Assessing the Need for More Incentives to Stimulate Next Generation Network Investment. A Presentation at the 38 th Annual Telecommunications Policy Research Conference Arlington, VA October 2, 2010 Rob Frieden, Professor of Telecommunications and Law
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A Presentation at the
38th Annual Telecommunications Policy Research Conference
Arlington, VA October 2, 2010
Rob Frieden, Professor of Telecommunications and Law
Penn State [email protected]
Web site : http://www.personal.psu.edu/faculty/r/m/rmf5/
Blog site: http://telefrieden.blogspot.com/
Incumbent carriers have framed NGN network investment as driven primarily by regulations, as though the general business cycle, competitive necessity, the cost of capital, new investment opportunities, technological innovation and declining revenues in core markets did not matter. A change in regulatory climate does not explain why Comcast wants to acquire NBC and Bell Canada seeks to increase to 100% its ownership of a major broadcast television network.
Sponsored researchers have claimed that when the FCC eliminated LLU requirements, incumbent carriers expedited and vastly increased NGN investment. But did deregulation solely cause this outcome? Might proven demand for broadband have had a significant impact?
Just as wireless has provided incumbents with a revenue generating alternative to wireline services, broadband demand surely has and will stimulate investment. But if U.S. NGN investment or market penetration lags, what strategies should legislatures and regulators use? U.S. policy concentrates on deregulation and additional incentive creation through subsidies and other forms of supply-side stimulation.
global economy and should not be the subject of regulatory brinksmanship.
Despite ample evidence to the contrary, until 2009 the U.S. government, including
the FCC saw no need to create broadband incentives based on evidence of global best practices.
“[T]here is substantial competition in the provision of Internet access services. Broadband penetration has increased rapidly over the last year with more Americans relying on high-speed connections to the Internet for access to news, entertainment, and communication. Increased penetration has been accompanied by more vigorous competition. Greater competition limits the ability of providers to engage in anticompetitive conduct since subscribers would have the option of switching to alternative providers if their access to content were blocked or degraded. In particular, cable providers collectively continue to retain the largest share of the mass market high speed, Internet access market. Additionally, consumers have gained access to more choice in broadband providers.” AT&T Inc. and BellSouth Corp., Application for Transfer of Control, Memorandum Opinion and Order, 22 FCC Rcd. 5662, 5724-25 (2007).
In 2008, John Kneuer, then Assistant Secretary for Communications and Information and Administrator at the Commerce Department’s National Telecommunications and Information Administration claimed the United States “has the most effective multiplatform broadband in the world.”
For Years the FCC Provided One Source Document for All the Positive News on Broadband Penetration—Everything Else Constituted a “Trade Secret”
Necessitating Confidential Treatment
Until 2010 the FCC Asserted that the U.S. Had 100% Broadband Penetration With Consumers in 94.6% of All Zip Codes Having 4 or More Broadband Choices
Source: FCC (2009)
The U.S. Ranks 15 Penetration With Consumers in 94.6% of All Zip Codes Having 4 or More Broadband Choicesth Among OECD Nations in Terms of Household Penetrationsource: OECD (2009) http://www.oecd.org/document/54/0,3343,en_2649_34225_38690102_1_1_1_1,00.html
source: Internetinnovation.org; Penetration With Consumers in 94.6% of All Zip Codes Having 4 or More Broadband Choiceshttp://internetinnovation.org/images/factbook/by_country.png.
Best practices does not require nations to “throw money at the problem,” but instead:
• Develop a vision and strategy;
• Promote digital literacy, i.e., the ability to use digital technologies to pursue information, communications and entertainment interests;
• Invest in infrastructure, aggregating demand, and serving as an anchor tenant;
• Foster facilities-based competition;
• Create targeted incentives for private investment and disincentives for litigation and other delay tactics;
• Offer electronic government services, including healthcare, education, access to information, and licensing;
• Auction off universal service franchises that receive subsidies and grants; and
• Revise and reform governmental safeguards to promote a high level of trust, security, privacy, and consumer protection in NGN services, including electronic commerce.
Nations emphasize expanding the supply of broadband capacity by
stimulating access through:
Expanded universal service obligation to include broadband
Use of targeted financial stimulus tools such as grants, subsidies, and tax credits;
Reallocated spectrum to expand available bandwidth useable for
broadband services; and
Supporting competition from multiple platforms, including retrofitted fixed line telephone networks, cable television plant, white spaces and other wireless options, fiber optic links, and the powerline grid.
Nations emphasize stimulation of demand for NGN and the services
they deliver through government:
Becoming an early provider of NGN-mediated services and an underwriter of programs designed to enhance digital literacy, i.e., the skills needed to use NGNs for enhancing social and personal utility;
Offering access to e-government services ;
Offering free or subsidized computers and support for the creation of digital content;
Funneling grant money to “community champions” and broadband demand aggregators in addition to carriers; and
Addressing consumer protection issues including, privacy, network reliability, security and neutrality, and competition policy issues.