by Bruce Mehlman, Internet Innovation Alliance
After an extraordinary and impressive amount of outreach and investigation, the Federal Communications Commission released their proposed National Broadband Strategy to Congress last Wednesday. An exhaustive tome, the 360 page report seemingly considers every aspect of the broadband marketplace and policy environment, making recommendations for all aspects of digital infrastructure from deployment to adoption and usage.
There is certainly something for everyone in the plan. As intended, it should help guide a national conversation on where we have been, where we are heading and where we want to be as a nation. The Internet Innovation Alliance believes the plan could have a positive and powerful impact, provided it is not accompanied by heavy new regulations that depress investment. But much work remains to be done, with many details to be ironed out. It certainly raises several questions to be answered as we go forward:
- Who's Driving Now? The plan calls for wide-ranging actions by the FCC, NTIA, Congress, Department of Energy, Department of Health & Human Services, Department of Homeland Security, Department of Defense, FTC and countless others. Such multi-agency initiatives are best accomplished when choreographed and overseen by a point-person in the White House with budget authority and vision into all agencies. Blair Levin brilliantly quarterbacked the FCC-led effort to devise the planning, drawing on a career in politics, policy and Wall Street. Does he still have gas in the tank? And if not him, then who can oversee such a complex and politically challenging endeavor, and can it be done from the Commission?
- Omnibus or Piecemeal Legislation? Historically telecom moves via big legislative vehicles (think Telecom Act of 1996), with all sectors realizing some gain and some pain. After health reform, however, and with financial regulatory reform in play, it is unclear whether Congress can handle another massive bill this session, and several elements of this plan are readier to pass than others.
- Budget Neutral or Free to Spend? The Plan claims that spectrum auction revenues will cover digital literacy and other outlays. Given bipartisan concerns over the massive deficits, and the $7 billion for broadband grants already included in the ARRA, that makes political sense. But at the same time we have long treated telecom services like a luxury, taxed them like a sin and then lamented that we don't see greater deployment and adoption. Broadband could cost less if we taxed connectivity less. Economists such as Rob Atkinson have shown positive societal externalities if we spend public money to spread broadband farther and promote its adoption.
- Restructure Markets or Maximize Investment? To its credit the plan acknowledges the rapid evolution of broadband over the past decade (from 8 million to 200 million home subscriptions) was "fueled primarily by private sector investment." It seems unrealistic to think we can achieve the lofty goals set forth in the Plan without the enthusiastic support and engagement of the biggest infrastructure investors. Yet some argue that big is inherently bad, that more regulations are needed or even a regulated utility model, either through new competition policies or through the Net Neutrality proceeding. Imposing aggressive regulations on the folks investing over $60 billion each year in broadband infrastructure seems an unlikely way to accelerate such investment--much more likely to depress private spending (especially in the near term as the uncertainty of rule-making chills cap-ex). This is likely the most significant question impacting the fate of this plan and the future of broadband in America.
- Whence Universal Service Funding? How we ensure that connectivity in remote and rural areas remains one of the thorniest challenges in telecom, both technologically and politically. Proposals to refashion the POTS-based USF make a lot of sense in the broadband era, but adding substantial new cross-subsidies to subscribers' bills will not drive broadband adoption. Many agree we must switch from voice-and-location-based USF to broadband-and-subscriber based. But rural Senators have long proven forceful advocates for their constituents, exempting rural carriers from competition rules and diverting major subsidies to more remote areas, raising questions about the adequacy and source of a "new and improved" USF.
- Are Spectrum Wars Inevitable? The plan attempts a combined carrot-and-stick approach to driving spectrum use towards maximum market efficiency. Will it work? Some broadcasters suggest yes, some say no. What if some sell while others hold out, depriving would-be buyers of the chance for a national footprint? Finding 500 more MHz for broadband is a bold and worthy goal, but a challenging proposition in practice. Will supporters in industry who urged more spectrum stick their necks out if it comes to a food fight?
- Are the Targets (100 squared) Aspirational or Mandatory? It is great to aim high, but what are the consequences and rewards of the target data rates? Certainly history has shown government to be a poor predictor of technology trends, and numbers-based regulations are rapidly out-of-date (think computer export controls). As goals, 100-squared seems either too fast (too hard to accomplish) or too slow (as we'll all have gigabit wireless iBrains by then).
- How Deep A Dive into Privacy? The language in the plan suggests the potential for significant examination of online activities and privacy policies, with the potential for new rules or regulations. To-date, companies such as Yahoo! have led the marketplace and outpaced all government proposals in bringing consumers new privacy tools, options and innovative offerings that marry the digital world and consumer choice (imagine if you could opt-out of certain kinds of TV commercials). Will the FCC seek to lead here, hand this off to the FTC with instructions to regulate, or encourage and enable continued market-led innovation?
Bruce Mehlman--a regular FierceTelecom columnist--is the Co-Chairman of the Internet Innovation Alliance and is founding partner of Washington, D.C.-based lobbying firm Mehlman Vogel Castagnetti.