The Federal Communications Commission earlier this month voted to no longer require telephone companies to sell DSL services to independent competitors at regulated rates, changing the landscape of the broadband market.
While the decision is final, the public debate is heating up.
“If you deregulate a marketplace that is controlled by two technologies, its disingenuous to say youre creating a free market,” said Ben Scott, policy director at Free Press, a nonprofit media reform organization trying to push affordable broadband access.
The FCC and phone companies have argued that the deregulation will allow large DSL providers to not only compete with cable modem providers, which have long been untouched by regulators, but enhance their service as well.
Consumer advocates like Free Press believe it will decrease the competition by eliminating smaller ISPs from the mix.
Its also not a given that dominant phone companies will immediately ramp up their innovation.
“The one thing the FCC lacks is a stick to go after the phone companies if they dont improve their networks,” said Joe Laszlo, research director at analyst firm JupiterResearch in New York.
“Now that providers are essentially freed from these regulatory obligations, it is incumbent on the FCC to make sure those steps are taken.”
In a response to the FCCs report in July touting the growing numbers of broadband subscribers and availability, Free Press, along with the Consumer Federation of America and Consumers Union, the publisher of “Consumer Reports,” also published “Broadband Reality Check,” which challenged the FCCs overly “rosy picture.”
The groups will take their findings to Congress to encourage a change in policy to increase broadband availability, affordability and adoption.
In particular, the authors challenge the FCCs definition of high speed and how the regulatory body measures broadband availability.
U.S. FCC eases regulations on DSL broadband.
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“200K bps (kilobits per second) is a very shoddy definition of broadband,” said Scott.
He argues that those speeds dont even meet the requirements set forward by the 1996 Telecommunications Act, which says broadband must provide “high-quality voice, data, graphics and video telecommunications.”
Next Page: Reporting on broadband called into question.
Reporting on Broadband Called
Yet theyre still counted as broadband connections. Washington, D.C.-based Free Press believes broadband speeds should clock in at 1M bps (megabit per second).
The FCC also counts broadband as being “available” in a particular area if just one subscriber in a zip code has broadband service.
By that count, 99 percent of all U.S. residents have broadband available to them.
“If you look under the hood, there are tons of gaps in that method of reporting,” said Scott. “Were not saying theyre hiding how they did it. Were saying its not a good way to do it.”
JupiterResearch, meanwhile, puts broadband availability (200K bps or more) at between 80 and 85 percent of the population.
“Just because one person in a zip code can get broadband doesnt mean everyone can,” said Laszlo. “From a public policy perspective, that measurement should probably change.”
Free Press also ripped an op-ed in the Wall Street Journal by FCC Chairman Kevin Martin as “wildly optimistic” in reporting progress in broadband access, when based on the 200K bps speeds.
According to the FCC, the U.S. leads the world with a total of 37.9 million broadband subscribers, and growing at a rapid rate.
“In the 10 years theyve been required to do these reports, theyve never been disappointed,” said Laszlo. “But its pretty undeniable that broadband is growing healthily in the U.S. Im forced to agree with the FCC.”
JupiterResearch puts the number at closer to 36 million households and one in three of all U.S. households have broadband.
However, the country ranks 16th in the number of subscribers per 100 residents and 16th in increasing penetration of broadband, Free Press points out.
“Additionally, if you look at some of the world leaders in broadband, you cant even buy a connection as slow as 1M bps,” said Scott. “Theyre at 10 or 20M bps at the same price we pay for 200K bps.”
“Does having more broadband make you a better, more competitive country?” asks Laszlo. “Probably not, but I do think the FCC view is a bit out of line for how we stack up against the rest of the world.”
Instead, the U.S. can look to leading countries like Japan and South Korea to determine how to shape their regulatory practices.
The recent moves towards deregulation are in fact in exact opposition to how most leading nations have tackled the expansion of broadband access, chiefly by requiring phone companies to share their DSL lines with competitors.
“Some of the decisions the FCC is making may prove problematic for continuing broadbands growth,” said Laszlo.
In fact, on a recent post on deregulation to his blog , he said he may consider revising JupiterResearchs broadband forecast—69 million subscribers by 2010—down based on the moves.