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In the Coming Battle over Net Neutrality, Bell Companies Prefer the FCC to the FTC

August 11 – Presumptive Republican presidential nominee John McCain is preparing to launch a new telecom and technology agency, in which he’s pushing for the Federal Trade Commission — and not the Federal Communications Commission — to be the key internet enforcement agency.

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August 11 – Presumptive Republican presidential nominee John McCain is preparing to launch a new telecom and technology agency, according to this report by Dow Jones.

In the story, Dow Jones paraphrases McCain domestic policy advisor Douglas Holtz-Eakin as saying that McCain thinks that the Federal Communications Commission shouldn’t be drafting rules for new markets. “Instead, McCain wants the FCC to function more like the Federal Trade Commission, which analyzes the impact of companies’ endeavors before it acts,” according to the report.

There’s more to that distinction — FCC versus FTC — than meets the eye.

Consider what happened about an hour after the Federal Communications Commission took its enforcement against Comcast for “block[ing] content and significantly interfer[ing] with a person’s ability to access applications and content of their choice”: advocates pushing for Net Neutrality held a congratulatory phone call.

That was expected. Net Neutrality partisans from Free Press, the Open Internet Coalition, Public Knowledge and Vuze emphasized the seminal aspects the Comcast punishment decision — and the need for further legislative action.

The unexpected part was who else showed up at the party: Lawrence Spiwak, President of the Phoenix Center for Advanced Legal and Economic Public Policy Studies.

The Phoenix Center used to be a critic of the Bell companies. It pushed the economic case for “unbundling” the telephone network, or requiring the Bell to share their lines with long-distance competitors like the old AT&T.

Soon after AT&T was bought by SBC (SBC took on the name of the better-known and more-storied acquisition target) and became the new AT&T, however, the Phoenix Center began to focus on other issues, like promoting national video franchising. That was the Bell’s agenda during the 109th Congress, the last one controlled by Republicans.

Lately, the Phoenix Center has taken to criticizing Network Neutrality, or the idea that carriers should be barred from striking preferential deals with favored business partners. Sample titles: “Only Winners from Network Neutrality Regulation to be Content Providers, Consumers Lose,” “The Efficiency Risk of Network Neutrality Rules,” and “The Burden of Network Neutrality Mandates on Rural Broadband Deployment”

But now, with Republicans’ poll numbers in the tank — and with presumptive Democratic presidential nominee Barack Obama being the first presidential candidate to come forward with a detailed prescription for Net Neutrality — the telecom companies and their allies are beginning to realize that they need to come up with a Plan B, and fast.

And that is where the battle over Net Neutrality begins again. Today, my friend Paul Kapustka over at Sidecut reports has just released a detailed analysis about what just happened — and what’s likely to happen — in the next phase of the Net Neutrality fight.

Here’s the dilemma for the Bell and cable companies, according to Kaps’ new report:

“With the Democrats in control of both the House and the Senate, the odds of Congress drafting some kind of writ-in-stone net neutrality legislation in the near future are looking more likely, especially if Obama were to win the Presidency. The best way to head such legislation or regulation off at the pass, if you listen to the telcos, is to argue that the 2005 principles are all the rules the FCC needs to police and enforce any net neutrality infractions.”

Well, that’s exactly what Spiwak was arguing when he joined with the pro-Net Neutrality forces on the call.

After thanking Free Press “for inviting me to be a part of this conference call,” he noted that the Phoenix Center’s research on the effects of Net Neutrality regulation has led them to be “very much on the other side of this issue from other people on this call.”

So why team up? For Spiwak (and, as Kaps documents in his report, for key Bell lobbyists), the answer is that FCC Chairman Kevin Martin’s actions shows “why additional legislation is unnecessary.”

Clearly, they won’t get any agreement on that from the Free Press crowd. But what do they agree upon? “We agree that the FCC is the proper place and forum to adjudicate issues of Net Neutrality — far better than the antitrust agencies,” such as the Federal Trade Commission.

I called up Spiwak to ask him why, given that he believes that Net Neutrality complaints were best adjudicated on a case-by-case basis, the FTC (or Justice Department) wouldn’t be a better place to do so than at the FCC?

