While not as well known as its Grokster sibling, the Supreme Court’s decision yesterday in FCC v Brand X will have important ramifications for broadband services that consumers increasingly choose for Internet access. By a vote of 6 to 3, the Supreme Court struck down a 9th Circuit decision that muddied the waters between telecom service classifications, essentially greenlighting the FCC’s determination that cable broadband Internet services are not “telecommunications services” subject to a whole host of Title II common carrier rules, and in volume.
Several years ago the Commission embarked on an examination of cable and telco broadband access platforms, seeking to classify the broadband offerings as interstate “information services” subject to looser regulatory treatment, only to be stopped cold by the 9th Circuit’s contrary interpretation. Yesterday’s decision will certainly bring clarity to the FCC’s efforts to “find a home” for the appropriate regulatory treatment of broadband services – a sentiment echoed in the public statements issued by the FCC chairman and commissioners on the Supreme Court decision.
In fact, while cable and the telcos found common ground for victory in the Court’s ruling, about the only sure bet is that the FCC will quickly move to fashion rules to speed the deployment of broadband services. The telcos face increasing pressure to move to a less regulated, more market-oriented environment, more or less where cable sits now – with caveats included, of course, given that some rules applicable to cable don’t quite suit the carriers’ video deployment plans.
Yesterday Sentators John McCain (R-AZ) and Frank Lautenberg (D-NJ) introduced legislation that would allow municipalities to provide broadband services to their residents. The bi-partisan legislation is aimed at efforts underway in some states to prohibit municipalities from building their own networks, to serve residents who either cannot get broadband or get it affordably. According to the press statement on Senator Lautenberg’s web page, fourteen states have enacted barriers to entry.
The legislation could be viewed as a counter measure to a bill introduced several weeks ago by Rep. Pete Sessions (R-TX) in the US House of Representatives, HR 2726 (prohibiting munis from building competing broadband networks), and represents a growing focus on “the municipality issue(s)" – a burgeoning “grass roots” effort on one side by munis seeking to bring broadband to their citizens (opposed by cable and the telcos), and, on the other side, growing pressure from the telephone companies to streamline or eliminate the local franchise approval process to deliver video services to compete with existing cable services over the their new, deep fiber networks.
Upgrading the nation’s communications infrastructure to provide more robust services has been a major policy goal in the US for years, with the devil largely in the details. Companies with competing visions slug this out daily before policymakers, set against a backdrop of rapidly changing technology and enormously complex, slow to change rules.
Meanwhile, companies position themselves to take advantage of the world as it exists now, and place bets on what the world will look like in the future – witness the telcos gearing up for legislation to address the local franchise issue, as the cable companies eye going private to increase investments in their networks – today’s fight is over video programming and beyond.
It’s the “beyond” part that defies simple definition. The FCC rules make distinctions between “interactive, on-demand service” and “video programming service” – the latter meaning a service that is comparable to that provided by a television broadcast station, with programming prescheduled by the programming providers. In other words, it’s the world we currently know.
Indeed, one of the benefits of next generation broadband investments by carriers is the interactive feature set, which has the telephone companies trying to distinguish their proposed interactive service offerings from those currently offered by cable, only to be have cable respond “we can do all that now.”
Not an easy job. The “build it and they will come” model having been tried and found wanting several years ago, today’s carriers find themselves in the unenviable position of defining a future market by selling technical capabilities (multi-megabit broadband) that the vast majority of people have no use for today, but can hardly comprehend.
New applications to exploit newly available technology have a way of exploding onto the scene, however. “Podcasting” presents a pretty good current example of this phenomenon. (Type “podcasting” into your favorite search engine and see what pops up on your screen. You’re likely to find the information available in many different languages).
Without attempting a tortured explanation, podcasting involves combining electronic devices such as digital audio players or computers with a subscription format that allows files to be published to the Internet. While it has been described as creating one’s own radio show, a better description might be how some savvy consumers harnessed technology to reach an apparently random group of people, perhaps geographically distinct or otherwise socially disparate – around a vehicle or theme that attracts their common interest.
According to Nikkei Net Interactive’s Information Business Technology glossary, in discussing the greater capabilities of next generation broadband networks, “[s]ince broadband technology allows for smooth interactive communications of large volumes of data, such as videos, expectations are high that the technology will evolve into a variety of services, such as teleconferencing and Internet-based distribution of games and other content. It will also enable people working from home or small offices to have speedier communications.”
Again, it’s hard to define, but I believe the bottom line is that these technological advances put more power into the hands of consumers everywhere, to view and even to create their own content, with what follows being anybody’s guess. The one sure thing is that uses and synergies will develop, and after that it’s wide open all over again.
The recent introduction of legislation by Rep. Pete Sessions (R-TX) raises the municipal entry into broadband debate in Congress, although there has been a fairly steady drumbeat on muni issues all along.
Rep. Session’s bill, HR 2726, entitled “Preserving Innovation in Telecom Act of 2005,” would prevent munis from building broadband networks that compete with cable or telco networks, and, similar to legislative efforts in a number of states, has drawn criticism from consumer advocates and local government umbrella organizations.
The build-out issue is one of two sides of the debate over local broadband issues; the other side involves the push by the large telephone companies to streamline the local franchise approval process, which has been the subject of a number of hearings in the House this spring.
Essentially there are three groups involved in the two muni debates – the locals, the incumbent video provider cable companies, and the telcos seeking to upgrade their networks to deliver video through various deep fiber deployments such as Verizon’s Fiber to the Home architecture, and SBC’s Fiber to the Node IPTV Project Lightspeed.
The dynamics among the groups somewhat resemble a game of musical chairs, with the added attraction of loose team affiliations, and an apparently additional requirement that the players try to poke each other in the eye before the music runs out.
Cable and telcos have been aligned on muni build-out prohibitions in state legislatures, but are much less aligned on the subject of local franchise reform, given that the telephone companies present an enormous competitive threat, particularly if their time frame to market on video delivery is accelerated.
The mainstream press seems to find the muni build-out prohibitions more attractive to write about from a David and Goliath point of view. Streamlining the local franchise approval process doesn’t have the juice of the build-out prohibitions, being somewhat arcane in its orientation around Titles I, II, VI or other amendment to the Telecom Act, although the decibel level certainly is rising within the telecom policy community.
