MarketNeutral
8th April 2010, 12:57 PM
Federal Communications Commission members began the work of relaunching their broadband strategy Wednesday, a day after a court threw out their earlier effort to police broadband traffic and even as Internet providers said no action at all would be best.
The ruling by the U.S. Court of Appeals for the District of Columbia Circuit that the FCC has limited authority under current law to tell Internet providers how to manage their networks has put portions of FCC Chairman Julius Genachowski's National Broadband Plan at risk.
Internet content companies like Google Inc., video sites and other services want the government to assure "net neutrality," or even-handed treatment of Web content regardless of how much bandwidth it consumes.
Broadband providers respond that heavy federal regulation of Web pricing or traffic management would reduce their ability to make a return on the billions of dollars they are investing in their networks and force them to cut capital spending and jobs.
"The telcos and cable guys' worst nightmare is if net neutrality comes in as promised and on top of that, the FCC or Congress says you can't change pricing," said Moody's analyst Gerald Granovsky. "If they're going to fall on their sword for any issue, that's going to be it."
In 2009, the cable industry spent about $14 billion on infrastructure investments, according to research firm SNL Kagan.
AT&T Inc. spent $17.3 billion on capital expenditures for its landline and wireless networks, and Verizon Communications Inc. spent about $17 billion.
Verizon said last month it has stopped expanding its FIOS fiber-optic broadband service to more markets. It committed $23 billion to building out the new network over the last three years, amid concerns about how it would make a sizable return.
For broadband providers, the worst outcome would be if the FCC decided to classify broadband networks as common carriers under Title 2 of the Communications Act, which allows the federal government to control pricing and access as it does with landline telephone service. To do that, the FCC would essentially have to say it made a mistake when it deregulated Internet lines in 2002.
The FCC staff has begun trying to figure out how the agency could take the Title 2 route, but it's unclear if it will do so. The agency declined to comment.
The court's decision means Comcast Corp., AT&T and other providers can now block Web sites or Internet services like online video anytime, said Joel Kelsey, a telecom policy analyst at Consumers Union, publisher of Consumer Reports magazine.
Broadband providers said they aren't planning to change how they run their networks. Blocking or limiting how people access the Web risks too big a public backlash, they argued.
"We're not going to block anyone from where they want to go, and we're not going to block anyone from using any application they want to use," said Robert Quinn, AT&T's senior vice president, federal regulatory.
In any case, the court's ruling means it may be harder for the FCC to implement many of the policies it proposed in the recent National Broadband Plan, a blueprint for ensuring that all Americans have access to fast, affordable high-speed Web service.
That leaves the agency with several options, analysts said.
It could do nothing. But that's unlikely because Mr. Genachowski made new Net neutrality rules—which say that all legal Net traffic should be treated equally—a central tenet of a wide-ranging broadband strategy released last month. Net neutrality was also the centerpiece of President Obama's technology plan, announced at Google's Silicon Valley headquarters, during the presidential campaign.
It could take a cautious approach, asking industry and consumer groups how the court's decision affects the formal Net neutrality rules the FCC proposed last September. And it could try to revise the rules in the hope that the appeals court won't shoot them down again.
Congress could also get involved, but that could be hard in an election year because there's no consensus between consumer groups and the cable and telecom companies about the need for new rules.
"Other than demonstrable problems that might happen in the Internet space, they're going to have a tough time arguing for legislation this year," said Howard Waltzman, a former top Republican staffer for the House Telecommunications and Internet subcommittee.
Added Craig Moffett, a senior analyst at Bernstein Research: "It's not clear that Congress has a particular appetite for expanding the power of the FCC right now. But it probably has even less interest in taking on something as complex and controversial as net neutrality on its own." That, he suggested, leaves the FCC "with Title 2 as potentially its least bad option."
http://online.wsj.com/article/SB20001424052702303591204575170331107445378.html
The ruling by the U.S. Court of Appeals for the District of Columbia Circuit that the FCC has limited authority under current law to tell Internet providers how to manage their networks has put portions of FCC Chairman Julius Genachowski's National Broadband Plan at risk.
Internet content companies like Google Inc., video sites and other services want the government to assure "net neutrality," or even-handed treatment of Web content regardless of how much bandwidth it consumes.
Broadband providers respond that heavy federal regulation of Web pricing or traffic management would reduce their ability to make a return on the billions of dollars they are investing in their networks and force them to cut capital spending and jobs.
"The telcos and cable guys' worst nightmare is if net neutrality comes in as promised and on top of that, the FCC or Congress says you can't change pricing," said Moody's analyst Gerald Granovsky. "If they're going to fall on their sword for any issue, that's going to be it."
In 2009, the cable industry spent about $14 billion on infrastructure investments, according to research firm SNL Kagan.
AT&T Inc. spent $17.3 billion on capital expenditures for its landline and wireless networks, and Verizon Communications Inc. spent about $17 billion.
Verizon said last month it has stopped expanding its FIOS fiber-optic broadband service to more markets. It committed $23 billion to building out the new network over the last three years, amid concerns about how it would make a sizable return.
For broadband providers, the worst outcome would be if the FCC decided to classify broadband networks as common carriers under Title 2 of the Communications Act, which allows the federal government to control pricing and access as it does with landline telephone service. To do that, the FCC would essentially have to say it made a mistake when it deregulated Internet lines in 2002.
The FCC staff has begun trying to figure out how the agency could take the Title 2 route, but it's unclear if it will do so. The agency declined to comment.
The court's decision means Comcast Corp., AT&T and other providers can now block Web sites or Internet services like online video anytime, said Joel Kelsey, a telecom policy analyst at Consumers Union, publisher of Consumer Reports magazine.
Broadband providers said they aren't planning to change how they run their networks. Blocking or limiting how people access the Web risks too big a public backlash, they argued.
"We're not going to block anyone from where they want to go, and we're not going to block anyone from using any application they want to use," said Robert Quinn, AT&T's senior vice president, federal regulatory.
In any case, the court's ruling means it may be harder for the FCC to implement many of the policies it proposed in the recent National Broadband Plan, a blueprint for ensuring that all Americans have access to fast, affordable high-speed Web service.
That leaves the agency with several options, analysts said.
It could do nothing. But that's unlikely because Mr. Genachowski made new Net neutrality rules—which say that all legal Net traffic should be treated equally—a central tenet of a wide-ranging broadband strategy released last month. Net neutrality was also the centerpiece of President Obama's technology plan, announced at Google's Silicon Valley headquarters, during the presidential campaign.
It could take a cautious approach, asking industry and consumer groups how the court's decision affects the formal Net neutrality rules the FCC proposed last September. And it could try to revise the rules in the hope that the appeals court won't shoot them down again.
Congress could also get involved, but that could be hard in an election year because there's no consensus between consumer groups and the cable and telecom companies about the need for new rules.
"Other than demonstrable problems that might happen in the Internet space, they're going to have a tough time arguing for legislation this year," said Howard Waltzman, a former top Republican staffer for the House Telecommunications and Internet subcommittee.
Added Craig Moffett, a senior analyst at Bernstein Research: "It's not clear that Congress has a particular appetite for expanding the power of the FCC right now. But it probably has even less interest in taking on something as complex and controversial as net neutrality on its own." That, he suggested, leaves the FCC "with Title 2 as potentially its least bad option."
http://online.wsj.com/article/SB20001424052702303591204575170331107445378.html