“You need that level of specialization,” Spiwak said, referring to the FCC. Although the Phoenix Center agrees with the McCain-ites that Net Neutrality complaints are best adjudicated on a case-by-case basis, for Spiwak, the antitrust agencies are too static and limited in their analyses to handle the task.

Further, “the FCC is often in a very difficult position,” Spiwak said. Congress wants it to promote competition, but it also wants subsidies for universal service. “Those goals are contradictory, but Congress wants both of them.”

And for the Bell companies seeking to avoid new mandates for Net Neutrality, the devil that they know at the FCC is a lot better than the devil that they don’t at the FTC.

Breakfast Media LLC CEO Drew Clark has led the Broadband Breakfast community since 2008. An early proponent of better broadband, better lives, he initially founded the Broadband Census crowdsourcing campaign for broadband data. As Editor and Publisher, Clark presides over the leading media company advocating for higher-capacity internet everywhere through topical, timely and intelligent coverage. Clark also served as head of the Partnership for a Connected Illinois, a state broadband initiative.

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Dae-Keun Cho: Demystifying Interconnection and Cost Recovery in South Korea

South Korean courts have rejected attempts to mix net neutrality arguments into payment disputes.

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The author of this Expert Opinion is Advisor in Dae-Keun Cho, a member of the telecom, media and technology practice team at Lee & Ko.

South Korea is recognized as a leading broadband nation for network access, use and skills by the International Telecommunications Union and the Organisation for Economic Co-operation and Development.

South Korea exports content and produces platforms which compete with leading tech platforms from the US and China. Yet few know and understand the important elements of South Korean broadband policy, particularly its unique interconnection and cost recovery regime.

For example, most Western observers mischaracterize the relationship between broadband providers and content providers as a termination regime. There is no such concept in the South Korean broadband market. Content providers which want to connect to a broadband network pay an “access fee” like any other user.

International policy observers are paying attention to the IP interconnection system of IP powerhouse Korea and the lawsuit between SK Broadband (SKB) and Netflix. There are two important subjects. The first is the history and major regulations relating to internet protocol interconnection in South Korea. Regulating IP interconnection between internet service providers is considered a rare case overseas, and I explain why the Korean government adopted such a policy and how the policy has been developed and what it has accomplished.

The second subject is the issues over network usage fees between ISPs and content providers and the pros and cons. The author discusses issues that came to the surface during the legal proceedings between SKB and Netflix in the form of questions and answers. The following issues were identified during the process.

First, what Korean ISPs demand from global big tech companies is an access fee, not a termination fee. The termination fee does not exist in the broadband market, only in the market between ISPs.

In South Korea, content providers only pay for access, not termination

For example, Netflix’s Open Connect Appliance is a content delivery network. To deliver its content to end users in Korea, Netflix must purchase connectivity from a Korean ISP. The dispute arises because Netflix refuses to pay this connectivity fee. Charging CPs in the sending party network pay method, as discussed in Europe, suggests that the CPs already paid access fees to the originating ISPs and should thus pay the termination fee for their traffic delivery to the terminating ISPs. However in Korea, it is only access fees that CPs (also CDNs) pay ISPs.

In South Korea, IP interconnection between content providers and internet service providers is subject to negotiation

Second, although the IP interconnection between Korean ISPs is included in regulations, transactions between CPs and ISPs are still subject to negotiation. In Korea, a CP (including CDN) is a purchaser which pays a fee to a telecommunications service provider called an ISP and purchases a public internet network connection service, because the CP’s legal status is a “user” under the Telecommunications Business Act. Currently, a CP negotiates with an ISP and signs a contract setting out connection conditions and rates.

Access fees do not violate net neutrality

South Korean courts have rejected attempts to mix net neutrality arguments into payment disputes. The principle of net neutrality applies between the ISP and the consumer, e.g. the practice of blocking, throttling and paid prioritization (fast lane).

In South Korea, ISPs do not prioritize a specific CP’s traffic over other CP’s because they receive fees from the specific CP. To comply with the net neutrality principle, all ISPs in South Korea act on a first-in, first-out basis. That is, the ISP does not perform traffic management for specific CP traffic for various reasons (such as competition, money etc.). The Korean court did not accept the Netflix’s argument about net neutrality because SKB did not engage in traffic management.

