The FCC recently conducted a hearing on the future of broadband and digital media at Carnegie-Mellon University in Pittsburgh. Among the typical fanfare at FCC meetings like this, an interesting point of view emerged from FCC Commissioner Michael Copps. In his opening remarks, Copps likened broadband access to a civil right. In regards to broadband, Copps says, “no matter who you are, where you live, how much money you make, whether you are young or old, rural or inner city, healthy or dealing with a disability, you will need—and you are entitled—to have these tools and services available to you. I think it’s a civil right; I really do.” I wonder where he thinks broadband get’s placed in the civil rights pecking order. Maybe before the right to vote, but after liberty.

We all know that broadband’s adoption is slowing. We also know that the more educated and affluent you are, the more likely you are to have broadband in your home. Probably the biggest challenge to broadband ubiquity is cost. Cost both to network providers for building it out, and to the end user for purchasing it. Until such time that those costs are dramatically lowered (either through free market economics or regulatory subsidies), this new “civil right” will certainly not be available to everyone. Is Copps likening of broadband to a “civil right” entitlement realistic? If so, how will we breakthrough through the current slowing broadband penetration rate to achieve it?

In the hyper competitive world of wireless, telephone numbers can be ported to competing carriers within hours. Several members of Congress have written the FCC, demanding comparable portability timelines for wireline to wireless number portability. Currently, porting a number from a wireline carrier to a wireless carrier can take up to four business days. To address the issue, Senate Commerce Committee Chairman Daniel Inouye (D-Hawaii) and Vice Chairman Ted Stevens (R-Alaska) introduced the Same Number Act (S.1769) which would “…require the commission to establish number portability performance standards for all voice service providers.”

RCR Wireless is reporting that members of Congress have written the FCC, urging this issue to be addressed by “month’s end.” FCC Chairman seems to be in agreement, at least in principal. He’s quoted in the RCR article as saying, “I think it would be a good thing for the commission to try to address, to harmonize our local number portability [guidelines] so the amount of time of taking a number from carrier to carrier is shortened and consistent from platform to platform.” The issue adds more fuel to an already ugly fire, from a wireline carrier’s point of view (especially those who don’t have wireless assets). Wireline substitution, in favor of wireless, is the revealing reality of the today’s competitive landscape. Making it even easier and more seamless for consumers to cut the cord makes the implications even more intense.

Verizon lost its stay request concerning their win back marketing saga. Cable companies filed a formal complaint with the FCC claiming that Verizon was illegally trying to “court” customers back after they decided to switch phone service to a competing cable company. In a strange turn of events, the FCC Enforcement Bureau sided with Verizon, but FCC commissioners voted in favor of the cable companies. Verizon then appealed to the U.S. Court of Appeals for the D.C. Circuit, which voted 2 to 1 to reject Verizon’s stay request, which in effect keeps the FCC decision in place and prevents Verizon from using these win back tactics. It’s a rare loss for a large incumbent, and a big win for its cable competitors.

Verizon intends to have the last word on their “winback” marketing tactics. They were recently rebuffed by the FCC and told to stop contacting customers to attempt to win them back after receiving a competitor number porting request. Verizon filed a petition with the U.S. Court of Appeals for the District of Columbia, seeking to stay the recent FCC decision. Verizon is using the first amendment right of free speech as the core of their argument, arguing the FCC decision violates this right. Verizon is also arguing the decision violates section 222(b) of the Communications Act of 1996. Look for this to drag out for a while. Get the details from this Light Reading post.

The FCC is seeking comments on its plan to auction AWS-3 spectrum with a mandate that the winner provide free broadband wireless coverage to 95% of the population after 10 years of winning the license. The mandate would require the licensee to set aside at least 25% of their network capacity to provide broadband service of 768K downstream (or better), free of charge. In addition, the licensee would have to filter out content that would be objectionable to children and families. This FCC Further Notice of Proposed Rulemaking focuses on AWS spectrum in the 1915-1920 MHz, 1995-2000 MHz, and 2155-2180 MHz bands.

