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U.S. Makes Major Move On Broadband     Print Email
By David A.Gross and Brendon M. Pinkard

Obama Administration Releases FCC’s “National Broadband Plan"


A plan to drastically reshape America’s broadband policy was released amid great anticipation by the Federal Communications Commission (FCC) in March 2010. The National Broadband Plan (known as the NBP or just “the Plan”)[1], it is a sweeping set of proposals produced in response to the Congress’s direction (in the American Recovery and Reinvestment Act or ARRA to develop a plan with the primary objective of providing ubiquitous access to high-speed broadband service throughout America.  The ARRA also required that the Plan set forth a detailed strategy for utilizing broadband to advance a set of broad policy goals, including “consumer welfare, civic participation, public safety and homeland security, community development, health care delivery, energy independence and efficiency, education, worker training, private sector investment, entrepreneurial activity, job creation and economic growth, and other national purposes.”[2]

Although the Plan focuses on domestic broadband issues, it was greatly influenced by international broadband developments, including those in Europe.  The international underpinnings of the Plan were underscored by FCC Chairman Julius Genachowski when he explained that the NBP was important because, among other things, he believed that “the U.S. is lagging globally” regarding broadband deployment and that “broadband is essential to our global competitiveness.”[3] In fact, one of the NBP’s six goals is that “the United States should lead the world in mobile innovation, with the fastest and most extensive wireless networks of any nation.”[4] – an area where Europe has been traditionally strong.

Indeed, European nations have long been at the forefront of the global community in recognizing the importance of encouraging broadband in the 21st century.   This focus has been intense at both the national and European level.  Although there are clearly many structural and other differences between the European and American telecommunications markets, including those that affect the construction and use of broadband, there is also great commonality as everyone seeks to find the correct formula for encouraging broadband deployment and adoption.  As a result, the issues discussed in the NBP and many of the recommendations contained in that lengthy document are likely to be reviewed carefully and considered closely by Europeans both in Brussels and in national capitals - as well as in corporate boardrooms across the continent.


FCC Says U.S. Lagging Globally

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The Plan itself includes no direct mandates to effectuate its objectives, nor are any of the Plan’s proposals self-executing.  Instead, the Plan identifies certain gaps and opportunities in the country’s current broadband ecosystem and the attendant regulatory framework and proposes recommendations to Congress, the FCC, and other governmental entities as to how best to meet the challenges identified in the Plan.[5] Because of the breadth of issues addressed in the Plan, and the need for independent (and in some cases joint) action by various governmental bodies, implementation of the Plan will be a lengthy process, subject to extended deliberation and potential modification.  However, the Plan serves as a comprehensive blueprint of how broadband will be deployed and utilized in America for many years to come and, as such, the Plan is an instructive model for those with an interest in the development of broadband policy.

While the Plan touches, to some degree, on virtually every facet of the broadband landscape, this article focuses on four of the Plan’s core proposals:

  • reallocation or repurposing of broadcast spectrum for wireless broadband;
  • reform of the Universal Service Fund;
  • the use of cable set-top boxes as vehicles for broadband access;
  • the development of a nationwide interoperable public safety wireless broadband network.

1. Broadcast Spectrum for Wireless Broadband

Based on what the Plan describes as the staggering growth in recent years of the use of mobile broadband and the likelihood of continued innovation and expansion of mobile broadband service, one of the Plan’s foundational components is the reformation of U.S. policy with respect to spectrum, the airwaves over which mobile broadband service is carried.  In emphasizing the importance of spectrum to mobile broadband deployment and, indeed, the Plan’s broadband goals at large, the Plan states that “spectrum must be a key pillar of U.S. economic policy.”[6] However, the Plan argues that without government action to make more spectrum available to support wireless broadband service, the nation could face a spectrum deficiency which could result in “higher prices, poor service quality, an inability for the U.S. to compete internationally, depressed demand and, ultimately, a drag on innovation.”[7]

To remedy this looming spectrum shortage, the Plan proposes a number of measures to increase the inventory of available spectrum.  At the center of the Plan’s various spectrum policy prescriptions is making available 500 MHz of spectrum for mobile, fixed and unlicensed broadband use in the next 10 years.[8] Of that 500 MHz, the Plan recommends the reallocation of a total of 300 MHz from various sources within five years, including, most significantly, 120 MHz of spectrum currently licensed to television broadcasters.[9]

