Friday, September 3, 2010

Broadband Penetration in the U.S.: Saturated, Recession-Affected, or Pricing Out Many?

In addition to providing a better sense of what specific broadband service options consumers have in more narrowly drawn geographic areas, the FCC’s most recent statistics on broadband show a significant decline in new subscriptions. See INTERNET ACCESS SERVICES: STATUS AS OF JUNE 30, 2009 (September 2010); available at: June 2009 FCC BB Stats.

The Commission also reports that as of June 2009 there were 61 reportable residential fixed-location connections per 100 households, with 56 connections per 100 households operating at advertised whose speeds in excess of 768 kbps downstream and only 27 connections per 100 households operating at advertised speeds near the broadband availability target--actual download speeds of at least 4 Mbps and actual upload speeds of at least 1 Mbps--recommended in the National Broadband Plan.

Does a downturn in new broadband statistics point to market saturation? It sure seems as though major broadband carriers are content with their subscription numbers. For example, Comcast recently raised by $2 both its service tiers. In light of the comparatively high rates charged in the United States, $30-60 a month, a significant portion of Americans do not appear willing to pay. Alternatively, current economic conditions might have forced prospective users to hold back.

Wednesday, September 1, 2010

Network Neutrality Debate Down to Two Issues?

A few days after Google and Verizon announced their qualified open Internet proposal, the FCC has opted to issue a Public Notice seeking comment on the two most controversial aspects of the proposal: the exclusion of specialized and wireless services from open access requirements. [1] The Public Notice appears to infer that the compromises reached by Google and Verizon have broader acceptance and represent “narrowed disagreement on many of the key elements of the [open Internet] framework proposed [by the Commission in its] NPRM.” [2]

The Commission appears to infer that the Google and Verizon proposal, along with comments filed in the Open Internet NPRM, evidence consensus on much of what the Commission had proposed:

1) that broadband providers should not prevent users from sending and receiving the lawful content of their choice, using the lawful applications and services of their choice, and connecting the nonharmful devices of their choice to the network, at least on fixed or wireline broadband platforms;

2) that broadband providers should be transparent regarding their network management practices;

3) that with respect to the handling of lawful traffic, some form of anti-discrimination protection is appropriate, at least on fixed or wireline broadband platforms;

4) that broadband providers must be able to reasonably manage their networks, including through appropriate and tailored mechanisms that reduce the effects of congestion or address traffic that is unwanted by users or harmful to the network; and

5) that in light of rapid technological and market change, enforcing high-level rules of the road through case-by-case adjudication, informed by engineering expertise, is a better policy approach than promulgating detailed, prescriptive rules that may have consequences that are difficult to foresee.

Whether the product of wishful thinking, or proper confidence in the ability of Google and Verizon to persuade all other stakeholders that consensus has been reached, the FCC seems to think only two issues remain unresolved and in need of “further inquiry.” The FCC wants to receive further comments on specialized services so that the Commission might find a way to promote investment and use of such options, but not in ways that bypass open Internet protections, provide a loophole that causes the open Internet to wither as an open platform and/or provide an opportunity for broadband providers to engage in anticompetitive conduct. The Commission emphasizes the need for clarity as to what types of services qualify as “specialized” as well as transparent and full disclosure by providers of specialized services.

Noting that Google and Verizon have proposed to exempt wireless broadband from all open Internet requirements, except for transparency, and acknowledging that new pricing plans that cap broadband usage could violate open Internet principles, the FCC invited more comments about mobile wireless platforms. The Commission framed its request for additional comments in terms of what would constitute adequate transparency in disclosing limits and non-neutral restrictions, whether new technologies harm or facilitate the ability of subscribers to attach devices to mobile wireless networks and what restrictions on open access to any available software or application service providers should be able to impose.

[1] Public Notice, Further Inquiry into Two Under-Developed Issues in the Open Internet Proceeding, GN Docket No. 09-191, WC Docket No. 07-52, DA 10-1667 (rel. Sep. 1, 1010); available at:

[2] Id. at 1. The Open Internet NPRM refers to Preserving the Open Internet; Broadband Industry Practices, GN Docket No. 09-191, WC Docket No. 07-52, Notice of Proposed Rulemaking, 24 FCC Rcd 13064 (2009).