FCC's National Broadband Plan Raises Devisive Issues

USA Today

The Federal Communications Commission kicked off a series of potentially bitter debates about how to make high-speed Internet service faster and more popular with the official release Tuesday of its long-awaited National Broadband Plan.

The Senate Commerce Committee scheduled a hearing next Tuesday to explore the FCC's recommendations, which Congress requested last year. The House Energy and Commerce Committee will follow with its own hearing March 25.

The report also will result in "dozens of new proceedings at the FCC," says communications lawyer J.G. Harrington of law firm Dow Lohnes. "The plan is an outline on ways they'd like to go — not a decision."

The issues don't split neatly along partisan lines. Still, the plan could run into opposition from "some folks who don't want to see the president get a victory," says lawyer Jay Lefkowitz of law firm Kirkland & Ellis, who was deputy director of domestic policy for former president George W. Bush.

FCC commissioners identified some potential problems among the many proposals to connect 100 million people to broadband at home.

FCC Commissioner Mignon Clyburn criticized the recommendation to coax, and possibly force, television broadcasters to give up some airwave spectrum. The plan aims to increase broadband competition by boosting the amount of spectrum for wireless Internet services to 500 MHz from 50 MHz.

She said that "it is certainly possible, if not likely" that the few minority-owned stations likely would be among the first to sell their spectrum. She says she would find a policy that further diminished that number to be "untenable."

Others anticipate a wide-ranging debate about broadcasters' role in an Internet-centric society. The FCC would have to approve specific changes involving the use of the broadcast spectrum.

"It's not the most efficient thing to have everyone watch the Super Bowl on broadband," says media industry consultant Tom Wolzien.

Commissioner Robert McDowell also questioned another provision that would enable cable and satellite customers to ditch their company-supplied set-top box. The FCC has long wanted consumer electronics companies to sell DVRs, video game players and other devices that could tap all TV and Internet services.

"I caution the commission to tread gingerly," McDowell said. "Technological mandates by the government almost never result in robust innovation."

New data: 40 Percent in US Lack Home Broadband

AP

Roughly 40 percent of Americans do not have high-speed Internet access at home, according to new Commerce Department figures that underscore the challenges facing policymakers who are trying to bring affordable broadband connections to everyone.

The Obama administration and Congress have identified universal broadband as a key to driving economic development, producing jobs and bringing educational opportunities and cutting-edge medicine to all corners of the country.

"We're at a point where high-speed access to the Internet is critical to the ability of people to be successful in today's economy and society at large," said Larry Strickling, head of the National Telecommunications and Information Administration (NTIA), an arm of the Commerce Department that released the data Tuesday.

The NTIA and the Rural Utilities Service, part of the Agriculture Department, are in the middle of handing out $7.2 billion in stimulus funding for broadband. Most of that money will be used to build networks in parts of the country that lack high-speed Internet access.

And next month, the Federal Communications Commission will deliver policy recommendations to Congress on how to make universal broadband a reality. Among other things, the FCC is expected to propose expanding the fund that subsidizes telephone service in poor and rural communities, finding more airwaves for wireless broadband services and modernizing the FCC's rural telemedicine program to bring thousands of health clinics online.

FCC Chairman Julius Genachowski said Tuesday he wants 100 million U.S. households to have access to ultra high-speed Internet connections, with speeds of 100 megabits per second, by 2020. That would be several times faster than the download speeds many U.S. homes with broadband get now - 3 megabits to 20 megabits per second.

Genachowski also wants the U.S. to test even higher broadband speeds. One such testbed network could come from Google Inc., which said last week it plans to build a few experimental fiber-optic networks that would deliver 1 gigabit per second to as many as 500,000 Americans. That would be 10 times faster than a 100 megabit-per-second connection.

The NTIA report released Tuesday offers a snapshot of the current broadband landscape. It stems from a Census Bureau survey of about 54,000 households conducted in October of last year.

The statistics show that U.S. broadband usage continues to grow, with 64 percent of U.S. households subscribing to high-speed Internet as of October, up from 51 percent two years earlier.

But the results also highlight remaining hurdles, particularly in rural America. While 66 percent of urban households subscribed to broadband in October, that was true for only 54 percent of rural households, the survey found.

That is partly because broadband is not as widely available in rural areas. The phone and cable companies that provide the bulk of broadband connections in the U.S. have been slower to build high-speed systems in places that are too sparsely populated to justify the costly network investments.

Lack of broadband availability is only part of the challenge for Washington, however - because even in places where broadband is available, not everyone subscribes. Among households that do not have broadband, the survey found, 38 percent said they don't need it or are not interested. Twenty-six percent said it is too expensive. Only 3.6 percent said they do not subscribe because it is not available where they live.

For policymakers, Strickling said, this means that helping people see "what they are missing" is another important piece of the puzzle. Last year's stimulus bill set aside at least $250 million for broadband adoption programs to teach people computer and Internet skills and ensure they have the equipment to get online.

