singer, presenting policy recommendations from his soon-to-be-published
e-book, The Need for Speed: A New Framework for Telecommunications Policy for
the 21st Century, said the FCC should eliminate telecommunications
providers' “carrier-of-last-resort,” or COLR, obligations--a vestige of
monopoly-era regulation which requires telcos to serve customers in areas if no
one else wants to.
COLR obligations served a critical need when only telephone companies
provided communications services. But when cable operators started offering
consumers internet-based telephone service, suddenly those regulatory
requirements seemed antiquated, Singer said.
For example, many cable operators between 2000 and 2010 successfully
negotiated deals with real estate developers to be the exclusive provider of
voice, video, and internet services for new subdivisions. Under state and
federal regulations, however, if a cable operator for some reason decided to
stop serving a particular subdivision, the legal COLR obligation to serve that
subdivision would still fall squarely on the incumbent phone company.
On top of that, telecom providers must also still maintain their copper phone
lines, whether they upgraded to fiber optics or not, which Singer argues skews
the playing field.
AT&T Inc. is now trying to do something about it. The company has filed a
petition with the FCC to launch a proceeding to “facilitate the transition” from
telcos' legacy copper networks to all internet-protocol networks.
Such a proceeding, AT&T says in the petition, will help the FCC to better
understand the “technological and policy dimensions” of the transition and
identify any “regulatory reforms needed to promote consumer interests and
preserve private incentives to upgrade America's infrastructure.”
“We have to be able to start this transition from the old to the new, and
have the FCC in a position facilitating that, not slowing it down,” said James
Cicconi, senior executive vice president for AT&T, at the Brookings event.
“The underlying statutes were designed for a Bell monopoly telephone system that
doesn't exist anymore.”
“I don't think you can take one segment of the broadband marketplace and
separate it off anymore and consider it as being in a silo anymore, when
consumer conduct is at odds with it,” Cicconi added. “Increasingly, the
commission, even though it knows better, finds itself having to deny the
To support his argument, Cicconi pointed to the FCC's most recent “706”
report to Congress, in which the agency, for the third straight year, found that
broadband is not being deployed to all Americans in a “reasonable and timely
Though Americans are increasingly “cutting the cord,” and choosing to
subscribe just to wireless instead, Cicconi said the FCC refuses to consider
wireless as a “substitution” when regulating wired telcos, like AT&T.
“The FCC needs to reexamine the purpose of regulation in markets that are
this dynamic,” he said.
Speaking at the same event, Michael Powell, former FCC chairman and president
and chief executive officer of the National Cable and Telecommunications
Association, agreed, calling the FCC's decision to discount wireless services in
the 706 report “unconscionable.”
Powell said the FCC should start thinking about broadband not only in terms
of speed, but functionality and use.
“Broadband access via a wireless device is a big-time, for-real broadband
service,” Powell said. “Investment in this space is all about driving the mobile
ecosystem. Remember that 3G [third generation] provided a sufficient base for
the rise of the iPhone and the app environment.”
“I love what we do in wireline. We do it well; we're proud of it,” Powell
said of the cable industry he now represents. “But to suggest that wireless does
not provide competitive discipline and is not a logical extension of the
broadband experience is just fantastical.”
Blair Levin, former executive director of the FCC's Omnibus Broadband
Initiative, suggested that wireless and wireline broadband may at some point be
seen as equivalent services, but pointed to several market “inputs” that could
prevent 4G LTE (fourth generation, long-term evolution) from competing equally
with cable broadband, for instance.
“If wireless is going to compete it's going to need a lot more spectrum,”
Levin said. “I am actually quite concerned that we won't produce enough spectrum
out of the upcoming ['incentive auction’] to enable wireless to compete. That is
He pointed out, too, that some applications are too bandwidth-intensive for
wireless networks to handle in the near term, such as e-health and distance
“It's not clear to me that it competes in the same way,” Levin said.
Powell, citing the FCC's 706 report, responded: “We shouldn't be so quick to
make the mark be 'did I cut the cord?’ and only then do we count it.”
Levin, the lone Democrat on the panel, agreed with others who called for the
FCC to hasten the transition of phone networks to IP, but urged caution.
“It's really redrawing the social contract that we've had for so long,” Levin
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