5-26-2010 Wednesday – FCC to Turn Back Time?

There is a lot happening on the FCC/Broadband front.

Differing opinions are out on whether the FCC should ‘turn back time’ and reverse its stance on the Tier 1 Internet Providers being an “Information Service” versus being a “Telecommunications Service” (i.e. a utility).

I believe this ‘reclassification’ is the correct thing to do.  Internet Access/Service is now too important not to regulate (or ‘Police’ if you prefer).  We must ensure access to all and we must constantly be increasing bandwidth/speed.

The model for previous technologies (Railroads, Phone/Voice, and to some extent Electricity) has been ‘unbridled’ growth/expansion (almost reaching ubiquitous access) followed by regulation (ensuring ubiquitous access) followed by de-regulation (managing ubiquitous access).

The difference with the Internet is the time span of each phase.  We have gone from decades to years (and even months).  The rate we are moving is even outstripping the technology we are implementing.  An example is Google’s Android Mobile O/S which is experiencing “Fragmentation” issues

In his article “The FCC’s disingenuous ‘third way’ on broadband”, Mr. Lawrence Spiwak, a guest columnist on cnet.com, writes –

“Despite his protestations to the contrary, Federal Communications Commission Chairman Julius Genachowski is about to reverse a 25-year bipartisan tradition of removing heavy-handed public-utility-type regulations over new technologies and services”

The ‘Web’ version of the Internet has not even been around 25 years, yet has the maturity (ubiquity) that previously took 50 or more years to reach.

Here are some facts, from Stacey Higginbotham at gigaom.com – The Top 10 Cities With the Best Broadband

US Top 10
1.San Jose, Calif. 15.02 Mbps
2.Saint Paul, Minn. 14.53 Mbps
3.Pittsburgh, Pa. 14.18 Mbps
4.Oklahoma City, Okla. 12.12 Mbps
5.Brooklyn, N.Y. 12.10 Mbps
6.Tampa, Fla. 12.05 Mbps
7.Bronx, N.Y. 12.01 Mbps
8.New York, N.Y. 11.85 Mbps
9.Denver, Colo. 11.68 Mbps
10.Sacramento, Calif. 11.34 Mbps

The global top 10:
1.Seoul, South Korea 34.49 Mbps
2.Riga, Latvia 27.88 Mbps
3.Hamburg, Germany 26.85 Mbps
4.Chisinau, Republic of Moldova 24.31 Mbps
5.Helsinki, Finland 20.58 Mbps
6.Stockholm, Sweden 19.97 Mbps
7.Bucharest, Romania 19.68 Mbps
8.Sofia, Bulgaria 18.99 Mbps
9.Kharkov, Ukraine 18.15 Mbps
10.Kaunas, Lithuania 17.46 Mbps

The US’s average of just over 10 Mbps ranks in the bottom ¼ of the Top 20 Countries.  And some analysts predict the US will drop further. This is unacceptable.  The US will not be able to compete globally if we are ‘waiting’ for the next page.

There is still a significant percentage of US Households (> 10%) without access to wire line broadband.  And still even larger percentage of those Households choosing to NOT access wire line broadband when they do have access (> 40%)..and the largest percentage of those not choosing is due to cost.

Given the above, what economics would drive any of the Tier 1 carriers to implement either faster wire line Internet speeds or expand to cover the last 10%?  It’s the last 10% that cost the most to reach and the data shows only slightly more than half will subscribe anyway.

US consumers are interested in new/more devices connected wirelessly to the Internet.  And they want unlimited access for a fixed cost.

So, the Tier 1s are looking at a ‘mature’ industry from a pricing perspective yet the market is demanding faster speeds.  Meaning consumers (You!) expect more speed (for the ‘new’ technologies – Hardware and Apps/Web) but no increase in cost.

The conclusion being without economic/business incentives and without an increase in competition (to the Tier 1s) we must have some regulation.

Here is an interview with Amy Schatz, who covers the FCC for the Wall Street Journal, with Terry Gross on NPR’s “Fresh Air”.  This conversation is a more ‘neutral’ discussion of the issues.

Also, announced yesterday, Congress will be revisiting the 1996 Communications Act – which ‘empowers’ the FCC.  However, given the current economic climate, election year, etc…it is not widely believed Congress can give the Communications Act much attention in the next year to 18 months.

Stay tuned…

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