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At Urging of Competify Coalition of Telecom Competitors, FCC Launches Inquiry of Broadband Business Services

in FCC/IP Transition by

WASHINGTON, October 19, 2015 – The Federal Communications Commission on Friday announced that it had launched an investigation into the broadband pricing plans of local exchange carriers AT&T, CenturyLink, Frontier and Verizon Communications for so-called “special access services” of business data.

A coalition of competitive carriers and non-profit organizations dubbed Competify has been urging the inquiry, and praised Friday’s order by the agency’s Wireline Communications Bureau.

“The incumbents use inherently anticompetitive lock-up plans – which only an entity with immense market power could impose – to charge businesses and anchor institutions excessive access rates that harm competition, restrain the deployment of competitive facilities, and impede the transition to next-generation services,” according to a statement released by the group.

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Among the companies supporting the campaign include BT, Level 3, Sprint and  XO Communications, together with a range of non-profit organizations.

The US Telecommunications Association struck back. Said association president Walter McCormick: “At the very time the commission is expressing concern over the growing dominance of cable in the overall broadband marketplace, and acknowledging that burdensome legacy regulation of telecom companies is misdirecting investment and hindering competition, it launches an old-fashioned ‘tarriff’  investigation of the only competitors in the marketplace who are required to operate under last century’s antiquated rules.”

Specifically, according to the order launching the investigation, the inquiry concerns “only a subset of specialized telecommunications services that continue to operate under tariffs,” namely time-division multiplexed (TDM) business data services such as DS1 and DS3 channel terminations under dedicated copper-based circuits.

“While competitors continue to expand their market presence by building IP [internet protocol]-based facilities or extending purchased TDM based facilities to additional buildings, preliminary results from the Commission’s data collection show that incumbent LECs remain the sole facilities-based provider of TDM-based special access services to a majority of business locations that demand or are likely to demand business data services nationwide.”

Rep. Anna Eshoo, D-Calif., and Rep. Mike Doyle, D-Penn., applauded the FCC’s investigation “that major telecom companies in the U.S. have been stifling competition in the $40 billion a year market for special access.”

“For too long, companies that utilize special access service have alleged that these services are only offered with unreasonable conditions attached, aimed at driving competitors out of this space,” wrote the representatives.

Other articles on the inquiry and Comptetify:

The Hill: http://thehill.com/policy/technology/257227-four-companies-at-center-of-fcc-probe-into-special-access-market

Multichannel News: http://www.multichannel.com/news/fcc/competify-launches-broadband-competition-campaign/394429

Drew Clark is the Chairman of the Broadband Breakfast Club. He tracks the development of Gigabit Networks, broadband usage, the universal service fund and wireless policy @BroadbandCensus. He is also Of Counsel with the firm of Best Best & Krieger LLP, with offices in California and Washington, DC. He works with cities, special districts and private companies on planning, financing and coordinating efforts of the many partners necessary to construct broadband infrastructure and deploy “Smart City” applications. You can find him on LinkedIN and Twitter. The articles and posts on BroadbandBreakfast.com and affiliated social media are not legal advice or legal services, do not constitute the creation of an attorney-client privilege, and represent the views of their respective authors.

EXCLUSIVE: An Array of FCC Partners on ConnectED Program Strive for Digital Education

in Education/FCC/Minority/NTIA by

WASHINGTON, October 13, 2014 – As technology permeates society, students are growing more comfortable with learning in the technology medium. Whether it’s organizing tables in Microsoft’s Excel, learning design software, or computer programming, there are increasingly fewer excuses to avoid technology. Tech giants like Microsoft, Autodesk, Apple and Prezi are embracing this rapid evolution and helping educators improve digital readiness in the U.S.

The mechanism by which they’re doing this is the White House’s ConnectED initiative, announced in June 2013, and which aims to complement and enhance the Federal Communications Commission’s E-Rate program. While E-Rate subsidizes schools’ costs for telecom and internet service, ConnectED extends to giving students the tools to adopt 21st century skills free of charge.

Moving Beyond The Textbook

“There’s only so much you can learn from a textbook,” Rebecca Wong said. Beyond pure academia, there’s an entire realm of skills for students to seize. Designing – whether it be movies, skyscrapers, or automobiles – is just one skill Autodesk is promoting.

The 3D design software company has dedicated $250 million to secondary schools in 2014, with plans to continue support in the future. Currently, it has offered software to 3, 300 schools, Wong said. All it takes to start using the software is a quick online registration online.

“Our mission is to help inspire students and empower teachers to imagine, create and design a better world,” Wong said. “When you think about the 21st century skills that these students are gonna need in order to succeed in the real world…we really think that the design thinking can play a very strategic role in helping to unlock those problem solving skills, creativity, collaboration, and communications [skills].”

