Teletruth
News Analysis: May 17th, 2010
The
FCC’s “
Should
the phone and broadband networks be reopened to competition?
The
FCC has come up with a new “third way” plan to regulate broadband and
Internet --- and it’s just a Pr con to cover up the fact that it is
not going to do the most essential thing--- bring in competition to
the “last mile”; to the customer’s home or office. (5/6/10 Statement
by Chairman Genachowski, "The Third Way: A Narrowly Tailored Broadband
Framework". http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-297944A1.doc
Also, it harms all customers because phone customers, not
the investors, have been and continue to be the primary funder
of broadband-Internet in
What
is the “
Besides
closing the networks to competition, the FCC’s
First,
Competition:
This
plan is a total cop-out as it keeps the current broadband networks closed
to competition, and yet it dazzles in its manipulation to obfuscate,
almost sounding like it is going to reopen the networks.
The
secret: Anything that is a fiber-optic, coaxial or DSL- based network
– read broadband networks – are still closed to competition but the
underlying service will now officially be ‘telecommunications’. This
FCC is now sound-byte-ing great, but without
the basic truth – The broadband networks will not be reopened;
customers can’t choose their Internet Service Provider (ISP), the companies
will not have competition except for the broadband duopoly of cable
and telco.
It
also doesn’t fix the basics of Net Neutrality issues, which are concerned
with the phone and cable companies’ blocking,
degrading of customers’
service, including giving their own service preferences. Unfortunately,
Net Neutrality is caused when there is a market failure – a lack of
competition. With competition, a customer can simply change providers
if they are harmed. Today, there is basically a duopoly who
control not only the wires but also the Internet service. There’s no
serious 3rd choice – So much for the third way.
We’ve
written about this: http://www.multichannel.com/article/452161-Competition_Not_Neutrality_Is_Key.php
In
fact, the FCC’s legal opinion makes it very clear it is not going to
attempt to overturn any previous ruling to
allow the competitors to use the broadband networks. Known as “unbundling”,
the opinion states: “No New Unbundling Authority”, meaning, while it
may be reclassifying broadband as telecommunications, it’s not going
to do what most everyone except for AT&T, Verizon and the cable
giants want --- to open the physical networks, the
last mile links themselves, to competitors. Instead, it will keep the
monopoly/duopoly on the connection to the customer, and keep the customers
–funding these closed networks.
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-297945A1.doc
Follow
the Money
The
second part of this problem is more problematic. There has been no mention
or recognition of how customers, not the telcos or investors, have been
the primary funder of the telephone companies' broadband networks. The
FCC’s ‘wrong way’ parrots
the phone companies’ lobbyists. They keep saying that
if there were drastic changes in the regulations – i.e., reopening the
networks, it would cause “less investment” and “less innovation”.
It
almost sounds plausible until you realize that almost the entire broadband
investment has been made, not by shareholder monies but through rate
increases of local phone rates and various other customer
overcharging. Caused through a series
of state deregulatory actions known as ‘alternative regulations’, it has given the phone companies over $320 billion
in funding for fiber optic networks, most of which was never put into
the ground.
And
when I mention “rate increases”, they are occurring now. Let me give
a specific example. There has been a 90% increase in
rates in
“We
are always concerned about the impacts on ratepayers of any rate increase,
especially in times of economic stress,” said Commission Chairman Garry
Brown. “Nevertheless, there are certain increases in Verizon’s costs
that have to be recognized. This is especially important given the magnitude
of the company's capital investment program, including its massive deployment
of fiber optics in
90%
increases are not ‘minor’. However, neither the FCC nor the state commissions
actually have a clue about the flows of money and the customer funding
of broadband. And the flows of monies today are huge. Besides the billions
collected per state through these ‘rate-increases’, AT&T, Verizon et al also get the benefits
of the Universal Service Fund or other protected universal service policies.
(I note the cable companies never got these benefits, but it is clear
as the new national broad band plan in underway, they too, will be able
to get government subsidies, which are really nothing more than taxes
customers pay every month.)
Another
real humdinger --- The FCC is making
rural telcos' closed DSL and Fiber optic data services eligible to collect
Universal Service Funding, a blank check to provide the AT&T and
Verizon monopoly broadband service, while banning competitive carriers
from collecting from the USF. So, any Wireless ISP or other wireless
carriers who have been struggling to serve rural areas will now face
subsidized competition, paid for by a new national tax on broadband
services.
The
FCC’s legal opinion document also has another zinger – If the FCC does
change the definition of broadband into reclassifying it as a telecommunications
service, the FCC can, at any time “forebear” on implementing the new
regulation, i.e., they can not put into effect specific parts of the
new regulation. The FCC claims:
“Congress
gave the FCC authority and responsibility via Section 10 of the Communications
Act to ‘forbear’ from applying telecommunications regulation, so that
the new services are not subject to needlessly burdensome regulations.”
So,
the FCC has an out whenever it wants to create a law that will never
be enforced, or explain to those concerned that if a regulation does
go through, it will actually not matter in the end.
Finally,
the FCC claims that this national broadband plan and this third way
are being done through “consensus”. “The consensus
understanding of the FCC’s role with respect to broadband”.
What are they smoking? Two Commissioners are actually against
this FCC action, but more importantly – there’s no consensus. If the
FCC wants to imagine there is consensus, maybe they should just take
a walk down
Bruce
Kushnick
Note:
We have asked the FCC continuously to investigate our claims pertaining
to customer-funding of broadband. I guess the consensus is the FCC doesn’t
need to worry about overcharging customers or the failure of the companies
to properly upgrade their networks. They have consensus.
Our request for the FCC to create a workshop and
investigate the ‘customer funding’ of broadband.