Does FCC want broadband competition to succeed?
July 21, 2010
Is the market, or the FCC, the problem in “timely and reasonable” broadband deployment?
- The FCC’s just released 706 broadband report, like the wireless competition report that preceded it in May, again indicts the broadband industry for not meeting the FCC’s new arbitrary, subjective, and after-the-fact expectations of where the nation should be at this particular point in time, despite the FCC’s own facts that 95% of Americans have access to broadband and that Americans have more broadband competitive choices than any country in the world.
To see if the FCC is more interested in actually getting broadband deployment to all Americans fastest or in micromanaging broadband access, economics and providers — look at how the FCC has burdened LightSquared, the start-up that seeks to be the EIGHTH national U.S. broadband competitor!
- (To count: 1. cable, 2. DSL/Fiber, 3. Verizon Wireless, 4. AT&T Mobility, 5. Sprint, 6. T-Mobile, 7. Clear (WiMax); & 8. LightSquared.)
Some context is needed here.
In the aftermath of the Great Recession, when credit remains tight, jobs are needed, and broadband investors are highly concerned about earning a return on long term investments, especially given a well-known more Title II regulatory-minded FCC/Adminstration, the FCC has effectively torpedoed much of LightSquared’s ability to raise the large amounts of capital over time it will need to build-out, launch and operate an EIGHTH national broadband network.
Despite the FCC knowing the high risk of deploying a satellite broadband network in a “timely” fashion (given Teledesic & Iridium‘s prior experience), the FCC piled on massive regulatory burdens on this start-up before it could even start.
- First, it made it much harder to raise capital by arbitrarily cutting its potential addressable market by more than half by effectively banning it from earning any revenue from wholesaling bandwidth to the nation’s two largest wireless broadband providers Verizon and AT&T.
- Second, the FCC effectively mandated a wireless net neutrality model that potentially will prohibit LightSquared from innovating with reasonable network management or ever experimenting with other business models if market conditions ever were to warrant it.
- Third, the FCC imposed strict build-out benchmarks and timetables on the platform, signaling to potential LightSquared investors that the FCC bureaucracy will be the equivalent of LightSquared’s shadow General Contractor.
In sum, if the FCC was truly interested in broadband competition succeeding, and actually encouraging broadband deployment in a timely and reasonable manner like the 706 provision and the Telecom Act require, the FCC would not be taking repeated actions that capital markets naturally would interpret as obviously hostile to broadband competition policy.
- The FCC’s inexplicable 706 broadband conclusion that broadband deployment is not timely or reasonable…
- …on the heels of the FCC’s fact-challenged finding that wireless is not effectively competitive…
- …on top of the FCC seeking to regulate broadband information services as telephone monopolies with no legal authority or factual predicate of changed circumstances…
- …on top of the FCC imposing mandatory Open Internet/net neutrality broadband regulations when there is no evidence of a problem to address…
- …cumulatively show that the FCC does not support the bipartisan consensus competition policy in the Telecom Act, but is pursuing its own unauthorized “de-competition policy.”
FOR IMMEDIATE RELEASE
July, 20 2010
Contact: Scott Cleland
703-217-2407
FCC 706 Report: U.S. Broadband Cup is 5% Empty
FCC’s criticism misplaced; broadband industry has over not under achieved
WASHINGTON – Scott Cleland, Chairman of Netcompetition.org, released the following statement regarding the FCC’s unprecedented 706 Report conclusion that broadband deployment is not timely and reasonable.
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“It is stupefying that the FCC could conclude that broadband service, which has reached 95% of all Americans faster and with more competitive choices than any deployed communications service before it, could somehow be judged as not timely or reasonable.”
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“What is unreasonable is for the FCC to ignore the obvious deployment facts before them, and to criticize industry for not deploying to the less than 5% of the nation where the FCC knows it to be uneconomic to serve competitively, and when the FCC knows that industry is, and has been, working very closely and constructively with the Federal Government on promoting universally accessible broadband and the National Broadband Plan.”
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“What is shake-one’s-head unreasonable is for the FCC to take a 706 broadband “incentives” provision of the Telecom Act and twist an FCC report to justify erecting unprecedented FCC broadband Title II regulations that would powerfully dis-incentivize broadband deployment more than any other FCC policy change the FCC has ever considered.”
