Lies, Damn Lies and Statistics at the Federal Communications Commission

The Federal Communications Commission recently discovered that 14 to 24 million Americans, located in 1,024 out of the nation’s 3,230 counties, do not have access to any broadband service at any price. This finding greatly contrasts with the Commission’s numerous previous statements that an unregulated and robustly competitive marketplace has provided universally accessible broadband at affordable rates just about everywhere. In reality the FCC could conclude that “broadband is being reasonably and timely deployed to all Americans” only by using false data.

It should come as no surprise that the FCC could so miss the mark on actual broadband access. The agency is awash in partisanship, pseudo science, fuzzy math, creative interpretation of economic principles and legal concepts, selective interpretation of the facts, innovative collection of statistics, and flawed thinking. These defects support results-driven decision making where FCC managers first reach a decision and subsequently support that outcome by framing the policy issues, “finding” facts and compiling data in ways that rationalize the preordained conclusion.

The FCC lacks the resources or resolve to compile a record independent of what parties with a financial stake file when the Commission seeks public comments. This means that the FCC does not have an unbiased, empirical record that would meet a threshold standard of fairness and reliability assessed by independent third parties, a process known as peer review. Because the FCC relies on data compiled by stakeholders, the Commission typically lacks the ability to differentiate credible research from “cooked books.” By relying on data compiled by the companies it regulates, the Commission regularly agrees to treat the information as proprietary, making it impossible for third parties to corroborate or refute the evidence used by the FCC to support its decisions.

In the case of broadband the FCC’s commitment to confidentiality has gone so far as to deem as “trade secrets” data about whether a carrier does or does not operate in a specific locality. Trade secrets typically refer to essential business information such as food and beverage recipes, but the FCC has managed to equate information about broadband accessibility with a company’s most essential assets. Bear in mind that the Commission must act on a congressional mandate to identify and remedy broadband access scarcity.

Notwithstanding a statutory obligation to track broadband access closely the FCC purposely overstated the scope of market competition and how well carriers had made service available. The FCC defined broadband in 1999 as a bit transmission speed of at least 200 kilobits per second in one direction. The FCC retained that now woefully inadequate bit rate until this year when it acknowledged that many Internet services require higher speeds. The Commission also used zip codes as the most focused geographical measure for broadband market penetration until this year. The Commission could reach its conclusion of 99+ percent market penetration by claiming “mission accomplished” for the entire zip code if at least one subscription opportunity existed somewhere within the zip code.

What statistics the FCC complies and how the Commission interprets the data has a substantial impact on how the agency interprets its regulatory mission. If the FCC wants to deregulate and abandon existing public interest safeguards, the Commission can claim evidence proves a robustly competitive marketplace can self-regulate. Until this year the FCC considered the wireless marketplace so competitive that the Commission could deem precompetitive numerous horizontal mergers where one competitor buys out another and acquires additional market share. The Commission’s most recent analysis of the wireless marketplace makes only passing reference to the fact that Verizon and AT&T national carriers have over a 60% market share, four national carriers control over 90%, and the rate of market concentration has grown in light of FCC-approved acquisitions so much so that it now well exceeds the Justice Department’s threshold for a “highly concentrated” market. The Commission also reports that U.S. wireless carriers enjoy healthy returns led by Verizon with an enviable 46.3% margin for the second quarter of 2009.

If the FCC wants to expand its regulatory wingspan, the Commission can claim evidence supports the need to curb market power. A former FCC Chairman, normally adverse to regulatory expansion, nevertheless wanted to further regulate cable television operators based on his perception that the industry had become too dominant. Using data, not compiled by FCC staff and highly questionable in light of market conditions favoring more competition from satellite and telephone companies, this Chairman believed that cable market penetration had reached a congressionally-drawn threshold. Neither the Chairman nor his staff could generate empirical data to support this conclusion.

The FCC can rely on poor fact finding only if reviewing courts accept such practices as worthy of judicial deference to the agency’s expertise. Some courts appear not to second guess the Commission, but others readily find flaws. Examples of the latter include a court’s refusal to allow the FCC to count as equals any media outlet in a market, regardless of significance and market share.

As information, communications and entertainment become an increasingly significant component in the economy, we cannot afford to have the FCC ignore instances where market self-regulation does not serve the national interest. The FCC has undertaken some recent efforts to improve its statistical compilations, but longstanding institutional flaws remain

Identifying Areas in the U.S. Lacking Any Broadband Options

Despite previous proclamations of near ubiquitous broadband access in the United States, using smaller and more numerous counties instead of zip codes and considering broadband to require far greater than the previous 200 kilo bits per second floor, the FCC now acknowledges that significant numbers of Americans residing in many largely rural areas with low incomes lack any access at all. [1] The Commission now acknowledges “that broadband deployment to all Americans is not reasonable and timely. This conclusion departs from previous broadband deployment reports, which held that even though certain groups of Americans were not receiving timely access to broadband, broadband deployment ‘overall’ was reasonable and timely.” [2]