By granting students free access to professional design software, Autodesk helps students become industry-ready.

“It’s ultimately a commitment to both education and the next generation of America,” Wong added. “It’s a commitment also to our customers. [They] tell us it’s really hard these days to recruit employees who are fresh from school who have the necessary skills to hit the ground running when they hit the work force. By doing this, it’s an extension of our commitment to our customers…that these students will ultimately be professional designers in the industry.”

Fostering Long-Term Partners In The Tech Industry

Safari Books Online shares a similar philosophy. The digital library company committed to help its parent company, O’Reilly Media, distribute roughly 2, 000 online books and training videos on computer technology topics to “every student in the country,” said Safari CEO Andrew Savikas.

Although Safari normally serves professional and corporate interests, Savikas said there are massive benefits to exposing students to his company’s content and brand as they advance in their education.

After all, some of the internet’s greatest phenomenon like Tumblr and Facebook were started by innovators who hadn’t even left school yet, thanks to access to programming tools at an early age. Imagine then, Savikas said, what students could do with professional resources in their hands.

“We benefit by having a lot of technology companies, a lot of energy, and enthusiasm in growth of the technology sector,” Savikas said. “And certainly, helping to spread and foster that among students really helps us to foster the next generation of companies and customers that we look forward to serving ten to 20 years from now.”

To date, Safari has launched a pilot program where students can sign up to participate. A larger rollout to all high school students across the country is scheduled for either late August or early September. By January 2015,  Savikas said he hopes all K-12 students will be served. Currently, U.S. law requires users of the software to verify they are above age 13, meaning that privacy concerns need to be considered.

The goal is for students to be able to log onto Safari’s website and access the entire catalogue of books and videos with just a few clicks.

While Safari’s commitment to ConnectED lasts two years, Savikas expressed confidence that support will be revisited and refined in the future.

More Immersive Classrooms

Even classroom lectures benefit from technology. At Montera Middle School in Oakland, California, Prezi ran a case study by offering teachers its cloud-based presentation software.

“One of the most valuable lessons I’ve taught this year, I actually taught through the Prezi platform,” said Courtney Connelly, a Montera teacher in Prezi’s case study video. “It was a comparison of classical, medieval and renaissance art, and it was this beautiful moment where [the students were] arguing with each other about ‘hey no, it’s classical – but no, it’s not because of the emotion on the face.”

Students became more engaged, Connelly said, adding that it’s a sign that classrooms need to catch up with the vast technological knowledge that digital natives have already acquired.

Prezi’s software allows teachers to present lectures on a virtual canvas with stimulating visuals. A zooming user interface allows navigation through information with ease.

Prezi’s commitment covers $100 million worth of four-year EDU Pro licenses – the highest tier of software available for educators – that are being given to Title I high schools for free.

Cost Savings On The Cloud

Like Autodesk, Prezi’s software offerings are cloud-based, freeing schools from the reliance on sophisticated hardware.

“For schools on a limited IT budget, the fact that they have access to free software is a huge chunk off their IT budget that they can spend on other things,” Wong said. “That wasn’t possible before.”

Geographic information software company Esri also committed $1 billion to making its advanced mapping software, running on cloud infrastructure provided by Amazon Web Services, available for free to more than 100, 000 elementary, middle, and high schools in the U.S.

In May 2014, Esri President Jack Dangermond said in a statement: “Geographic Information System technology gives students powerful tools for understanding our planet, and teaches them to become problem solvers…preparing [them] for further education and expanding career opportunities in fields that can help and better manage our world, build better lives for more people, and design a better future.”

Making Tech More Than Just An Elective

Acquainting students with technology is especially important since the future economy will be “fueled by creators and innovators” in the digital realm, said Marissa Hopkins, a spokeswoman for Adobe.

“Adobe believes that creativity cannot just be an elective – where some youth get to be creative after school or because their school can afford to purchase technology tools – but that instead, creativity is the future for all young people. That’s why we’re supporting ConnectED – to increase access to creativity for all.”

Adobe is making its $300 million contribution to Title I qualified schools by donating creative tools like Adobe Photoshop Elements and multimedia software like Adobe Premiere Elements. It will also provide eLearning tools like Adobe Presenter and Adobe Captivate.

The application process for teachers, schools and students began in early June, and Adobe has since been reviewing them on a rolling basis. The ConnectED commitment will continue for five years or until 15, 000 schools are served, with plans to continue support in the future via Adobe’s own Education Exchange and Youth Voices programs.

No Software Without Hardware

In June, Apple opened up its applications for iPads, MacBooks, and technical training to “schools with a high percentage of students in lunch assistance programs.” Apple has committed $100 million to the program.

