Broadband Plan Spoiling for a Fight Over Spectrum, USF - Page 2

By Kenneth Corbin | Posted Mar 18, 2010
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While the hulking broadband plan the FCC delivered to Congress this week contains many proposals that enjoy popular support, industry groups have staked out battle lines over the recommendations for spectrum and telecom subsidies.

WASHINGTON -- Now that the many industries and stakeholders that are looking ahead to the country's next moves on Internet policy have had a chance to digest the Federal Communications Commission's national broadband plan, most everyone can find much to agree with in the document.

"If you actually read the commentary, everyone supports large parts of it," Blair Levin, the executive director of the FCC's Omnibus Broadband Initiative, said on Wednesday in remarks at the Brookings Institution. But he quickly added that the far-ranging recommendations the plan proposes have inevitably sparked opposition from various corners of the Internet sector.

Levin explained that many of the plan's recommendations were intentionally broad, leaving the details of arcane matters – like shared access to infrastructure – to the commissioners to define in rulemaking proceedings. Phoebe Yang, the broadband team's general counsel, said she expected the plan to lead to more than 40 notices of proposed rulemaking over the next 12 months to 18 months.

"We wanted to have a document that was both visionary and practical," Levin said, describing the balance the team aimed for in producing a plan that was "simultaneously comprehensive and targeted."

The FCC formally delivered the plan to Congress on Tuesday, inviting a wave of perfunctory plaudits in the form of corporate blog posts and statements e-mailed to reporters. Most offered high praise for the 13 months of work the broadband team put into developing the plan, including President Obama, who in a statement said, "My administration will build upon our efforts over the past year to make America's nationwide broadband infrastructure the world's most powerful platform for economic growth and prosperity, including improving access to mobile broadband, maximizing technology innovation and supporting a nationwide, interoperable public safety wireless broadband network."

Mobile broadband battle

The FCC's proposal to move ahead with a public safety network is hardly controversial. Its plans for mobile broadband, on the other hand, can be expected to meet with severe opposition from a powerful Washington lobby. In the plan, the commission proposes to reallocate or repurpose 500 MHz of wireless spectrum over the next 10 years for mobile data networks through a mix of licensed, unlicensed and secondary-market mechanisms. In five years, the plan sets the goal of reallocating 300 MHz, including 120 MHz from TV broadcasters.

"As we look out into the future it's obvious that spectrum is going to be the lifeblood of the broadband ecosystem," Levin said. The plan proposes to establish "incentive auctions," through which broadcasters would relinquish their spectrum licenses in exchange for a portion of the auction proceeds. While the National Association of Broadcasters (NAB), the chief industry lobby, was quick to voice opposition to a spectrum reclamation program, Levin argued that that view doesn't represent a consensus in the industry.

"There are lobbyists who are objecting but there are a lot of broadcasters I've talked to who think this is a good idea," he said.

NAB Executive Vice President Dennis Wharton sees it differently.

"It's funny he keeps saying that," Wharton told InternetNews.com when asked about Levin's comments. "I haven't seen any groundswell of support from broadcasters to leave the broadcast business."

Wharton said that to reach the spectrum goals outlined in the broadband plan, numerous -- perhaps hundreds -- of broadcast stations would have to close down. While he admitted that a few of the 1,700 TV stations represented by the NAB might be willing to take the deal, the group plans to oppose any measure to pressure broadcasters to relinquish their spectrum, warning of the loss of independent or niche stations, as well as the threat to new mobile TV services.

"I don't see how you can take 120 MHz of spectrum from broadcast without a considerable number of stations not shutting down. That doesn't seem feasible to me," he said.

"We spent a lot of time and a lot of effort and a lot of money working as a partner with government to get through the digital television transition," Wharton added. "Now nine months later the FCC seems to be suggesting that broadcasting really doesn't matter that much anymore."

Both the incentive auction program as well as a proposal in the broadband plan to impose fees on license holders who are not using their spectrum to optimal efficiency would require congressional authorization, which invites the prospect of a protracted political battle similar to the campaign the NAB organized in opposition to the opening of TV white spaces for wireless networks – a fight it ultimately lost.

"Over the years there have been numerous attempts to get the broadcasters to give up spectrum," Larry Spiwak, president of the Phoenix Center think tank, told InternetNews.com. "The broadcasters have always resisted. This is a time-honored fight between the broadcasters and everyone else."

A Senate committee and House subcommittee have both scheduled hearings next week to review the broadband plan. Supporters of the spectrum programs outlined in the plan can be expected to rally for congressional support to set the auction process in motion.

"Incentive auctions may be the most important thing Congress has to do," Levin said. "I think that debate will evolve in some very interesting ways over the next twelve months."

Bigger challenge

But as tough as spectrum reform will be, Spiwak suggested that the broadband plan's proposals for overhauling federal telecom subsidies and phasing out intercarrier compensation (ICC), the rates telecom providers pay each other for the transmission of phone calls, will be much more difficult.

The ICC rules were developed at a time when many people used different providers for local and long-distance telephone service, and are widely considered to have fallen out of step with the way the telecom market has evolved.

"The current per-minute ICC system was never designed to promote deployment of broadband networks," the broadband team wrote in the plan. The plan recommends ending the per-minute ICC "implicit subsidies" over the next 10 years, which could spark opposition from smaller, rural carriers that don't want to see the funds evaporate.

The broadband plan suggests that the reform to the Universal Service Fund, which would replace the federal telecom subsidy with a Connect America Fund for broadband service, could help carriers recoup some of the money they stand to lose with the end of ICC.

USF and intercarrier compensation reform have been on the FCC's agenda for years. Commissioner Robert McDowell said both were "embarrassingly overdue" in remarks at the commission's meeting this week.

But shortly after the release of the plan, some of the smaller carriers began raising familiar objections. In a statement, the CEO of the National Telecommunications Cooperative Association, whose members include independent, local telecom providers, praised the FCC for proposing to include broadband to USF, but warned that phasing out the telecom subsidy in the fund and ending intercarrier compensation "would discourage rural investment and would make it unlikely that affordable broadband services could be further deployed and maintained in many high-cost rural areas."

That's a familiar refrain to long-time telecom policy observers.

"Like it always is in telecom, we will be arguing over compensation, subsidies and pressure to keep rates as low as possible. And that's always the difficult part of the business," Spiwak said.

But as tough as USF and ICC may be, Spiwak said the long-overdue reforms were "right on the money."

"If you really look at the substance of the plan, they're doing the right thing," he said. "Conceptually, I think the commission is moving in the right direction."

Kenneth Corbin is an associate editor at InternetNews.com, the news service of Internet.com, the network for technology professionals.

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