TR Daily Stakeholders Offer Differing Views of Fixed Broadband Competition
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Monday, August 20, 2018

Stakeholders Offer Differing Views of Fixed Broadband Competition

Incumbent telcos are urging the FCC to consider mobile broadband services when evaluating the state of competition for fixed broadband, but competitors and public interest stakeholders are telling the agency that it should focus strictly on fixed services. Satellite industry interests and the Electronic Frontier Foundation similarly disagreed on the inclusion of satellite broadband in the analysis.

Parties were responding to a public notice (TR Daily, July 27) issued by the FCC’s Wireline Competition Bureau seeking input to assist in the Commission’s analysis of fixed broadband competition for the consolidated communications market place report required by the RAY BAUM’S Act, which was enacted as part of fiscal year omnibus appropriations legislation earlier this year.

The U.S. Telecom Association urged the FCC to account “for both actual and potential competition (as the Commission did in BDS context).”

With regard to existing providers, USTelecom said that “[f]irst, the underlying foundation of fixed broadband infrastructure is widely deployed: 96 percent of households have at least one wired broadband option; 98 percent if fixed wireless is included; and nearly the entire country if satellite is included. Second, higher speeds are routinely deployed through upgrade cycles. Third, new technologies and players from outside the industry emerge to challenge existing technologies and providers.”

USTelecom added, “There were at least two providers of basic wired broadband infrastructure available to 86 percent of U.S. households as of the end of 2016 — 90 percent if fixed wireless is included. In addition, competitive deployment of wired broadband — areas where at least two wired providers have deployed facilities — is increasing over time at higher speeds as providers upgrade networks for faster service. The portion of U.S. households with two or more wired broadband providers available at 10 Megabits per second [Mbps] download and 1 [Mbps] upload grew from 59 percent in 2012 to 67 percent in 2016. The portion of U.S. households with two or more wired broadband providers available at 25 Mbps download and 3 Mbps upload grew from 25 percent to 50 percent.”

It also pointed out that according to provider data submitted on FCC Form 477, “adoption at higher speeds is growing.”

USTelecom argued that the FCC “should not limit analysis narrowly to ‘fixed’ broadband, because mobile technology is increasingly competing for fixed broadband business and traditional notions of fixed broadband are changing, however while mobile increasingly is a substitute for fixed, the reverse is not true. Today’s fourth Generation (4G) mobile speeds are on par with some DSL services.”

It said that the FCC needs to “fully fund” programs such as the Connect America Fund (CAF) to help deploy broadband to rural areas where there is no business case for unsubsidized service.

Given the consolidation of the FCC’s reporting requirements under the RAY BAUM’S Act, USTelecom urged the Commission to “look for ways to consolidate and streamline provider[s’] reporting obligations, as well. … At a minimum, the Commission should consolidate, streamline, and harmonize reporting requirements and dates now that so many of the Commission’s reports to Congress have been eliminated.”

Verizon Communications, Inc., said that the FCC’s report “should conclude that the broadband marketplace, including fixed and mobile services, is competitive and that broadband is being deployed in a reasonable and timely manner throughout the United States.”

It urged the FCC to “consider all types of technology in its assessment” and note to “create new or unnecessary reporting requirements.”

To continue to encourage broadband deployment and investment, the FCC should “expedite small cell deployment by removing roadblocks to the installation of necessary equipment and facilities, which include fixed broadband. The Commission also should grant USTelecom’s petition to forbear from Section 251(c) unbundling and resale requirements and related obligations. Finally, the Commission should be mindful to continue its work to streamline reporting requirements, rather than impose new or burdensome ones,” Verizon said.

NCTA said that the RAY BAUM’S Act requires a “comprehensive” report on competition in the communications marketplace and that the FCC should include online services in its analysis, as well as the effects of intermodal competition and communications services at speeds below the agency’s current 25 Mbps/3 Mbps broadband threshold.

NCTA urged the FCC to preempt state and local laws and regulations “that are barriers to deployment of broadband” and called for FCC subsidy programs to be “targeted to unserved areas and made available to all providers.”

The American Cable Association said that “the fixed broadband marketplace is substantially competitive” and that its members play “a vital role” in “bringing consumers high-performance fixed broadband networks and innovative services at reasonable prices in the competitive markets they serve.

ACA urged the FCC to address “barriers to competitive entry and expansion that disproportionately afflict ACA members by virtue of their size and operating characteristics,” advising the FCC to do so by “further streamlining infrastructure access”, “avoiding excessive regulatory burdens”, “reining in video programming costs”, and “protecting against anti-competitive overbuilds.”