Likewise, Microsoft has a $1 billion commitment to serve students with both hardware and software. It has thus far partnered with multiple hardware companies to bring tablets and laptops to schools including the Lenovo ThinkPad, ASUS Transformer Book T100, Acer Travelmate TMB113-E, and the Toshiba Satelite NB15t.

Windows 8.1 Pro and Office 365 ProPlus will also be made available for free to schools that apply, on top of Microsoft IT Academy training to familiarize students and teachers with technology.

Serving The Unserved

Together with Verizon, will lend wireless tablets, as well as hands-on learning tools to every Native American student in ten school-related dormitories on reservations across the West and Midwest of the U.S. Verizon will deploy broadband infrastructure to provide robust wireless connectivity.

The telecom company’s total commitment numbers at $100 million over the course of several years, as does Sprint’s, which seeks to bring free wireless service to 50,000 low-income high school students over the next four years.

There’s precedence for technology fostering higher academic achievement. An evaluation study conducted in January by the International Society for Technology in Education, a nonprofit organization that serves educators, found that schools with Verizon Innovative Learning Schools (a professional development program for teachers) that integrated mobile technology experienced much more positive results than others.

Students and teachers from 24 elementary, middle, and high schools participated. The control group included schools without mobile technology as well as schools with mobile technology that did not participate in any systematic, professional development program focused on using technology effectively to teach students.

Among other things, teachers in the VILS program reported that 35 percent of their students showed higher scores on classroom assessments; 32 percent showed increased engagement in the classroom; and 62 percent demonstrated increased proficiency with mobile devices.” Sixty percent of teachers also reported that they were providing more one-on-one assistance to students by using their mobile devices and 47 percent said they were spending less time on lectures to the entire class.

Free Of Charge

With all the free hardware, software, and educational tools being offered to schools, one could be forgiven for raising an eyebrow at the motive and end goal of these tech companies.

There really isn’t a catch, Wong said. The contributions by each of the ten ConnectED partners are a steadfast dedication to the next generation of innovators and customers.

“What are you waiting for?” she asked. “It’s free.”

Or as Ashley Whitlatch, Global Education Relations at Prezi, puts it: “we’re giving away tools to educators that are able to utilize them to improve education. Why would that ever be a bad thing?”

 

Wheeler Addresses Both Wired and Wireless Infrastructure to Enhance Broadband Buildout and FirstNet

in FCC/Fiber/Weekly Report by

October 2, 2014 – On Wednesday, Federal Communications Commission Chairman Tom Wheeler addressed the importance of local choice and competition regarding broadband access during remarks at the National Association of Telecommunications Officers and Advisors Annual Conference in Minnesota.

Wheeler did not make specific comments about recent petitions from two communities–Wilson, North Carolina, and Chattanooga, Tennessee– who are soliciting the FCC to preempt their states’ laws that prohibit expansion of their respective community-owned broadband networks. However, Wheeler did express the importance of prioritizing the expansion of wired and wireless infrastructure.

In his prepared remarks, Wheeler said, “If the infrastructure necessary to build out both wired and wireless broadband networks doesn’t receive the prioritization that it warrants as a major national undertaking, then all the efforts to achieve faster, cheaper, better broadband service that will enhance our nation’s competitiveness, create quality jobs for our fellow citizens, and introduce services that will redefine both our commerce and our culture will be for naught.”

Wheeler also expressed that greater broadband access directly correlates to America’s continued economic leadership. He called on local officials to support their communities and the American society at large.

The Chairman also highlighted his agency’s recent proposal to make it easier to deploy wireless equipment, especially so-called small-cell systems. This technology enhances increases network speeds in high-congestion areas. Carriers including Sprint and AT&T have been working on such technologies as a way to better manage their networks.

Wheeler’s closing remarks emphasized the need for cooperation to facilitate public safety communication over all-internet protocol networks. The next generation of emergency 911 systems relies on multi-state or national infrastructures and relationships. The need for reliability and resiliency for these networks is vital in light of recent outages in April and August. He noted that next year’s incentive spectrum auction is a key mechanism for funding FirstNet, the First Responder Network Authority that will deploy the next generation 911 systems. The federal government, every state and territory, local governments and approximately 5.4 million first responders will be participating in FirstNet, which was created when the Middle Class Tax Relief and Job Creation Act was signed into law on February 22, 2012.

Broadband Roundup: FTC a Loser Under Title II, Rural Gigabit Projects, and Wireless Sponsored Data

in FCC/Fiber/Net Neutrality/Wireless by

WASHINGTON, September 23, 2014 – In a filing with the Federal Communications Commission, the Federal Trade Commission noted that some of its regulatory authority would be lost if the FCC decided to regulate broadband as a public utility.