There is no violation of net neutrality in the transaction between Netflix and SKB. There is no action by SKB to block or throttle the CP’s traffic (in this case, Netflix). In addition, SKB does not undertake any traffic management action to deliver the traffic of Netflix to the end user faster than other CPs in exchange for an additional fee from Netflix.

Therefore, the access fee that Korean ISPs request from CPs does not create a net neutrality problem.

Why the Korean model is not double billing

Korean law allows for access to broadband networks for all parties provided an access fee is paid. Foreign content providers incorrectly describe this as a double payment. That would mean that an end user is paying for the access of another party. There is no such notion. Each party pays for the requisite connectivity of the individual connection, nothing more. Each user pays for its own purpose, whether it is a human subscriber, a CP, or a CDN. No one user pays for the connectivity of another.

Dae-Keun Cho, PhD is is a member of the Telecom, Media and Technology practice team at Lee & Ko. He is a regulatory policy expert with more than 20 years of experience in telecommunications and ICT regulatory policies who also advises clients on online platform regulation policies, telecommunications competition policies, ICT user protection policies, and personal information protection. He earned a Ph.D. in Public Administration from the Graduate School of Public Administration in Seoul National University. This piece is reprinted with permission.

Request the FREE 58 page English language summary of Dr. Dae-Keun Cho’s book Nothing Is Free: An In-depth report to understand network usage disputes with Google and Netflix. Additionally see Strand Consult’s library of reports and research notes on the South Korea.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views reflected in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

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Luke Lintz: The Dark Side of Banning TikTok on College Campuses

Campus TikTok bans could have negative consequences for students.

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The author of this expert opinion is Luke Lintz, co-owner of HighKey Enterprises LLC

In recent months, there have been growing concerns about the security of data shared on the popular social media app TikTok. As a result, a number of colleges and universities have decided to ban the app from their campuses.

While these bans may have been implemented with the intention of protecting students’ data, they could also have a number of negative consequences.

Banning TikTok on college campuses could also have a negative impact on the inter-accessibility of the student body. Many students use the app to connect with others who share their interests or come from similar backgrounds. For example, international students may use the app to connect with other students from their home countries, or students from underrepresented groups may use the app to connect with others who share similar experiences.

By denying them access to TikTok, colleges may be inadvertently limiting their students’ ability to form diverse and supportive communities. This can have a detrimental effect on the student experience, as students may feel isolated and disconnected from their peers. Additionally, it can also have a negative impact on the wider college community, as the ban may make it more difficult for students from different backgrounds to come together and collaborate.

Furthermore, by banning TikTok, colleges may also be missing out on the opportunity to promote diverse events on their campuses. The app is often used by students to share information about events, clubs and other activities that promote diversity and inclusivity. Without this platform, it may be more difficult for students to learn about these initiatives and for organizations to reach a wide audience.

Lastly, it’s important to note that banning TikTok on college campuses could also have a negative impact on the ability of college administrators to communicate with students. Many colleges and universities have started to use TikTok as a way to connect with students and share important information and updates. The popularity of TikTok makes it the perfect app for students to use to reach large, campus-wide audiences.

TikTok also offers a unique way for college administrators to connect with students in a more informal and engaging way. TikTok allows administrators to create videos that are fun, creative and relatable, which can help to build trust and to heighten interaction with students. Without this platform, it may be more difficult for administrators to establish this type of connection with students.

Banning TikTok from college campuses could have a number of negative consequences for students, including limiting their ability to form diverse and supportive communities, missing out on future opportunities and staying informed about what’s happening on campus. College administrators should consider the potential consequences before making a decision about banning TikTok from their campuses.

Luke Lintz is a successful businessman, entrepreneur and social media personality. Today, he is the co-owner of HighKey Enterprises LLC, which aims to revolutionize social media marketing. HighKey Enterprises is a highly rated company that has molded its global reputation by servicing high-profile clients that range from A-listers in the entertainment industry to the most successful one percent across the globe. This piece is exclusive to Broadband Breakfast.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views reflected in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

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Jessica Dine: Broadband Networks Are Doing Well, Time to Shift to Adoption Gap

There is a perennial policy debate over why the digital divide exists and what to do about it.