The Satellite Industry Association said, “By ensuring that regulations and marketplace practices are technologically neutral the Commission can improve the competitive balance among all technologies that participate in the fixed broadband market. In addition, the Commission should refine its methodology for assessing fixed broadband coverage, to ensure that it is ascribing ‘unserved’ and ‘underserved’ labels, and thus limited resources, to the regions that require prioritization for fixed broadband service deployment.”

It added, “The Commission’s current data fails to account for the number of consumers who presently have access to satellite broadband services if they choose to activate them. Consumers living in regions covered by 25/3 Mbps satellite broadband service are not ‘unserved’; there is a broadband provider available in their region capable of installing service in a matter of days.”

In joint comments, affiliates EchoStar Satellite Operating Corp. and Hughes Network Systems LLC said that “the fixed broadband market is competitive, and satellite broadband is an important part of the competitive landscape. … The Commission can further improve competition in the fixed broadband marketplace by creating a technology-neutral regulatory environment for satellite broadband providers. Examples of where regulatory changes are needed include universal service and spectrum policy.”

The Wireless Internet Service Providers Association said, “In measuring the state of competition in the fixed broadband marketplace and necessary steps to improve competition, WISPA suggests that the Commission focus on criteria and metrics that include cost and speed of deployment for broadband Internet access services, as such information can help gauge the most efficient and expedient means to reach all citizens, regardless of where they choose to live.”

WISPA also cited “laws, regulations, regulatory practices and policies that have served as market barriers to entry and growth. These include abrupt and material changes in regulations that impact small provider access to spectrum, spectrum policy that does not adequately consider the needs of rural Americans, government subsidies that fund larger carriers’ overbuilding of unsubsidized WISPs, lack of adherence to the Regulatory Flexibility Act, and inadequate cost-benefit analyses to determine the unique economic impact of regulations on small providers.”

Incompas said that “the high-speed broadband internet access services [BIAS] marketplace, as well as the business data services [BDS] marketplace remain highly concentrated in most geographic areas.” It urged the FCC to complete its “wired and wireless deployment proceedings, consistent with INCOMPAS’ filings in those dockets.”

Incompas said that “competitors using UNEs [unbundled network elements] (1) build more fiber than incumbents; (2) deliver faster broadband speeds over traditional broadband lines than the incumbents; and (3) offer lower prices and better service to customers. … However, USTelecom seeks to cut off the bridge to broadband competition with its request that the Commission forbear from its UNE/resale policies which will harm fixed broadband competition, lead to price increases, and deter fiber buildout from both incumbents and competitors. Accordingly, INCOMPAS urges the Commission to grant the Motion for Summary Denial we filed in that proceeding.” It urged the FCC to move ahead with a notice of proposed rulemaking following its notice of inquiry on “the deployment of broadband in multi-tenant environments [MTEs] and their surrounding communities.” Eventually, the FCC should adopt an order prohibiting “the use of exclusive service agreements by all video, telecommunications, and broadband providers, as well as use of graduated revenue sharing and exclusive wiring agreements in MTEs.”

“We urge the Commission to respond to GAO’s criticism of the lack of Commission analysis demonstrating the impact of competition on price and service quality by assigning its new Office of Economics and Analytics to undertake such a study to assess that impact,” Incompas said.

It said the FCC should reform its Form 477 broadband data collection and to “gather location-specific information from each fixed broadband provider for their residential offerings of BIAS, as well as for their dedicated broadband offerings of BDS.”

“The Commission should only include and evaluate those services that compete with one another. Thus, for purposes of BIAS — the Commission should only include fixed services that are delivering 25/3 Mbps, and not mobile broadband service — consistent with its Section 706 report finding that mobile is not substitutable; and the Commission should separately evaluate BDS competition,” Incompas said.

The FCC also has an open proceeding seeking comment on whether advanced telecommunications capability is being deployed in a reasonable and timely fashion, which will lead to a separate report to Congress known as a section 706 report for the provision of the 1996 Telecommunications Act that initially called for it.

In joint comments, New America’s Open Technology Institute (OTI), the Institute For Local Self-Reliance, the National Association of Telecommunications Officers and Advisors, the National League of Cities, and Next Century Cities called for better FCC broadband data collection, pointed to state laws “thwart or outright prohibit the development of municipal broadband,” and warned that the pending USTelecom petition for forbearance from UNE unbundling requirements “would eliminate a federal policy that promotes competition and market entry.”

“Third, ISPs employ a variety of tactics to freeze out competition and leave millions of Americans with only one choice for fixed broadband. Fixed broadband providers decline to compete against each other in local markets across the country, erect high switching costs to prevent consumers from taking their business elsewhere, and enter into anticompetitive deals with landlords of multiple tenant environments to stop competition,” OTI and the local government groups said.