The FTC protects the privacy and security of consumer data by imposing obligations on broadband service providers through the enforcement of the Federal Trade Commission Act, the Fair Credit Reporting Act and Children’s Online Privacy Protection Act, among other federal laws. The FTC Act prohibits deceptive and unfair practices as to require companies to truthfully market their products and refrain from engagement in harmful business practices, while simultaneously promoting competition based on truthful claims. However, this same section also includes an exemption clause for the activities of common carriers.

Gigabit Networks in Rural Northern Minnesota and in Miami, Florida

Paul Bunyan Communications announced its plans to launch Gigazone, a new advanced regional Gigabit fiber network. Eventually covering the company’s 5,000 square mile service area in northern Minnesota, the new network will be one of the largest rural gigabit in the country.

“Expanding broadband is a great equalizing force for boosting rural economies,” said Sen. Amy Klobuchar, D-Minn., said in a statement. “Today you don’t need to live off a major highway or in a bustling city to find a good job, start a new business, or get a high quality education but today you do need a high-speed Internet connection.”

Also, Atlantic Broadband announced its initial Gigabit service in Indian Creek Village near Miami, Florida. The company, which provides cable services in Maryland, Delaware, South Carolina, Central Pennsylvania and Florida, is evaluating expansion opportunities to expand.

“Atlantic Broadband utilizes [a radio frequency] over glass platform which means that all the in-home wiring, [customer premises equipment, head-end and back office systems remain the same as the rest of our service network,” the spokesperson noted to Telecompetitor. the company expects to use both fiber-to-the-home and DOCSIS 3.0, the advanced cable modem technology.

CTIA CEO Touts Competitive Benefits of Sponsored Data

CTIA CEO Meredith Baker stressed how mobile Internet providers increasingly seeing sponsored data as a way to handle growing competition in the wireless marketplace, reported the Washington Post.

T-Mobile, AT&T and Sprint are all starting to offer these service packages. Under its Music Freedom program, T-Mobile currently provides its customers with unlimited music streaming from certain music services that does not count against their data allowance. Sprint’s newly unveiled Virgin Mobile Custom plan allows unlimited access to either Facebook, Twitter, Instagram or Pinterest and additional data for $12 a month. Paying $10 more will allow unlimited use of all four social networks and unlimited streaming from any one music app costs an extra $5. AT&T announced its sponsored data programs in January. These plans allow a consumer to access to the contents of these services without counting against the consumer’s data allowance.

Baker, former head of the U.S. Department of Commerce’s National Telecommunications and Information Administration and an FCC commissioner from 2009 to 2011, argued, “we should want competitors fighting to see who can manage the best network, and optimize the most services for the most subscribers. No one wants a one-size-fits-all mobile internet experience.”

Separately, the wireless lobbying group urged Congress to develop a new way for paying for the FCC’s Universal Service Fund programs in a comment submitted to the House Energy and Commerce Committee. Currently, the Universal Service Fund is partially financed by consumers through fees on phone service. CTIA suggested that some of the programs should be funded through the general budget process. The lobbying group also urged the agency to cut money from developing wired service to instead focus on wireless service.

NetAmerica Alliance Hails Rural 4G LTE Benefits From Partnership with Sprint

in Fiber/Wireless by

WASHINGTON, July 29, 2014 – An alliance designed to serve the wireless broadband needs of rural America has partnered with Sprint to provide fourth-generation LTE service to members of the NTCA that are calling themselves the Rural Broadband Alliance, according to details unveiled in a webinar on Thursday, July 24.

In a webinar hosted by rural broadband group formerly known as the National Telecommunications Cooperative Association, NetAmerica Alliance Chairman and CEO Roger Hutton said that the alliance seeks to unite peers in the communications industry with Sprint so as to provide greater scale to small carriers but without consolidation.The alliance offers access to 4G LTE service from Sprint.

“Our belief was that you could achieve [that] with small carriers where they maintained their independence, and yet operate in a manner where they shared cost and operating cost in a manner that then produced scale,” Hutton said.

The barriers include national reach, meeting technology requirements, and aligning with spectrum holdings.

Bringing cost-effective 4G LTE to rural areas is important because access to internet is no longer optional, Hutton said. It’s just as much an absolute necessity for folks living in rural America as it is for those in urban and suburban communities.

“The internet has gone mobile and we all need to remain aware of that,” Hutton said. “People want access where they are, not where they ain’t.”

A study conducted by NetAmerica Alliance in 2012 found that 75 percent of respondents in rural communities deemed mobile broadband to be crucial. Roughly two-thirds of younger adults said they credited mobile broadband access with being able to live wherever they want to, Hutton said.

Smartphone ownership has reached 50 percent penetration in the U.S., Hutton said. The rate of smartphone growth is about twice the decline of the number of people with no phone at all.