The Sixth Broadband Deployment Report confirms that a sizeable number of Americans have no broadband access whatsoever, or have access that do not meet the National Broadband Plan goal of affordable service with download speeds of at least 4 megabits per second (“Mbps”) and upload speeds of at least 1 Mbps. [3] The FCC recognized the prior 200 kilobit per second rate, in either direction, “simply is not enough bandwidth to enable a user, using current technology, ‘to originate and receive high-quality voice, data, graphics, and video telecommunications,’ as section 706 [of the Telecommunication Act of 1996] requires of such services.” [4]

Using the higher bit rate threshold the FCC estimates that 1,024 out of 3,230 counties in the United States and its territories are unserved by broadband, [5] and between approximately 14 to 24 million Americans do not have access to broadband today. [6] The Commission makes a number of candid acknowledgements:

The . . . [unserved] group appears to be disproportionately lower-income Americans and Americans who live in rural areas. The goal of the statute, and the standard against which we measure our progress, is universal broadband availability. We have not achieved this goal today, nor does it appear that we will achieve success without changes to present policies. The evidence further indicates that market forces alone are unlikely to ensure that the unserved minority of Americans will be able to obtain the benefits of broadband anytime in the near future. Therefore, if we remain on our current course, a large number of Americans likely will remain excluded from the significant benefits of broadband that most other Americans can access today. Given the ever-growing importance of broadband to our society, we are unable to conclude that broadband is being reasonably and timely deployed to all Americans in this situation. [7]

As evidenced by the ambitious goals in the National Broadband Plan, the Commission aspires to do a better job of promoting affordable and ubiquitous access going forward.

[1] Inquiry Concerning the Deployment of Advanced Telecommunications Capability to All Americans in a Reasonable and Timely Fashion, and Possible Steps to Accelerate Such Deployment Pursuant to Section 706 of the Telecommunications Act of 1996, as Amended by the Broadband Data Improvement Act, GN Docket No. 09-137, Sixth Broadband Deployment Report, (rel. July 20, 2010); available at: http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-10-129A1.pdf[hereinafter cited as Sixth Broadband Deployment Report].


[2] Id. at ¶2.

[3] See FCC, OMNIBUS BROADBAND INITIATIVE (OBI), CONNECTING AMERICA: THE NATIONAL BROADBAND PLAN, GN Docket No. 09-51 (2010) (NATIONAL BROADBAND PLAN); Inquiry Concerning the Deployment of Advanced Telecommunications Capability to All Americans in a Reasonable and Timely Fashion, and Possible Steps to Accelerate Such Deployment Pursuant to Section 706 of the Telecommunications Act of 1996, as Amended by the Broadband Data Improvement Act; A National Broadband Plan for Our Future, GN Docket Nos. 09-51, 09-137, 2010 W.L. 972375 (rel. March 16, 2010). See also, National Broadband Plan, World Wide Web Site, http://www.broadband.gov/plan/.

[4] Sixth Broadband Deployment Report at ¶10.

[5] Id. at ¶22.

[6] Id. at ¶28. The Commission previously reported that about 80 million Americans either do not have access, or do not subscriber to an available broadband service.

[7] Id.

The National Broadband Plan--A Work in Progress

The National Broadband Plan represents a thoughtful, albeit belated, recognition that the U.S. federal government can stimulate both the broadband supply and demand through stewardship and vision. However, the Plan does not signal a major shift in strategy, the infusion of billions more in subsidies, or a departure from reliance on marketplace forces to allocate most resources to broadband development. The Plan does make the case for many short and long term adjustments in policies, many of which the FCC cannot effectuate unilaterally in light of the need for a legislative mandate, or cooperation with other government agencies and stakeholders. The Plan offers hope that some leaders in the U.S. government now recognize the need to adopt global best practices, many of which require the national government to engage in sophisticated analysis of when to become more involved in broadband development, but also when to remove regulatory underbrush that retards timely and flexible adjustments to the mix of radio spectrum available.

The FCC officially recognizes that broadband means something much faster than 200 kbps. The Plan proposes an ambitious “100 squared” goal of having 100 million households with access to 100 Mbps download service by 2020 with a far less ambitious 4 mbps service of actual download speed available to nearly all residents as soon as possible.

The National Broadband Plan offers scores of thoughtful and probably positive policy changes, but many of them require coordination among federal agencies, newfound zeal in finding ways to use spectrum with greater efficiency, and the need to make changes quickly. Dislodging the status quo will prove daunting, because the Plan offers little new inducements for government agencies to refrain from inefficient spectrum use bordering on hoarding and for incumbent wireline carriers to welcome a shift in universal service funding from narrowband telephone service to broadband.

The Plan operates under the flawed presumption that broadband competition exists, or soon will flourish, with particular emphasis on wireless broadband options that currently have failed to match the bitrate deliver speeds of wireline options. Additionally, the Commission appears content with finding new wireless broadband spectrum for incumbent carriers, without considering whether the scope of competition, as well as broadband access and affordability might be enhanced by reserving some newly available spectrum for market entrants. The Plan avoids addressing network interconnection, neutrality and sharing requirements that other nations have adopted with measureable success.

16 Page Summary of the National Broadband Plan and Mission Statement

Having completed the first of many readings of the FCC's National Broadband Plan, I have prepared a relatively short summary of the document. It is available at my web site: http://www.personal.psu.edu/faculty/r/m/rmf5/. Scroll down toward the bottom of the page and under Broadband and Next Generation Network Development, click on the link titled Summary of National Broadband Plan.