FCC Faces Stark Choice on How to Regulate Broadband Market, Say Copps and Panelists
Panelists offered starkly different visions on how to regulate the broadband market to ensure competition and economic growth, at a New America Foundation event Friday (http://xrl.us/bnpsjw). Former FCC Commissioner Michael Copps, lamenting that the competitive market he envisioned in 2001 has not come to fruition, pushed for a “major national commitment” to increase broadband performance, and a renewed emphasis on promoting competition. Special access and the transition to Internet Protocol networks were also hotly debated, with economist Joseph Gillan calling AT&T’s proposal to “sunset” the public switched telephone network (PSTN) the “largest regulatory ask” in his lifetime.
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Hank Hultquist, AT&T vice president-regulatory affairs, called the choice between innovation and competition a “false dichotomy.” Everyone’s trying to figure out how to invest in broadband networks in different communities, he said, pointing to AT&T’s U-Verse as an example of its commitment to innovation. The fact is, “our TDM network is sunsetting,” he said. “We are shedding customers rapidly.” Hultquist estimated fewer than 20 percent of its twisted-copper pairs would be in service in a few years. The transition to an Internet Protocol world is going to happen, he said. “The question is whether we do it in an organized or chaotic fashion."
Broadband Coalition spokesman Chip Pickering said the FCC should reject AT&T’s late-August proposal to “sunset the PSTN” and “end interconnection policy as we know it.” If the commission eliminates interconnection policies that were the “lynchpin” of the 1996 Telecom Act, “we will lose the dynamic, competitive nature of telecommunications” and go back to the past of “at best a duopoly,” he said. Pickering worked on the Act in 1996 on the staff of the Senate Commerce Committee, and subsequently became a Republican U.S. representative from Mississippi. Incumbents don’t innovate well, he said; “almost all innovation comes from competitors."
The PSTN is not going away, said Gillan. It’s just undergoing a change in the technology it arrives on. “These new networks are not being built de novo,” but are rather extensions of the current architecture -- fiber often uses the same poles and follows the same copper lines, he said. “Those advantages of incumbency aren’t disappearing as the new technology is coming about.” The incumbent request to sunset the PSTN is “the largest regulatory ask, if not in history, certainly in my lifetime,” he said. AT&T is asking the government to “forcibly evict” 20 percent of its customers, Gillan said. The Telecom Act is not broken, he said. It’s technologically neutral and the principles can easily be applied to IP networks, he said. “It just needs to be implemented in a technology neutral way."
Copps railed against an FCC that he said in the past decade “killed UNE-P and shackled wholesale leasing”; didn’t follow through to make sure facilities-based competition developed; and removed broadband from Title II to “the nebulous land of Title I” where public interest requirements are not clearly mandated. Because of FCC actions, “the public interest and broadband never cohabitated,” he said. The U.S. lost its lead in world broadband rankings, and government officials have taken a “head-in-the-sands” approach and ignored the “urgent national infrastructure challenge,” while the FCC was “busy doing other things,” he said. “We cannot expect changing universal service by itself to magically bring ubiquitous broadband to every home and hearth."
The fundamental question to Phoenix Center President Lawrence Spiwak is whether regulation will make things better or worse. Imposing more price regulation isn’t going to spur innovation and competition, because the FCC doesn’t do do a very good job at price regulation, he said. In the context of special access, no one even knows what the state of competition is, “because the FCC won’t collect the data,” he said. As more people jump off landline networks, if the FCC were to conduct a “real rate case,” Spiwak said he would expect that the price of special access would have to go up. Ultimately, the most important thing is regulatory certainty, he said. “Pick a policy and stick to it.”
The FCC should reject mergers and acquisitions, Copps said, for it has already allowed too much industry concentration at the expense of the public interest. Municipal broadband should be encouraged, but 19 state legislatures have erected barriers to public provision of broadband, he said. Copps said the commission should also revamp its spectrum policy. He said it should look more to unlicensed spectrum, shared spectrum, smart radio technologies, set-asides for small and minority businesses, and strict roaming requirements. He encouraged the commission to do something “finally” about special access, which has “huge” potential but is currently a “multibillion dollar disincentive to competition.”