Unfortunately, mobile broadband has been “a natural and historical challenge” in rural America because of a lack of scale,” Hutton said. “In the case of rural America, you don’t have very many people in a very large area. Fifteen percent of our population resides in rural areas in 72 percent of the land area in the country.” Covering such a small but widespread population comes with great costs, yet limited rewards.

“The reverse of that is there’s 85 percent of the population concentrated in 28 percent of the geography and so the economics are significantly different than they are in rural areas. These markets, quite frankly, you have to consider to be standalone markets…pretty much uneconomic. They just don’t have enough people to generate enough revenue.”

AT&T and Verizon Communications haven’t made things easier for smaller rural carriers with their consolidation in recent years, Hutton said. The duopoly’s market share in the mobile broadband space from 2008 to 2013 increased from 56 percent to 73 percent.

Large swaths of land in the U.S. have gone unserved by Sprint due to high costs of deployment, he said. NetAmerica Alliance’s rural carriers have operated in rural communities for decades.

“The primary thing we were able to secure in this alliance was the use of [Sprint’s] spectrum in rural areas as well as using their networks when our customers leave our network so that we’ll be able to get national reach,” Hutton said. “And by aligning our LTE network and building it on spectrum that aligns with their spectrum, then we would have the ability to access their devices. So in essence, we’ve knocked down all barriers.”

“The greatest threat [to rural deployment] is inaction and thinking the government is gonna solve all your problems. I don’t think we can rely on them. You can roll over and play dead, which many people did, but I opt for fighting and winning,” Hutton said, saying that the program will lead to more successful rural deployment.

Broadband Roundup: Wireless Data Exploding, Will Sprint Succeed with T-Mobile, Cybersecurity Bill

in Broadband Roundup/Media ownership/Mobile Broadband/Wireless by

WASHINGTON, June 18, 2014 – A new study by Wireless Association CTIA reported that between 2012 and 2013, mobile traffic and data increased by 120 percent. That’s 383 times the data usage from 2008. The result was $331 billion worth of investments into wireless networks last year, according to the association.

On the communications merger front, AT&T Chairman and CEO Randall Stephenson said Tuesday that he expects Sprint’s attempt to acquire T-Mobile to suffer the same doomed fate of AT&T’s attempt to acquire the wireless carrier, The National Journal reported.

Regulators won’t budge, he said, because in their minds, a colossal merger would reduce competition in the wireless industry from four major carriers to three.

“There were not other major issues. That was the issue, and that’s what they came after,” he said during an interview with David Rubenstein, CEO of the Carlyle Group, during an event hosted by the Business Roundtable, according to National Journal. “As you think about Sprint and T-Mobile combining, I struggle to see how that is not four going to three.”

Softbank Corp CEO Masayoshi Son, on the other hand, expressed more optimism about Sprint’s proposed merger, according to Reuters. Softbank owns majority share in Sprint.

“We can make it more effective by getting bigger scale,” he said at Tuesday’s interview, conducted jointly with former U.S. Secretary of State Colin Powell who is attending SoftBank-sponsored events in Tokyo. “Us becoming a more credible competitor in scale is something good for American consumers and citizens.”

Additionally, a Senate press release said that Senate Intelligence Chairwoman Dianne Fernstein has drafted a bill that allows companies to more easily share information about cyberattacks.

A counterpart bill to a similar House bill, the measure offers “liability protection to companies that participate  in the program.”

Broadband Roundup: House Communications Committee Seeks Comments from Trade Groups on Telecom Law

in Broadband Roundup/Broadband's Impact/FCC/Net Neutrality by

WASHINGTON, June 17, 2014 – The House Energy and Commerce Committee put forward an opportunity for individuals and interest groups to offer comment on telecommunications policy, and many individuals and trade groups took advantage of the opportunity, The Hill reported

The Telecommunications Industry Association said that in 1996, lawmakers didn’t grasp the manner in which new technologies “directly challenge each other in the marketplace,”

“A legislative focus on specific, well-defined public interest objectives will ultimately prove more durable in achieving those objectives as technology evolves, rather than an approach which micro-manages how content providers, network operators, and customers should relate to each other,” said the group representing equipment manufacturers.

CTIA – The Wireless Association suggested the FCC adopt a minimal regulation.

“To accommodate this changing landscape, competition should be defined flexibly to include an examination of what consumers consider product substitutes, including services offered by non-carrier providers,” the group said.

Sprint said in a press release that it just reached agreements with 12 rural and regional network carriers on their fourth-generation LTE networks.

“These agreements seek to increase wireless competition by providing the carriers – and their customers – low-cost access to Sprint’s nationwide 4G LTE network and an opportunity to pursue an expanded utilization of 4G LTE across America where the cost of building such networks and the roaming costs are often prohibitively expensive,” read the press release

Dubbed the rural roaming preferred program, the effort was developed in conjunction with Competitive Carriers Association and now extends to “23 states, over 350, 000 square miles and a population of over 34 million people.”