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The author of this Expert Opinion is Jessica Dine, a research assistant for broadband policy at the ITIF

It turns out there are two digital divides in America. The first one is the familiar divide between those who have Internet subscriptions and those who don’t. Everyone agrees this is a persistent concern, with about 10 percent of the public lacking subscriptions at last count. But then we come to the second divide: There is a perennial policy debate over why the digital divide exists and what to do about it.

This second digital divide is once again on full display around the latest edition of the biennial Communications Marketplace Report from the Federal Communications Commission. Those who think that broadband should fundamentally be in the hands of the government will no doubt claim it shows America’s private-sector broadband system is a failure; we are a backward nation with inadequate service offerings that are too expensive for consumers and too profitable for providers. The solution to this, advocates say, is to weaken corporate providers and strengthen non-corporate alternatives, including government-run networks.

But the empirical evidence belies their claims. An evenhanded look at broadband data show that U.S. broadband infrastructure is not the problem; it’s a lack of adoption that’s causing the digital divide to persist.

Comprehensive data reveal that almost everyone in the United States is passed by fixed broadband matching the FCC’s 25 Megabits per second (Mbps) download and 3 Mbps upload speed requirement. And the expansive coverage doesn’t end there — 94 percent of people are passed by networks at speeds of 100/10, and the majority of Americans have multiple providers at broadband speeds or higher. 4G wireless coverage is almost everywhere; 5G, still in its early stages, already covers the majority of the U.S. population at 93 percent and reaches competitively high speeds for most of the country. The first iteration of the long-awaited National Broadband Map confirms that deployment is strong. Modern broadband deployment in the United States outpaces coverage in the European Union and is competitive at the international level. And with the use of fixed-wireless and low-earth-orbit satellites continuing to grow, it’s only getting better.

As for prices, U.S. broadband has been shown to be relatively affordable. The ITU finds U.S. fixed broadband prices are just one percent of an average person’s income, proportionately lower than the prices charged in Japan and South Korea. While U.S. mobile prices are relatively higher in the rankings, they’re still significantly lower than one percent of the average income per person. Moreover, Americans are paying for high-speed, high-quality networks, as evidenced by the Ookla’s latest Speedtest Global Index, which put U.S. fixed network speeds in 6th place globally, above even digital frontrunners like South Korea and Denmark. By October 2022, U.S. fixed median download and upload speeds were each roughly seven times the FCC broadband benchmark.

Time to focus on what’s causing the digital divide to persist: Broadband adoption

But even though broadband deployment is already strong, the government has packaged billions of dollars for more to take place. It’s time to stop throwing money at deployment. It’s time to focus on what’s really causing the digital divide to persist, and that’s broadband adoption.

It’s one thing to have access to broadband service but another to “adopt” — to sign up for and purchase — that service. The United States has room for improvement when it comes to adoption. Ninety percent of households subscribe to some form of Internet connection — for context, that’s similar to broadband adoption in 10 EU countries according to Eurostat, and it’s nine percentage points behind the leader. Though U.S. adoption rates are not appallingly low, they still lag behind the country’s performance in deployment. In other words, a substantial percentage of Americans, given the opportunity to connect to the Internet, simply chooses not to.

While a simplistic policy solution would throw money at the problem to lower prices, that likely wouldn’t make a significant dent in the adoption rate. The U.S. Commerce Department’s Internet Use Survey finds, instead, that the main barrier to connectivity is a lack of interest, with 58 percent of respondents stating so. Meanwhile, price comes in distant second, with only 18 percent of respondents putting it down as their answer.

No matter how much money and effort policy makers put into closing the digital divide, they will never close it if they fail to target the true root cause. Pouring money into deployment under the misimpression that U.S. networks themselves are lacking or designing policies to regulate allegedly high U.S. prices and ramp up slow speeds — these are tactics that take scarce funds away from the more pressing challenge of adoption.

Jessica Dine is a research assistant for broadband policy at the Information Technology and Innovation Foundation. She has conducted research and written on closing the digital divide, the state of U.S. broadband, and how 5G can play a role in reducing environmental harm. She holds a B.A. in economics and philosophy from Grinnell College. This piece is exclusive to Broadband Breakfast.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views reflected in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

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