There has been a significant amount of news coverage regarding the recent announcement by the Federal Communications Commission (FCC) that, for the first time, it may classify many broadband services under Title II of the Communications Act of 1934. Title II was designed to give the then newly-formed FCC authority to regulate telephone and telegraph services; a long stretch from modern broadband access to the Internet.
Legal and agency experts are poring over the technical aspects of moving broadband from Title I to Title II, but what has not been carefully examined -- and which should be -- is the economic impact this re-designation will have on investment decisions that broadband network providers will make in deciding how, where, and if to build, upgrade and maintain the next generation of broadband networks.
The growth of the Internet ecosystem relies on continued private investment. For the past decade, a stable market atmosphere has prospered under the "light regulatory touch" of the original classification of broadband under Title I of the Communications Act. This has allowed companies -- both the operating companies and investment firms -- to make reasoned judgments on how and where to invest and innovate. We are talking about sophisticated investors helping provide funding to build wired and wireless networks which now reach 95 percent of the American public. It was this confidence in the FCC to work in partnership with consumers and with providers which investors in the private sector saw as a reason to invest in broadband companies, judging their prospects to earn a reasonable rate of return were justified. All that is about to change. From my experience in Congress and judging by the opinions from market analysts from around the country, this move by the FCC to classify broadband as a Title II "telecommunications service" will create massive uncertainty for investors.
Tuna Amobi, Standard & Poor stated in a May 6th MarketWatch piece:
"[The FCC's 'third-way' framework] creates potential long-term negative investment (and competitive) implications for major cable broadband providers.'"
John Hodulik, with UBS stated in a May 5th Wall Street Journal article:
"Cable companies and carriers are likely to fight this in court for years and could accelerate their plans to wind down investment in their broadband networks...You could have regulators involved in every facet of providing Internet over time. How wholesale and [retail] prices are set, how networks are interconnected and requirements that they lease out portions of their network."
Craig Moffett, with Bernstein Research stated in a May 6th Wall Street Journal article following the announcement by the FCC:
"Markets abhor uncertainty. Today we got uncertainty in spades...this development is an unequivocal negative ... most significantly for the cable operators and Verizon."
The above concerns should not go ignored. Statements like "long-term negative investment," "regulated price setting" and "this development is an unequivocal negative," show that a better plan is coveted by the marketplace. In light of fiscal and economic uncertainty in Europe, combined with lackluster domestic job creation, the FCC should be careful not to inject more uncertainty into a marketplace searching for stability and increased investment.
Broadband for America's mission is to increase the deployment and adoption of broadband throughout America, a goal the FCC has stated is its top priority. By proposing new regulatory policies that will immediately create long-term uncertainty in the marketplace, the FCC will complicate our goal of universal access and adoption.
The FCC needs to look no further than the example of the policies promoted under President Bill Clinton and President George W. Bush, which increased private investment in the pursuit of broadband deployment and adoption. That example merits following again.
Harold Ford, Jr. is an honorary co-Chairman of Broadband for America
Everything the bandwidth providers have built has been built for their short-term profit. Their stockholders would have thrown them out on their tails if they hadn't show immediate results--it's the American way, stupid and short-sighted as it is. So congratulations, now they want us to rig the game so they can get twenty (or a hundred-or a thousand) times more out of the same--and if we don't give it to them, they'll take their ball and go home.
So? Go. No loss. Build your own internet and charge for it and see how many people are interested. Leave us our open equally-available highway, allow our creativity to flow without being controlled by monster corporations and see how it flourishes.
But that's what scares you, doesn't it?
Are we Democrats now ritually cleansing the party such that anyone who doesn't pass our purity test is ejected? As one of Mr. Ford's former students and a liberal Democrat, I can say that while I often disagreed with him, I never wanted to excommunicate him. He wants to govern from the center. I don't.
Criticize the argument, not the speaker. Ad hominem is a fallacy! Insofar as he appeals to his experience as a Congressman, he’s vulnerable to the claim that such experience is irrelevant. That's it. Reading through these posts I see little discussion of the point being made: greater regulations might lead to decreased private investment.
This is an easy argument to refute. So refute it!
Say how increasing consumer demand for broadband will provide an incentive for telecoms to overlook the burden that increased regulations will pose.
Say how the business press has been co-opted by the industry it’s supposed to cover, has consequently historically over-reacted to proposed regulations, and thus any hyperbolic commentary about regulatory changes should be viewed skeptically.
Say something.
Don't just call Harold Ford names and "big business" names.
Forcing companies to play fair with their customers is rarely a popular move for them.
We already know that "competition" has resulted in huge consolidation. Used to be I had a choice of at least a dozen providers. What are my choices now? Verizon, Comcast, "Earthlink." (or satellite, but anyone with any other choice isn't going to pay for satellite).
I guess Ford and his ilk are assuming that this decision will be made by people who don't know what's going on in other countries? It comes down to whether the US, as the inventor (with public money), is interested in all the benefits to business and community of widespread broadband that's accessible to all, or whether the prime utility of the Internet is as a profit stream and a propaganda tool. Ford has made his preference clear.
Michael.Copps@fcc.gov
BTW, I do know, I've been using it since the late 1970s.
http://i.imgur.com/1A6qZ.jpg