Apple said it is asking schools to apply for its portion of the ConnectED program to improve connectivity and technology in schools, The Washington Post reported.

The company has already invested $100 million to the program and will be contributing further by providing iPads, MacBooks, software and technical training to “schools with a high percentage of students in lunch assistance programs.”

Ron Carruth, superintendent for the Whittier County School District in Whittier, Calif., said “we are looking to partner with schools that share our vision of using technology to transform education. If a school is selected, we will provide it with Apple products, education content and wireless infrastructure, and we will work closely with teachers to further their professional development.”

The applications are due on June 20.

In other news, a study by the Information Technology & Innovation Foundation found that about one-third of Americans are not competent in the use of computers and the internet. That’s nearly twice the number of people without internet access.

The report urged increased investments into digital skills education by the public and private sectors.

Broadband Roundup: Sprint and T-Mobile Proposal, Mobile Broadband Rising, Media Ownership Rules

in Broadband Roundup/Broadband's Impact/FCC/Wireless by

WASHINGTON, June 5, 2014 – Another significant telecommunications merger proposition is underway between Sprint and T-Mobile. The Wall Street Journal reported that the acquisition would cost Sprint $32 billion, or about $40 per share in cash and stock.

Sprint and T-Mobile are the third and fourth largest wireless operators in the United States, respectively. The merger could present serious competition for market leaders Verizon Communications and AT&T.

“In order to compete against the big two, AT&T and Verizon, scale is essential,” said Satoru Kikuchi, an analyst at SMBC Nikko Securities Inc. in Tokyo told Bloomberg. “The mobile-phone industry is an industry that needs business investment, so the larger the better.”

This isn’t the first time a telecom company has tried to acquire T-Mobile. AT&T courted T-Mobile three years ago, but the marriage was blocked by regulators, citing antitrust concerns that would leave consumers too few choices in wireless carriers.

In other news, consumers spent more than $113 billion this year on internet access, USA Today reported. That number is expected to rise to $174 billion by 2018.

The report was filed by consulting firm PricewaterhouseCoopers’ Entertainment & Media Outlook 2014-2018.

Mobile Internet expenditures comprised “$53 billion of the total $102 billion [interet] access pie,” USA Today reported, while home broadband made up the lesser share of $49 billion. In four years, the PwC projects that 86 percent of the U.S. population will have mobile service as opposed to the 85.6 percent with home broadband.

Demand for music, movie, and video game streaming services is expected to increase the demand for internet access.

Also, the House Energy and Commerce Subcommittee on Communications and Technology scheduled a hearing for Wednesday June 11, 2014 entitled “Media Ownership in the 21st Century.”

Witnesses have yet to be announced. The hearing will examine the FCC’s “inaction on the statutorily required 2010 quadrennial review of the media ownership rules as well as the continued relevance of the media ownership regulatory framework in general.”

The hearing also aims to review the commission’s institution of new rules on joint sales agreements, plus various media ownership changes undertaken without the quadrennial review.

In a form filed with the Securities and Exchange Commission, AT&T told investors Tuesday that its proposed merger with DirecTV would help building out the company’s “ultra-fast fiber connections to consumers’ homes and compete better with the major cable providers.”

Savings up to 20 percent would result through fewer programming costs. This would allow the company to make additional investments in expanded broadband coverage, the company said.

Is Internet Interconnection the New Network Neutrality? Panel Suggests a New Regulatory Creep

in FCC/Net Neutrality by

WASHINGTON, May 28, 2014 – The Federal Communications Commission is likely to experience increasing pressure to intervene in and resolve disputes involving internet interconnection, experts said on Tuesday at a panel hosted by the Progressive Policy Institute.

Central to the discussion was the question of whether the FCC should go as far as to mandate interconnection, should the agency intervene.

Responses from the panelists were mixed, albeit leaning toward the standpoint that outright mandatory interconnection may be unnecessary, and even counter-productive – although there was dissent from that position.

Early in the discussion, Carnegie Mellon University computer engineering professor Jon Peha explained the basics of concept of interconnection:

“The Internet feels like one big network when we use it, but if that were the case, there would be no such thing as interconnection,” Peha said “The internet is a network of networks that are packed over 66,000 independent, autonomous networks that somehow work as one, and each network in there is connected to one or more neighboring networks. That means information I send may travel from network to network before it finally gets to its intended recipient.”

“For example, I have a student right now in Uganda and I sent her a message, and amazingly, from whatever network I’m at, it somehow figures out how to get my message to her in Uganda,” he said.