NetCompetition.org is a pro-competition e-forum representing broadband interests.
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For an FCC that so assiduously respected the integrity of process to produce a consensus National Broadband Plan just a few short months ago, how could this same FCC come to abuse the integrity of process in its pursuit of Title II net neutrality authority, just a few months later?
- What’s wrong with this picture?
How could the same FCC go from the predictable, open, consensus-driven process of developing the National Broadband Plan to the most unpredictable, closed, and non-consensus approach of the Title II net neutrality NOI?
How can an FCC, which supposedly heard loud and clear from Congress about the importance of the integrity of process in confirmation hearings held just last year, completely ignore letters to the FCC from a majority of Congress imploring the FCC to respect the Constitutional process that empowers the Congress, not the FCC, with the authority to set communications policy for the Nation?
Does not all integrity of process come entirely from respecting the Constitutional processes of separation of powers, due process, rule of law, equal protection, etc.?
How can the FCC maintain that they respect the integrity of process with the small “p” of the Adminstrative Procedures Act, when they disrespect the integrity of process with the large “P” of the U.S. Constitution and the Bill of Rights?
What’s wrong with this picture?
- This FCC’s apparent disregard for the integrity of Constitutionally mandated process.
FCC Exceptionalism and Supremacy?
May 28, 2010
Often stepping back to gain perspective and to try and see the forest for the trees, can be highly instructive. However, if one steps back to see the big picture of how this FCC is attempting unilaterally to change U.S. Internet policy, the view is surreal.
- Increasingly, this FCC is becoming an island.
- It is insisting on self-asserting its exceptionalism and its supremacy over the Internet; and
- It is ignoring an overwhelming amount of important and contrary input, advice and evidence from Congress, the Courts, DOJ, FTC, past FCCs, industry, and the public.
- Simply, this FCC increasingly appears to view itself as exceptional and as the supreme authority on and over the Internet, unconstrained by Congress, the courts, law, economics, markets, or the public.
- Specifically, this FCC is ignoring the strong majority of House members (245 of 435) who oppose its Internet policy in writing; see letter from 74 House Democrats and a letter from 171 House Republicans).
- This FCC also is ignoring the “grave concerns” expressed in a letter from John Dingell, Commerce Committee Chairman Emeritus, the most experienced telecom legislator in the House, who states that the FCC likely will lose in court and that Congress, not the FCC, should make Internet policy.
- Many House members oppose FCC efforts to end run Congress by essentially implementing legislation that was introduced in the House, but never even considered by House subcommittee — the Markey Eshoo bill (HR3458).
- In the Senate, at least the magic number 41, and maybe a majority, oppose the FCC on this too, given the opposition letter from 37 republicans and the fact that over a quarter of House Democrats oppose the FCC on this.
2. Ignoring Courts/Law: It is instructive that the FCC’s is not appealing to the Supreme Court the D.C. Circuit Court of Appeals Comcast decision that ruled that the FCC does not have the legal authority to regulate the Internet. This implies the FCC does not disagree with the court’s legal judgment.
- In its own words, the FCC’s “third way” is a creative way to invent legal authority that doesn’t currently exist and that, in effect, circumvents the normal processes of legal appeal or seeking authority from the Congress.
- At core, if the FCC believes it can invent fundamental legal authority all by itself, for itself, that is in direct contradiction to existing law, the FCC effectively is claiming effectively to have exceptional, supreme, and supra-constitutional powers without limit or constraint.
- Top appelate experts from both previous Democratic Administrations do not believe the FCC can invent its own legal authority: see former Clinton Administration Solicitor General Seth P. Waxman’s legal analysis here; and Former Carter Administration, Assistant to the Solicitor General, H. Bartow Farr’s III, First Amendment analysis here.
- The previous Democratic FCC Chairman Bill Kennard, who also served as FCC General Counsel, described in detail why applying Title II to broadband was wrong-headed and unworkable.
- Longtime FCC expert and former FCC Associate Bureau Chief Barbara Esbin explains in great detail why the FCC can’t invent legal authority this way; see her legal analysis here.
- The entire broadband sector is unanimous in its detailed legal analysis, based on its collective experience and expertise, that the FCC cannot invent new authority that does not exist in law; see their copiously documented FCC filings here and here.