This rulemaking looks to be a breeding ground of lawsuits, should it move forward as presently discussed. There is huge opposition on multiple fronts. Existing AWS spectrum holders, including T-mobile claim considerable interference challenges to this plan. Considering the billions T-mobile is spending on both AWS spectrum and a 3G build out, they certainly plan to be heard on this issue. Additionally, all broadband carriers (wireless or otherwise) are not exactly thrilled at the “free” service mandate associated with this auction. After all, it’s kind of hard to compete with free. A wireless 768K service certainly does not send shivers down the backs of providers of multi-megabit broadband service offerings, but it’s the precedent that is scary. A contrarian view says that such a development might actually be beneficial to broadband carriers. Consumers who choose a 768K service certainly won’t be pleased with it for long. Perhaps it will serve to whet their broadband appetites for something more robust, and lead them to better and fee based broadband services. Whatever the case, expect this issue to get a lot of opposition and a ton of debate before ever seeing the light of day.

Verizon lost one at the FCC. Cable competitors brought a complaint against Verizon regarding some customer win back tactics being used by the phone giant. The complaint alleged that upon receiving a telephone number porting request to a cable competitor, Verizon would contact the customer in question and try to “win them back.” Cable companies claim such tactics were not only unfair, but illegal. The FCC issued a Memorandum Opinion and Order against Verizon and in support of the cable companies complaint. It's somewhat of a surprising development, considering the FCC's own enforcement bureau came out with an opinion siding with Verizon. Apparently several FCC commissioners were not impressed with that opinion.

Verizon did fire back against the original complaint, and issued a complaint of their own regarding the process to switch video service providers. Verizon claims that the process for video switching requires the customer to initiate action with the existing provider, whereas a telephone switch does not. Both points seem to be valid. Whatever the process, it should be comparable and equal. Both telcos and cablecos should have an equal chance to “eat each others lunch.”

The FCC recently instituted an interim cap on universal service funding (USF) for competitive eligible telecommunication carriers (CETCs). CETCs are primarily wireless carriers who have qualified for USF subsidies. These subsidies have been somewhat of a catalyst for building out wireless infrastructure in rural areas. The CETC issue has created controversy because CETCs have been getting USF support based on the costs of the incumbent wireline provider in the territory they want to overbuild with wireless. Wireline infrastructure is much more costly to build than wireless, and thus CETCs have been gaining somewhat of a “windfall,” because they receive subsidies based on a higher cost model than what their actual costs are. It has led to accelerated growth in the high cost fund of the USF program. CETC support was about $1.5 million in 2000 and close to $1 billion in 2007. The cap will be in place until more comprehensive USF reform takes place.

Pivot Media estimates annual wireless substitution rates to average about 2.3% for small rural wireline carriers and 5.7% for larger multi-state rural providers. An argument can be made that the past CETC USF structure certainly contributed to these growing wireless substitution rates. According to Bennet and Bennet’s Rural Spectrum Scanner, “…annual support for competitive ETCs will be capped at the level of support that they were eligible to receive in each state during March 2008. States may still designate additional ETCs, but the new entrants will have to share diluted support with established competitive ETCs.” This interim cap may slow additional rural wireless deployments, and thus temporarily slow wireless substitution in rural areas. Many rural carriers have identified wireless substitution as their most immediate competitive threat.

Rep. Anna Eshoo (D-Calif.) has introduced legislation that mandates free broadband wireless service to 95% of the country’s population within 10 years. This ambitious proposal would be accomplished through wireless broadband service utilizing spectrum located at 2.155 GHz. Rep. Eshoo’s legislation calls for the spectrum to be auctioned by the FCC, and contains the 95% mandate, as well as ‘family friendly’ requirements which would filter out offensive content like porn. The legislation is called the Wireless Internet Nationwide for Families Act. The details in the legislation are quite similar to a proposal floated by M2Z Networks, which wanted the FCC to provide M2Z the spectrum for free, provided they paid 5% of their revenues to the U.S. Treasury. The FCC politely declined.

