Wednesday, February 27, 2008

Information Service Telecommunications Service Mutual Exclusivity

The FCC surely has a hard time dealing with convergence and in particular a firm that offers both telecommunications services and information services, e.g., wireline and wireless telephone companies. The Commission perceives the statutory duty to establish bright line, mutual exclusivity between the two categories:

The FCC interprets the Telecommunications Act of 1996 to create mutually exclusivity between telecommunications services, subject to Title II common carrier regulation, and information services, subject to limited regulation available under Title I. “Congress intended the categories of ‘telecommunications service’ and ‘information service’ to be mutually exclusive.” Federal-State Joint Board On Universal Service, CC Docket No. 96-45, Report to Congress, 13 FCC Rcd. 11501, 13 FCC Rcd. 11830, n. 79 (1998). “Based on our analysis of the statutory definitions, we conclude that an approach in which “telecommunications” and “information service” are mutually exclusive categories is most faithful to both the 1996 Act and the policy goals of competition, deregulation, and universal service.” Id. 13FCC Rcd. at 11530 (1998).

So does this mean that the FCC has no statutorily appropriate means to subject a single firm to two different regulatory regimes?

Monday, February 25, 2008

Network Neutrality Unneeded in a Competitive Broadband Marketplace

In the Feb 25th edition of the Wall Street Journal former hedge fund manager Andy Kessler strongly suggests that competition would solve any calamity that network neutrality rules would (hamhandedly) attempt to remedy. See
Mr. Kessler suggests the need for legislation to promote broadband competition, a Bandwidth Competition Act of 2008. Regretably, he offers few specific recommendations.
I heartily agree that in a perfect world facilities-based competition would enable consumers to “vote with their dollars” and punish any ISP foolish enough to handicap, delay, drop or otherwise meddle with their traffic. If I had a number of competitors from which to choose perhaps I could find a rate plans that provides a better fit than the current “one size fits all” model that motivates Comcast and other ISPs to rein in heavy users.
If only we had such competition. If only we had a legislature that would pay enough attention to the problem to direct the FCC and a Federal-State Joint Board to revamp efforts to jump start broadband deployment through a variety of strategies, including financial cross-subsidies.
Sponsored researchers will tell you that sufficient competition already exists thereby obviating both the need for network neutrality rules and legislation, unless of course the legislation steers money their clients’ way. According to the FCC’s latest statistics my rural zip code now has 11 broadband options, up from 9 last time. Accepting this number for the sake of discussion I still can conclude that robust facilities-based competition does not exist in my neck of the woods. Put another way access to $100 a month satellite semi-broadband and $60 a month cable broadband will not jump start broadband adoption. Nor will it create the critical mass we both agree would—if it existed—that would provide consumers and suppliers to come to terms on price and quality of service tiers.
Legislators and the FCC have to consider network neutrality rules in the absence of competition and diverging price points for broadband access.