3. Ignoring Bipartisanship: This FCC is ignoring the fact that all the major decisions that the FCC wants to essentially reverse unilaterally were originally near unanimous bi-partisan congressional votes, i.e. the 1996 Telecom Act and the repeated extensions of the Internet Tax Moratorium, and unanimous (5-0) FCC broadband information services decisions: cable modems (2002); DSL (2005), BPL (2006) and wireless broadband (2007).
- House Democrat Gene Green said the letter from 74 House Democrats “clearly shows it is not a partisan issue. A large number of Democrats have reservations about such a significant regulatory shift and the impacts it will have on jobs and investments.”
- Moreover, the two Republican FCC Commissioners, Robert McDowell and Meridith Atwell Baker oppose the FCC’s “third way” as contrary to law, existing successful FCC policy/precedent, and destructive to investment and jobs.
4. Ignoring the DOJ: This FCC has also ignored the finding of the Federal Government’s expert agency in assessing competition, the DOJ Antitrust Division, which rejected the FCC’s market failure thesis, making it very difficult for the FCC to argue persuasively in court that the competitive facts have changed sufficiently to warrant a wholesale reversal of U.S. Internet policy.
5. Ignoring the FTC: There has been amazingly little public discussion that the FCC’s proposed “third way” would be a big power/authority grab from the FTC.
- Section 5 of the FTC’s legal authority includes a common carrier exemption, meaning if the FCC declares broadband to be a common carrier for the first time, the FCC would effectively seize oversight authority over broadband providers from the FTC.
- This implies a serious rebuke of the FTC’s competence from the FCC.
- Most importantly, under the Constitution and law, Congress decides which congressionally-created entities have what legal authority over whom — not the FCC.
6. Ignoring Economic Impacts: The FCC is ignoring overwhelming evidence and analysis that the FCC declaring broadband to be regulated for the first time — after years of business model evolution, innovation, and hundreds of billions of dollars in infrastructure investment — would be exceptionally disruptive and destructive to the sector and to the U.S. economy at large.
- See leading economic, investment and job impact analyses: here, here, here, here, here, here, and here.
7. Ignoring the Public: An overwhelming number of newspaper editorials around the country have opposed the FCC on this, e.g. The Washington Post, Chicago Tribune, Denver Post, Detroit News, Arizona Republic, etc.
- Moreover, a national poll by Rasmussen found that 53% of Americans do not want the FCC to regulate the Internet, 27% do, and 19% are undecided.
In sum, the evidence above is overwhelming that this FCC may think it knows best, but Congress, the courts, the DOJ, the FTC, the market and the public think it does not.
- The evidence shows this FCC is exceptional only in its delusion that it should, or does, have supreme unconstrained authority over the Internet.
Seventy-four House Democrats and thirty-seven Senate Republicans wrote letters (here, here) to the FCC today that essentially told the FCC that their announced plans to deem broadband a common carrier service are over-reaching and out-of-bounds.
- In Washington-speak, the letters communicated that the FCC is trying to decide an issue that is “above their paygrade” to decide.
In turn, these letters appear to have prompted the Chairmen of the FCC’s House and Senate authorizing committees and subcommittees to announce today that they will hold meetings with key stakeholders to discuss updating the Communications Act legislatively – another strong message to the FCC that Congress makes communications policy, not unelected commissioners at the FCC.
The clear political message to the FCC here is that they have wrongly put the cart before the horse, and that they must seek a “solid bi-partisan political foundation” for U.S. broadband policy… before they can achieve their desired “solid legal foundation” for the FCC.
- Rep. Gene Green (TX) clearly explained the political significance of the House letter from 74 House Democrats to the FCC in his press release:
- “This letter clearly shows it is not a partisan issue. A large number of Democrats have reservations about such a significant regulatory shift and the impacts it will have on jobs and investments.”
If the FCC respects Congress and understands its authority comes from Congress, the U.S. Constitution and the rule of law, not a simple FCC majority, the FCC will postpone its plans: to deem broadband a common carrier service and to implement its proposed Open Internet regulations — until Congress grants it the express authority to do so.
The lesson here is that successful communications policy comes from doing the right thing in the right way — meaning the FCC must respect the appropriate constitutional, legislative, legal and adminstrative processes that every other independent regulatory agency must respect.