The concept is an interesting one, with perplexing competitive implications. The free service would offer a minimum speed of 200 kbps – not exactly considered broadband speeds by today’s (or even yesterday’s) standards. But should it become available, it certainly will tempt the remaining dial-up hold outs to move to it, robbing conventional service providers of the opportunity to convert those customers. Perhaps that dwindling base of dial-up customers are no one’s loss. Or perhaps those dial-up converts will be itching for even faster speeds once they get this “broadband lite” taste. Maybe it will serve as a boon for more conventional broadband competitors. The real question is what is the purpose of this legislation? Is it a M2Z engineered effort to push the FCC towards their original proposal? I just don’t see anyone (other than perhaps M2Z) remotely interested in fulfilling these mandates after obtaining spectrum at auction. Maybe it’s worth watching, maybe not.

The FCC offered its opinion in the recent spat between cable MSOs and Verizon. Several cable companies lodged a formal complaint with the FCC claiming Verizon was illegally trying to stop customers from defecting to cable triple play offers. The complaint alleged that once Verizon got notice of a telephone number porting request, they aggressively pursued that customer with offers to keep them from switching phone service providers. The cable industry argued the practice is against the spirit of FCC competition guidelines, and may even be illegal. Verizon argues that they are doing nothing illegal, and are simply aggressively competing in the marketplace.

Apparently, the FCC agrees. In the Enforcement Bureau’s recommendation, the FCC, while suggesting Verizon’s retention marketing practice may need more study (and even recommends a Notice of Proposed Rulemaking on the subject), sees this type of debate as healthy for consumers and the competitive marketplace. “In fact, one could argue that, when the customer’s existing provider offers to lower prices or expand services to prevent the customer from switching providers, the customer benefits. This type of aggressive competition to win and to keep customers can result in lower prices for consumers, the introduction of new services and technologies, and improved quality of service as carriers compete in the open marketplace,” says the FCC Enforcement Bureau. They go on to say, “In fact, today’s competitive marketplace for bundled services, and intermodal competition of providers of services within the bundle, may reduce the need for regulation. It is reasonable even to ask whether further deregulation would allow for even more vigorous competition for customers and bring with it the associated benefits of such competition.” In the end, the recommendation rules for Verizon and says the cable company’s complaint and argument “don’t hold any water” in the context of the current guidelines and regulations. Checkmark Verizon.

First it was the cable companies complaining to the FCC about Verizon breaking the rules with their “prevent defense.” Comcast, Time Warner Cable, and others complained that Verizon was trying to prevent Verizon customers from leaving once they received a number portability request from a cable competitor. The cable companies accused Verizon of aggressively pursuing those customers with a “please don’t leave” campaign. Cablecos complained, saying that practice is against the spirit of FCC rules and may be breaking the law. Verizon says nonsense, and that they are just doing a routine marketing strategy.

Well now its payback time. Verizon is now the complainer and has petitioned the FCC, asking that the process for switching cable service should be streamlined. By Verizon’s estimation, it’s somewhat easier to switch phone companies than to switch video providers. For switching phone companies, but keeping the same telephone number, there is an “automated” number portability system, where a customer simply tells their new phone provider they would like to switch. The prospective phone service provider initiates the number portability request on behalf of the new customer. But according to Verizon, when a customer wants to switch video providers, they have to initiate the disconnect themselves from their existing provider. Verizon says “no fair.” “This significantly complicates the process of switching video providers, thereby entrenching the cable incumbents' dominant market position," Verizon said in the petition. Of course the cable industry begs to differ. “Verizon's fairy tale complaint is a lame attempt to deflect criticism from its years-long illegal practice of misusing proprietary information to prevent consumers from switching to a new phone provider," Brian Dietz, vice president of Communications for the National Cable & Telecommunications Association (NCTA) said in a statement. Life in the fast lane of competition, I guess.