Powells Broadband Explosion

Americans want an explosion of broadband, although few are willing to pay for it. The FCC is giving them an explosion of deregulation that has incumbent providers dancing in the streets.

WASHINGTON — The average American might be excused for thinking, on the basis of the output of the hyperactive Washington press corps, that our nations capital is a place of constant activity. Not so.

In fact, most issues of grave public import enter the governmental consciousness with a media-generated splash, then disappear into a void for a long, sometimes very long, time — only to reappear in an explosion of vigorous action long after the public has taken its eye off the ball.

So it is with broadband deregulation. The major players in the nascent broadband market have been pushing for deregulation for several years, but generating little action, as both Congress and the William Kennard FCC chose to stay out of the fray. Congress is back in the fight — but Ive told that story ad nauseum elsewhere, and the FCC, not the Hill, is the topic of the day.

Even the advent of Republican, deregulation-friendly new Chairman Michael Powell more than a year ago didnt produce immediate FCC action — and as recently as March 11, a Broadcasting & Cable article belittled Powell for acquiring "a budding reputation as a do-nothing chairman."

Its explosion time.

With todays action on cable broadband, combined with a series of concurrent proceedings on DSL broadband, unbundled network elements and two separate considerations of incumbent deregulation, Powell can no longer, by any means, be dubbed a "do-nothing chairman." The series of decisions and proposed rulemakings adds up to a forward-looking, if relatively drastic, policy on the future of the public communications network. In fact, they look forward to a future where there is, in fact, little remaining of a "public" network in the current sense — but instead a set of private networks dominated by the current incumbent players and those who can muster the capital to take them on at their own, facilities-based game.

In todays decision, the FCC commissioners concluded that cable-modem service is an information service under FCC jurisdiction — and therefore essentially free from state and local regulation — giving cable-Internet providers a home in the least-regulated of the three basic service categories of the 96 Telecom Act — the other two being cable and telecommunications.

Thats right — cable broadband is neither, the commission decided (and not even "tentatively concluded," as it did in its DSL proceeding a month ago) a cable, nor a telecommunications service.

In essence, the Powell commission is looking at the Internet and seeing, at least as far as service providers are concerned, an information service that rides over, but is completely severable from, the underlying telecommunications or cable network.

Powell today portrayed that choice as a merely a strict adherence to the will of Congress, despite the fact that the results of the choice neatly dovetail with his ideological bent.

"The commission is not permitted to look at the consequences of different definitions and then choose the label that comports with its preferred regulatory treatment," Powell said. "That would be contrary to law. The commission must apply the definition and then accept the regulatory regime that adheres to that classification and that which Congress chose."

It must certainly be the will of Congress, then, that the two big winners in this series of rulemakings be the large cable operators and the regional Bell operating companies, who find themselves in rare agreement in lauding the commissions actions.

The cable operators get several big wins out of todays action: Local authorities will neither be able to impose another franchise on cable Internet service, nor use the revenue from that service in calculating the current 5-percent franchise fee; they will not be able to apply open-access requirements on cable Internet service; and they will not be able to consider Internet service in right-of-way proceedings. Also, cable MSOs will not have to offer independent ISPs transport on a common-carriage basis, but only as private carriage, free from government-standardized terms or conditions.

Incumbent DSL providers will likely get big wins from falling into the "information services" category, as the classification gives them a probably critical edge in the commissions three other DSL proceedings — the dominant/non-dominant proceeding, which will almost certainly determine that telcos are not dominant broadband providers; the UNE review, which will probably strip the Kennard commissions line-sharing requirement; and the New Networks proceeding, which will decide — probably in the RBOCs favor — whether line-card collocation in remote terminals, or line sharing over fiber feeders, will be required.

"One might ask, What is in a name?" Powell said today. "In the law, a great deal." Ill say.

The big hurdle in all this, of course, is persuading the courts to ignore all those broadband networks — those massive upgrades and buildouts to current networks that provide the broadband functionality, and will eventually supplant the old networks, once the world goes IP — and look on broadband as a mere service.

That may be a tough sell, and its one Powell certainly couldnt make to Michael Copps, the lone Democrat in the ointment.

"I cannot conceive that Congress intended to remove from its statutory framework core communications services such as the one at issue in this proceeding," Copps said. "I cannot imagine that it envisioned its statutory handiwork being made obsolete by a new service offering."

To be fair to Powell, theres a possibility that the results may not be that extreme. Remember that these actions are only notices of proposed rulemakings — the commission came down firmly only on the "information services" issue and reserved the right to apply other regulations, including open-access requirements, that it finds to be in the public interest, using its Title I authority over information services.

"That provision has been invoked consistently by the commission to guard against public-interest harms and anti-competitive results," Powell said. "There is no basis to conclude it cannot and will not be employed again to strike the right regulatory balance."

That has to be the greatest of todays many ironies. Powell has been (as I have), a frequent critic of the Communication Acts public-interest standard and authority (most visible in the issuance and transfer of licenses, but threaded throughout the act), which is nebulous, subjective and actions under which are brutally difficult to defend in court.

Now we find Powell asking his opponents to trust him to use that authority to balance the massive regulatory shift created by the "information services" decisions. And he seemed hurt that they would question his intent to do so.

"It seems to me that there is a feeling that, yes its there," Powell said of the "information services" classification, "but we just dont trust you. Somehow, youre the bad guys. I think thats preposterous."

Also ironic is the fact that the FCC proposals are, if not legislation by rulemaking, as Copps charged, at least somewhat of an abandonment of precedent by a chairman committed to respecting it. Powell saves himself from that charge somewhat by the Kennard commissions relative inaction on broadband, which left little precedent to follow.

Powell is at least right in that the commission would retain some regulatory authority over broadband, which he, if sincere, may use. If he doesnt, it will remain available to future commissions. That alone makes the proposals preferable to the Tauzin-Dingell deregulation bill, the most troublesome aspect of which is its failure to retain even safety-line authority for the feds to step in in cases of severe wrongdoing.

Ruling all broadband to be an information service is a shortcut to deregulated broadband industries — and quite possibly, as Powell argues, to faster rollout of broadband. It recognizes that broadband will, inevitably, in the future, be a national network, service and policy issue, which is a good thing. If those who dont trust Powell are right, however, it is also a shortcut to an incumbent-dominated Internet.