The technical challenge is not only in getting the message to Uganda, but getting every network along the way to carry the information. There are tangible costs to this, he said.

“The solution to both of these challenges is buried in the magic of interconnection agreements,” Peha continued. “An interconnection agreement is where two networks come together and agree on both the technical and business issues of changing internet traffic, including ‘will I carry any of your traffic, and if so, how much will I carry?’”

Up until now, interconnections have been created generally been created through by private, unregulated negotiations, but that is changing. The role of content distributor delivery networks and peering relationships are multiplying. The question, Peha said, is what to do about it.

Ruth Milkman, chief of staff for FCC Chairman Tom Wheeler, argued there were historical precedents for mandatory interconnection. She pointed to railroad systems and electrical networks of early in the United States as having evolved partly due to through regulatory oversight.

“There have been diverse regulatory approaches to ensuring effective interconnection,” Milkman said. “Some have involved a relatively lighter touch; others a heavier hand. Often, price regulation has been part of the package. At the bottom, however, is that a network without connections and interconnections is one that simply doesn’t work. Disconnected networks simply do not serve the public interest.”

Kevin Werbach, professor of legal studies and business ethics at the University of Pennsylvania, opined said that interconnection is was essential, especially particularly when the all communications networks is are converging into onto an internet protocol network. While the FCC should not micro-manage private agreements, a public policy backstop was needed for private enterprise interconnection agreements.

“It’s [naive] to believe that somehow, magically, this will work itself out given the way the network’s changing,” he said. “Some FCC involvement would have a lot of benefits,” he said. “I think it’s not right to say ‘do we have private agreements or do we have the FCC?’ We can absolutely have lots of room for private agreements but still have a sense that there are certain practices which are anti-competitive. ”

Werbach distinguished net neutrality and interconnection as separate issues. Interconnection  concerns the “edge of provider networks, not the network,” Werbach said. Yet the two have similar implications. Both situations leave open the possibility of an ISP internet service provider degrading and differentiating between traffic, he said.

Economists Incorporated Senior Fellow Hal Singer and Gerry Faulhaber, professor emeritus of business economics and public policy from at the University of Pennsylvania, did not favor regulatory oversight of private agreements. Faulhaber scoffed at the idea: “light touch regulation…is sort of like jumbo shrimp – it’s kind of an oxymoron.”

“Interconnection is not just a communications issue,” Faulhaber said. “It occurs in virtually every business in which the producer of something – it could be canned peas – has to distribute something to customers through distributors like supermarkets. Distributing through supermarkets works so nobody’s going for regulation of supermarkets…. We have an [internet] system that works.”

Calling for regulation of internet access because networks have changed is a fallacy, he said. The Internet has maintained itself for 30 years. The FCC, by contrast, has a “terrible reputation as an adjudicator.”

History has consistently shown that limited regulation causes two things to occur: rent- seeking and a slippery slope of more regulation.

“Once a commission interests itself in a particular area, puts a sign out that says ‘open business,’ which is what we did [with] the open internet order. What happens? Firms realize, ‘oh I don’t get to make money looking at customers and making investments. I make money by going to the regulators and getting them to favor me and disfavor others. For thirty 30 years, we never had complaints about interconnections. Since 2010, we’ve had a number…why? ‘Open for business.’

“The second thing that happens is even though commissioners may say ‘we want to limit how much we regulate,’ that won’t happen. They will be under constant pressure to expand the regulatory writ. Level 3 in 2010 said ‘let’s try to leverage network neutrality into regulating interconnection.’ It looks like we’re now leveraging the interest of the FCC in net neutrality into interest in interconnection.”

Singer added that the costs of mandatory interconnection outweighed the benefits, precisely because there have been relatively few network disputes.

“If the probability of these disruptions happening is close to zero, then the expected benefit of imposing mandatory interconnection is small as well,” Singer said.

On the cost side, Singer argued that if networks are forced to connect, it could upset providers’ “make or buy decision” and undermine some of the goals of Section 706 of the Communications Act of 1996 – namely, to encourage deployment.

“Some people point to Sprint and T-Mobile’s reluctance to deploy their spectrum into rural areas,” he said. “Mandatory interconnection and data roaming agreements cause them to want to take the ‘buy’ decision over the ‘make’ decision – so I’m worried about what it would do to incentives, not just of ISPs, but also of these middle-mile folks and content providers who are now getting a little taste of what it’s like to be in last-mile access.”

Taking a more neutral stance, Peha said he could see both sides of the argument on intervention by the FCC’s intervention. Ultimately, the agency has to provide more concrete evidence that there is a significant problem in the first place. The FCC also has to prove it can make things better.

“I would like to see more information gathered,” Peha said. “I think that’s where the FCC can do something constructive is to try to shed a little light on all those private agreements and just see if we have to be concerned about them.”