The 120 MHz of broadcast spectrum is the largest single source of spectrum identified for reallocation in the Plan, and is considered to be well suited to mobile broadband use due to its propagation characteristics.[10] The Plan recommends that the FCC initiate a rulemaking proceeding to reallocate 120 MHz of spectrum from broadcasters and to undertake a variety of steps to most effectively implement this proposal.  One of the key proposals in the Plan regarding reallocation of broadcast spectrum is the recommendation that the FCC conduct “incentive auctions” in which broadcasters could voluntarily relinquish some or all of their spectrum licenses in exchange for a portion of the proceeds from spectrum auctioned to wireless broadband providers.[11] According to the Plan, such auctions, which would be subject to prior Congressional approval, are a voluntary, market-based measure which would have a limited impact on consumers, broadcasters and the public interest while maximizing the use of valuable spectrum.[12] The Plan also proposes that the FCC update the rules on TV service areas and distance separations, establish a licensing framework to permit two or more stations to voluntarily share a TV channel, and explore alternatives if the voluntary efforts to reclaim broadcast TV spectrum do not yield sufficient spectrum.[13]


2. Universal Service Reform


One of the most significant policy shifts proposed in the Plan is the recommendation to comprehensively reform the Universal Service Fund by transitioning it from a subsidy for telephone service to one that will support the full range of broadband platforms. The Universal Service Fund, an outgrowth of the Telecommunications Act of 1996 (the “1996 Act”)[14], was created for the purpose of ensuring that all Americans, specifically, rural and low-income residents, have access to telephone service, by providing subsidies to providers that serve those residents.[15] While the Universal Service Fund has been a useful mechanism for providing telephone service on a universal basis, the fund was not designed to support the deployment of broadband service.  The Plan proposes to fundamentally change that structure.

As part of its efforts to modernize the Universal Service Fund, the Plan recommends that the FCC shift $15.5 billion over the next decade from the High-Cost program of the Universal Service Fund, which currently supports voice service to rural communities, to two separate funds expressly tasked with supporting broadband service: the Connect America Fund, which would support rural landline broadband service, and the Mobility Fund, which would support the deployment of 3G wireless service.[16] The Plan proposes that the High-Cost program of the Universal Service Fund be completely phased-out by the years 2017-2020.

The Plan asserts that restructuring the Universal Service Fund system to support broadband, rather than telephone, service will allow the FCC to utilize an existing - and significant - funding resource to accomplish the Plan’s goals of universal broadband access in a feasible timeframe.  Assuming the FCC implements the Plan’s recommendations, the Plan predicts that a broadband infrastructure covering 99% of American households could be completed by 2020 without the need for any new funding from Congress.[17]


3.  Cable Set-Top Boxes as Vehicles for Broadband Access

According to the Plan, competition for the manufacturing and sale of navigation devices, or set-top boxes, has the potential to spur innovation in the video marketplace and can serve as a vehicle to advance broadband deployment.[18] In the section of the Plan devoted to devices, the Plan notes that while the competitive markets for mobile and computing devices have produced robust innovation and price efficiencies, the market for set-top boxes has been stifled by lack of competition and, as a result, has not kept pace with technological advances, including the ability to access broadband via set-top boxes.[19] To demonstrate the degree of market concentration in the U.S. set-top box market, where according to the Plan two manufacturers captured 95% of the set-top box market through the first three quarters of 2009, the Plan cites the European, Middle Eastern and Asian markets, where, collectively, the top two set-top box manufacturers only accounted for 39% of the market between 2006 and the third quarter of 2009.[20]

In response, the Plan recommends that the FCC initiate a proceeding to require all Multichannel Video Programming Distributors (“MVPDs”)[21] to install a “gateway device” or equivalent functionality in all new subscriber homes and in all homes requiring a replacement set-top box by December 31, 2012.[22] Such a gateway device would be designed to separate the proprietary elements of the MVPD’s network services from the navigation functions and would be required to be compatible with third party, network-neutral devices.  The premise underlying this recommendation is that requiring cable operators to provide subscribers with a network neutral gateway device will encourage competitive set top box manufacturers to provide new and innovative set-top boxes which will include, among other things, the ability to navigate the Internet.

