FCC Study: Open Access Spurs Broadband Growth

Industrialized nations that rank above the United States in broadband in a variety of metrics implemented open access policies — unbundling, bitstream access, collocation requirements, wholesaling, and/or functional separation — to achieve their success, according to a study commissioned by the FCC (Federal Communications Commission) and conducted by Harvard University’s Berkman Center for Internet and Society.
The study is part of the FCC’s task force’s work preparing the National Broadband Plan ordered by Congress for February delivery.
“The lowest prices and highest speeds are almost all offered by firms in markets where, in
addition to an incumbent telephone company and a cable company, there are also competitors who entered the market, and built their presence, through use of open access facilities,” the report states.
The report adds that open access policies “are almost universally understood as having played a core role in the first generation transition to broadband in most of the high performing countries; that they now play a core role in planning for the next generation transition; and that the positive impact of such policies is strongly supported by the evidence of the first generation
broadband transition.”
Imposing open access policies on broadband carriers stands in stark contrast to current U.S. policy. Although the Telecommunications Act of 1996 imposed a number of open access requirements on carriers, including forcing the original Baby Bells to share their copper lines with competitors, the FCC abandoned those policies almost a decade ago.
In 2002, the FCC ruled that cable broadband providers are information services and do not have to share their lines with competing ISPs (Internet service providers). The ruling prompted a Santa Monica, Calif.-based ISP named Brand X to sue the FCC for open access to cable lines.

The case eventually went to the Supreme Court, which last summer ruled the FCC was within its regulatory authority to exempt cable modems from common carrier obligations.

The FCC then extended the same exemption from common carrier regulations to telephone companies offering broadband service. The two FCC rulings had the practical effect of doing away with the slew of regulations mandating open access that came out of the 1996 Telecommunications Act.

“Open access policies seek to make it easier for new competitors to enter and compete in broadband markets by requiring existing carriers to lease access to their networks to their competitors, mostly at regulated rates,” the report states. “The idea is that the cost of replicating the underlying physical plant: digging trenches, laying ducts, pulling copper/cable/fiber to each and every home is enormous; it therefore deters competitors from entering the market in broadband services.”

By requiring broadband capacity to be shared with competitors, open access rules are intended to encourage entry by those competitors, who can then focus their own investments and innovation on electronics and services that use that basic infrastructure.

The FCC is seeking public comment on the study and has posted the draft for public review at
http://www.fcc.gov/stage/pdf/Berkman_Center_Broadband_Study_13Oct09.pdf.