Anna-Maria Kovacs, a visiting scholar at Georgetown University’s Center for Business and Public Policy, expressed more condescension, arguing that even though it is essential for everyone to interconnect, several decades’ worth of history have proven that private commercial agreements can get the internet to that point.

Regulation, said, would eliminate flexibility and consequently lead to investments drying up.

“Barring a breakdown, we really should not be intervening because the rigidities that regulation would bring to the system would probably create far more chaos than the occasional disputes that you have between parties,” said Kovacs.

Kevin Werbach concluded by seeking to rebut arguments in opposition to regulation.

“I would hate to see the internet turn into a supermarket that’s just selling us peas,” Werbach said. “That’s not what the internet is today… not [the] open platform that generated so much extraordinary innovation. It’s a linear market – nothing comes back from the consumer the other way…. That’s not the internet we should have in the future.”

Expert Opinion: Business as Usual Despite Departure of Universal Service Administrative Company CEO

in Broadband's Impact/Expert Opinion/FCC/IP Transition/Universal Service by

Although it is the Federal Communications Commission (“FCC” or “Commission”) that is charged with implementing the ambitious universal service policy goals set forth in the Telecommunications Act of 1996 (the “Act”), the FCC designated the Universal Service Administrative Company (“USAC”), an independent, not-for-profit corporation, to administer the day-to-day operations of federal universal service. USAC bills and collects contributions to the federal universal service fund (“USF”) from telecommunications providers and disburses the funds to the four federal universal service programs: (1) High Cost; (2) Lifeline; (3) Rural Health Care; and (4) E-Rate. At the head of USAC is its Chief Executive Officer, who is responsible for the management of USAC’s daily operations.

What does this have to do with Scott Barash? As USAC’s first in-house counsel (a post he assumed in 1999) and Acting Chief Executive Officer (a post he assumed in 2006), Scott has been a constant USAC presence for over fourteen years in an otherwise tumultuous telecommunications world. He has had a ringside seat as telecommunications has progressed from primarily PSTN to include wireless, interconnected VoIP and broadband.

In his role as USAC’s first in-house counsel, Scott worked with USAC to develop federal universal service practices and procedures when the federal universal service fund was still in its infancy. As USAC’s Acting CEO, Scott managed USAC’s day-to-day operations, a task which required him to forge strong collaborative relationships with the FCC and USAC Board of Directors. As USAC’s figurehead, and perhaps most well-known employee, Scott was held accountable for USAC’s actions to Congress, the FCC, the USAC Board of Directors, industry participants and telecommunications consumers alike.

Given Scott’s long history with USAC and the importance of his role as Acting CEO, one would think that his recently announced departure would mean significant upheaval at USAC. That is not the case. There is no doubt that USAC faces tough challenges. Technology has rapidly outpaced the current telecommunications laws making it difficult for USAC to align the FCC’s policy goals and regulations with the practical reality of today’s telecommunications providers and the services they offer.

The FCC is grappling with reform in all of the federal universal service programs, as well as attempting comprehensive contribution reform. Lawmakers are also grappling with the task of universal service reform. President Obama has previously called for the overhaul of E-Rate, a task which the FCC initiated with its E-Rate modernization NPRM. In his 2014 State of the Union address, President Obama re-stated his commitment to bring high-speed broadband connectivity to 99% of America’s students with the support of the FCC and philanthropic relationships with companies like Apple, Microsoft, Sprint, and Verizon.

All of these potential changes come at a time when federal universal service has seen a shrinking contribution base and higher contribution factors (16.4% for the first quarter of 2014). With the move away from the Public Switched Telephone Network towards IP-based telecommunications, whether broadband Internet access, text-messaging and enterprise communications providers should be added to the list of federal USF contributors remains a contentious subject. While each of these is a matter of policy that must first be addressed by the FCC,9 each of them will have a significant administrative impact on USAC.

And yet, the old adage is true. The more things change, the more they stay the same. There is no doubt that the loss of Scott’s broad institutional knowledge and practical perspective regarding effective implementation of FCC policy goals will be a significant loss to USAC. However, perhaps the best testament to Scott’s leadership is that because of the strong administrative practices and procedures developed during his tenure, his departure will have little to no impact on the day-to-day administrative aspects of federal universal service.

At least in the short term (i.e., pending any significant Congressional or FCC universal service reform), the day-to-day obligations for federal USF contributors and beneficiaries will look the same after Scott’s departure as they did during his time as USAC’s Acting CEO. Nonetheless, given the rapidly evolving state of telecommunications and the calls for rapid, decisive federal universal service reform, it will only benefit USAC to have a strong, knowledgeable leader at the helm. The board would be wise to nominate, and the FCC to appoint, a new USAC CEO in an expeditious manner.

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