The FCC is scheduled to discuss the release of a Notice of Inquiry concerning the issue of gateway devices at the FCC’s April 21st meeting.[23]


4.  Nationwide Interoperable Public Safety Wireless Broadband Network

Among the key proposals of the Plan is the establishment of a nationwide interoperable public safety wireless broadband network.  The Plan finds that America’s broadband infrastructure is inadequate to meet the current and prospective needs of the country’s public safety providers.[24] For instance, the Plan indicates that emergency first responders operate on outdated systems and as a result are frequently unable to communicate across jurisdictional boundaries.[25] The Plan therefore proposes that the FCC undertake a three-pronged approach to creating a modern interoperable public safety wireless broadband network.[26]


First, the Plan calls for the development of a strong administrative system to ensure that users of the public safety broadband network have the capacity and service they require and are able to leverage commercial technologies to capture economies of scale and scope.[27] Important factors in effectuating this objective, according to the Plan, are creating opportunities for flexible private-public spectrum sharing partnerships with interoperability standards, requiring Commercial Mobile Radio Service operators to provide public safety entities with roaming and priority access on commercial networks in the 700 MHz and possibly other bands, licensing the “D-block”, a portion of the 700 MHz band considered to be optimal for public safety use, for commercial use conditioned upon the development of devices that use Long Term Evolution (“LTE”), and the provision of roaming and priority access to public safety entities.[28]

Second, the Plan recommends the creation of the Emergency Response Interoperability Center (“ERIC”) within the Public Safety and Homeland Security Bureau of the FCC to develop common standards of interoperability between applications, devices and networks comprising the nationwide public safety network.[29] The Plan contemplates that ERIC would have three core functions: network engineering, network technical operations, and network governance.[30]

Third, the Plan requests the establishment of a grant program, administered by a grant making agency within ERIC, to provide funding for projects that comply with ERIC.[31] The Plan seeks to fund this program through requested Congressional appropriations in an amount between $12-16 billion, revenue from the proposed D-block auction, and through potential “public safety fees” imposed on all broadband users by FY2011.[32]


Universal Access To High-Speed Internet

The National Broadband Plan represents an aggressive and ambitious effort to modernize U.S. broadband policy and to provide universal access to high speed broadband to all Americans.  Implementation of many parts of the Plan will be controversial and lengthy.  But despite the fact that many aspects of the NBP are controversial, there is no doubt that these issues will have far-reaching implications for companies providing broadband and related services, consumers, public safety entities, and both the American and global economies.

 

David A.Gross, a former U.S. Ambassador as U.S. Coordinator for International Communications and Information Policy,and Brendon M. Pinkard are attorneys at Wiley Rein LLP in Washington.



[1] See Federal Communications Commission, CONNECTING AMERICA: THE NATIONAL BROADBAND PLAN, available at http://www.broadband.gov/plan/

[2] Id.

[3] Julius Genachowski, Chairman, FCC, “The National Broadband Plan” (March 16, 2010) available at http://blog.broadband.gov/?entryId=281476.

[4] NBP at XIV.

[5] Less than a month after issuing the NBP,  the United States Court of Appeals for the D.C. Circuit  issued an important decision that  calls into question the FCC’s statutory authority to regulate certain aspects of broadband service and therefore its ability to implement at least some parts of the Plan.  See Comcast Corp. v. FCC, No. 08-1291, 2010 U.S. App. LEXIS 7039 (D.C. Cir. Apr. 6, 2010)  In fact, the FCC 's General Counsel   said that the  court  decision “may affect a significant number of important Plan recommendations [,]” including “recommendations aimed at accelerating broadband access and adoption in rural America; connecting low-income Americans, Native American communities, and Americans with disabilities; supporting robust use of broadband by small businesses to drive productivity, growth and ongoing innovation; lowering barriers that hinder broadband deployment; strengthening public safety communications; cybersecurity; consumer protection, including transparency and disclosure; and consumer privacy.”  Austin Schlick, General Counsel, FCC, “Implications of Comcast Decision on National Broadband Plan Implementation” (April 7, 2010) available at http://blog.broadband.gov/?entryId=356610.

[6] NBP at 75.

[7] Id at 77.

[8] Id at 84.

[9] Id.

[10] Id at 88.

[11] Id.

[12] Id at 90.

[13] Id.

[14] Telecommunications Act of 1996, Pub. L. 104-104, 110 Stat. 56 (1996).

[15] NBP at 140.

[16] Id at 145-150.

[17] Id at 143.

[18] Id at 52.

[19] Id.

[20] Id.

[21] “the term ‘multichannel video programming distributor’ means a person such as, but not limited to, a cable operator, a multichannel multipoint distribution service, a direct broadcast satellite service, or a television receive-only satellite program distributor, who makes available for purchase, by subscribers or customers, multiple channels of video programming[.]” 47 U.S.C. §522 (13).

[22] NBP at 53.

[23] See “FCC Announces Tentative Agenda for April 21st Open Meeting” (March 31, 2010) available at http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-297268A1.doc

[24] NBP at 313.

[25] Id.

[26] Id at 314.

[27] Id at 315.

[28] Id at 315-316.

[29] Id at 317.

[30] Id.

[31] Id.

[32] Id at 316-319.