by Kenneth Corbin

FCC’s Approach to Technology ‘Siloed’ and ‘Antiquated,’ Critics Say

Nov 27, 20126 mins

As the Federal Communications Commission continues its work on expanding broadband access and adoption, some Washington insiders urge the agency to relax its regulatory approach as wireless and wireline technologies converge.

Every four years, as Washington goes through its quadrennial reshuffling with new committee assignments in Congress and a wave of departures across the executive branch, experts and advocates turn their attention to big-picture questions about major course corrections the feds could take to improve their policy work.

Such was the setting Tuesday at the Brookings Institution, where Internet-sector stakeholders and observers gathered to consider proposals for a substantive overhaul of the chief industry regulator, the Federal Communications Commission.

[Related: FCC Paves Way for 4G LTE Mobile Broadband Service]

The springboard for the event is a forthcoming ebook that argues broadly for a far more limited role for the FCC, highlighting the agency’s siloed and, the authors argue, antiquated, approach to converging technologies such as cable, wireline and wireless broadband, and making the case that regulations such as net neutrality have the perverse effect of chilling investment in broadband infrastructure.

[Related: FCC Chief Says Broadband Key to Economic Success, Defends Net Neutrality]

To be sure, broadband has been the central issue on the FCC’s agenda throughout the tenure of Chairman Julius Genachowski. And while there is broad agreement that expanding access and adoption of broadband service is a laudable and worthwhile goal, the consensus breaks down with the debate over the proper role for the regulatory agency in overseeing the industry.

Robert Litan, director of research with Bloomberg Government and a co-author of the forthcoming e-book, The Need for Speed, argued that the FCC has devoted too much attention to the quest for universal access, when a large majority of households already have access to at least one option for broadband.

Instead, he suggested that the market would be better served if the agency relaxed its regulatory system to encourage new buildouts in wireline and wireless broadband networks — technologies which he believes are now squarely in competition with one another.

[Related: FCC Paves Way for 4G LTE Mobile Broadband Service]

“The FCC is really missing the forest for the trees by not focusing on this competition issue,” Litan said. He noted AT&T’s recent announcement of plans to invest $14 billion over the next three years to expand its 4G LTE wireless network and its wireline broadband infrastructure, but suggested that such a commitment is the exception, rather than the rule, in today’s regulatory environment.

“We believe that public policy should be focused primarily on removing the remaining regulatory barriers that prevent or that discourage other wireline providers from essentially doing what AT&T is doing, which is to expand service and provide competition in these areas that are served by only one provider,” Litan said. “In particular we think that the FCC should focus on getting rid of barriers to wireless providers who have not been given their due.”

That position encounters strong opposition from members the advocacy community, with groups such as Public Knowledge and Free Press standing as persistent critics of the cable and telecom industries, where they see a fundamental absence of competition, and thus call for greater oversight from the FCC as a check against monopolistic behavior.

Somewhere in the middle is Blair Levin, a former Wall Street analyst who has also done two stints at the FCC, most recently leading the team that produced the 2010 national broadband plan.

“I think we see very significant investment in the wireless side. We should all be grateful for that. America’s actually leading in that. We don’t see the same thing in wireline. There are definitely regulatory barriers, but I don’t think that’s what’s really holding that up,” Levin said. “The fundamental problem that I get from my former friends on Wall Street is that cable not only has a superior network today in most places, but also has a superior upgrade path. That makes it very difficult to justify investing effectively in wireline,” according to Levin.

Levin is also skeptical about the extent to which wireless broadband should be considered an equal competitor to fixed services, particularly as the number of data-intensive applications is growing so rapidly.

As the architect of the broadband plan and still today, Levin is a advocate for freeing up more spectrum to boost the capacity of wireless networks, but he remains uncertain that wireless will come to compete with wireline in broadband as it does in voice service, an area where consumers are increasingly “cutting the cord” and dropping their landline.

Concerns about FCC overreach were a recurring theme over the past two years in the Republican-controlled House of Representatives, with members of the Energy and Commerce Committee, which oversees the agency, frequently chastising the commission’s handling of merger reviews and the Internet policies that it advanced.

Of the latter, no action drew more scrutiny than the FCC’s open Internet order, which the agency adopted in 2010 to codify the principal of net neutrality, barring Internet service providers from blocking or slowing access to lawful applications and content on their networks.

Critics in Congress denounced the move for exceeding the agency’s statutory authority, calling the open Internet order a solution in search of a problem, a charge echoed by many opponents in the industry, most prominently the service providers who would be subject to the new regulations.

“I think the commission would be wise to focus its regulations going forward, you know, on actual problems in the market rather than hypothetical problems. And I know we may have some differing views on the issue of net neutrality, but this was essentially a hypothetical problem,” said James Cicconi, senior executive vice president for external and legislative affairs at AT&T.

“Ultimately, when a regulatory agency bases its regulations on hypotheticals, there is no limiting factor, because there are an endless variety of hypotheticals that are possible,” he added. “So they should be hinging their regulations on actual data and on actual problems, and not on hypotheticals dreamed up by some advocacy group.”

AT&T was ultimately more accepting of the FCC’s net neutrality rules than its chief rival, Verizon, which sued to overturn the order. But that case, which will likely be resolved next year, doesn’t figure to influence the level of investment on the part of broadband providers, regardless of which way the court rules, according to Levin, who downplayed the impact of the FCC’s action on the industry without commenting on the wisdom of the net neutrality rules.

“In no case do I believe that if Verizon wins its lawsuit, and I actually believe they will, I would not expect a huge new amount of wireline investment by the telcos,” Levin said. “Because I don’t think it changes the fundamental economics that much.”

Kenneth Corbin is a Washington, D.C.-based writer who covers government and regulatory issues for

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