“Finally, the Commission is likely to hear some arguments that future 5G networks will compete with fixed broadband as a viable alternative. These claims are extremely premature, as 5G technologies are years away from large-scale deployment, and consumers are, in turn, years away from assessing for themselves whether the 5G experience mirrors that of fixed broadband. Further, 5G service is likely to focus on urban areas and rely heavily on fixed backhaul — which could enhance the market power of fixed ISPs. Accordingly, we urge the Commission to reject hyperbolic claims about 5G and limit its assessment in this proceeding to fixed ISPs,” they said.

In jointly filed comments, Common Cause, Public Knowledge, the Center for Rural Strategies, and the Benton Foundation said, “As the Commission produces the Communications marketplace report in compliance with RAY BAUM’s Act, it should measure fixed and mobile broadband as distinct product markets. As the Commission’s most recent report on broadband deployment acknowledged, mobile services and fixed services have different properties and are generally not effective substitutes for each other. Conflating the two services would therefore distort competition analysis and potentially prevent the Commission or Congress from enacting policies to ensure there is robust broadband competition.”

The consolidated Communications Marketplace Report established by the RAY BAUM’S Act “requires the Commission to look at the state of competition in multiple markets including voice, cable, satellite, broadband, and mobile services. However, the Communications marketplace report is not a green light for the Commission to conflate fixed and mobile services simply because it is assessing competition throughout the entire communications ecosystem. … [F]ixed and mobile broadband are complimentary services that should be treated as distinct product markets when assessing competition,” Common Cause and the public interest groups said.

They also argued that the FCC “should not consider the next generation of wireless service — 5G — as a substitute for fixed broadband. First, it is important to note that 5G networks are still years away from being deployed as fully-realized commercial services. Indeed, the standard for 5G was only completed months ago, and there is still much work to be done in finalizing the specifications and building out the hardware and infrastructure. Second, while 5G networks promise to offer faster speeds, less latency, and greater capacity, they will only be a minor improvement to 4G LTE in some cases. In these instances, the Commission must look at 5G as another wireless service and treat it as a distinct product market from fixed broadband. Finally, 5G has transformed to mean different products over time and potentially different deployment plans. Carriers like AT&T plan on deploying 5G using millimeter wave spectrum. Other carriers may deploy 5G primarily using a combination of mid-band and low-band spectrum. The various deployment plans mean 5G will have a broad range of functionalities across multiple spectrum bands, giving consumers varying degrees of service.”

The public interest groups urged the FCC to break out data for “markets of traditional concern,” such as BDS for small businesses, which might otherwise get “lost in translation.”

They said that the FCC’s efforts to close the digital divide should promote competition through approaches such as municipal broadband networks. The FCC “should not support local or state regulations that make an effort to undermine innovative solutions to the digital divide. Any law, regulation or rule that attempts to limit competition, favor incumbent LECs, or disadvantage non-traditional approaches — including municipal broadband and public-private partnerships-- is counterintuitive to closing the digital divide,” they added.

The Electronic Frontier Foundation said that “the lack of competition in high-speed Internet access has allowed the cable industry to approach monopoly status for broadband speeds above 100 mbps. Cable companies have no incentive to upgrade to speeds of a gigabit or higher as their main rival, telephone companies, have done little more than upgrade their DSL lines to middle-tier speeds of 25 mbps these last few years. Wireless and satellite do not appear proven as competitive alternatives at these speeds, and for good reason that we explain below. As for rural markets that present unique challenges to obtaining competitive high-speed choice, new deployments by wholesale providers overseas could provide useful insights as to how we can ensure rural Americans get both high-speed access and competition.”

EFF compared U.S. last-mile fiber deployment unfavorably to most European Union members and South Korea, and suggested that the FCC take the cue from international markets that “have shown the ability of wholesale fiber networks that do not sell retail broadband service to overcome infrastructure cost barriers that plague retail broadband providers.”

EFF added, “It is cheaper to upgrade and stay ahead of the growth of Internet usage with FTTH [fiber to the home], yet no major ISP has announced an intention to upgrade to the clearly superior network infrastructure. As online services and applications become more dependent on high-speed connections, more Americans will be unable to utilize those services due to their inferior connection speeds. Being unable to make use of the latest advancements in Internet technologies means an impending national crisis in economic prosperity lies over the horizon as next generation application and services will not simply wait for the US market to catch up to the world. Reliance on a local cable monopoly for rapidly increasing capacity needs places a real danger to American innovation and the FCC should actively explore ways that would pressure the industry to deploy FTTH.” —Lynn Stanton, [email protected]

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