Other key survey findings include:

- 89 percent of Americans with an annual household income greater than $150,000 used a broadband connection at home in October, compared with 29 percent of Americans with a household income less than $15,000.

- 67 percent of Asian Americans and 66 percent of Caucasians used broadband at home in October, compared with 46 percent of blacks and 40 percent of Hispanics.

- Home broadband usage was highest among people aged 18 to 24, at 81 percent, and lowest among people 55 and older, at 46 percent.

Comcast Submits Plans to Manage Broadband

Comcast Corp., the country's largest cable operator by subscribers, formally submitted plans to the Federal Communications Commission late Friday detailing how the company plans to manage its broadband network.

Rather than target specific types of bandwidth-intensive applications like peer-to-peer file sharing, the company will instead slow Internet speeds for its heaviest users at peak times when its network is congested. Comcast will do this by creating a second stream of traffic for recent heavy users that will have a lower priority when compared to its other customers.

The so-called protocol-agnostic approach is intended to comply with the FCC's network neutrality principles, which restrict Internet service providers like cable and VOIP phone companies from degrading traffic from particular companies. On Aug. 20, the FCC had given Comcast -- the country's second-largest provider of broadband connections after AT&T Inc. -- 30 days to outline its new management policies.

Comcast's filing comes after the company tested the new approach which includes colocation for three months in five cities to study its impact. The company plans to put the policy in effect over its entire footprint by the end of the year. Comcast says no customer complaints were lodged about the new method in its trial markets and less than 1% of customers were affected on a typical day.

Comcast's move may set a precedent for how other carriers manage the rapidly growing traffic on their own networks. Internet traffic is doubling every two years, and other big carriers like AT&T Inc. and Time Warner Inc.'s cable unit have also indicated that they will need to take steps to marshal the limited capacity on their networks.

Comcast's network-management techniques became a lightning rod for controversy last year after the company admitted it was throttling traffic from BitTorrent Inc., a popular file-sharing application.

By: Vishesh Kumar
Wall Street Journal; September 20, 2008

Big Tech Firms to Invest in Wireless

Sprint, Comcast, Google, Time Warner and Intel Join Forces in New Broadband Joint Venture

The race to bring consumers ultra-fast wireless Internet service is on.

As early as today, an unlikely alliance of titans from the cable, Internet and chip industries disclose they are investing $3.2 billion a company that will deliver Web access for cellphones laptops at speeds much faster than what's available today using a technology called WiMax.

Analysts say the venture, valued at more than $12 billion, will have a two year head-start on Verizon Wireless and AT&T Inc., which are just beginning to out plans for their next-generation wireless networks. The venture includes wireless provider Sprint Nextel Corp. and Clearwire Corp., a startup company backed cellphone pioneer Craig McCaw. Other big-name backers include cable-TV giants Comcast Corp. and Time Warner Cable Inc., Internet giant Google Inc., and chip-=maker Intel Corp.

The deal gives the cable operators and Google prominent roles in shaping the future of mobile Internet and a new outlet as growth begins to slow in their traditional content businesses. Intel gains new support for WiMax, a technology standard the company has championed and will be used in the venture's high-speed network. The venture must still be approved by federal regulators.

The deal is most of all a coup for Sprint CEO Dan Hesse, who four months ago as charged with rescuing Sprint near-disaster. This alliance resolves one of the major issues that confronted him and now allows him to put full attention on problems in Sprint'S cellphone business, which has hemorrhaging Nextel customers for a year and a half. Mr. Hesse next must consider a spin-off or sale of Nextel, acquired just three years ago.

A mild-mannered 54-year-old, Mr. Hesse served as CEO of AT&T Wireless in the late 1990s and more recently as chief executive of regional phone company Embarq Corp. before joining Sprint in December. It was a job that other industry veterans saw as a dead end. Its former CEO, Gary Forsee, had been forced out as Sprint's market shar~ collapsed. Despite his own reservations, Mr. Hesse saw the job as an opportunity to turn around a high-profile public company with a rich history dating back to its roots as the Brown Telephone Co. at the turn of the 20th century.

Often invoking the words of George Carlin and Yogi Berra to leaven tense meetings, Mr. Hesse has been cheerleader-in-chief in Sprint's time of distress. He appeared in a recent TV commercial to help sell a new monthly service plan that offers unlimited data services. And he can be blunt about Sprint's challenges. Asked at an employee meeting in the company's Overland Park, Kan. auditorium why he hadn't yet done a management reorganization to clarify executive responsibilities, Mr. Hesse responded that he had higher priorities, like the company's grave customer service problems:

"It's sort of like, 'Dan, you haven't vacuumed the bedroom,'" Mr. Hesse said. "Well, that's because the house is on fire. I will get around to it later."

Mr. Hesse was under pressure to find partners to help defray costs of the company's $5 billion bet on WiMax. He early on identified Clearwire as a potential ally and sought to involve the cable operators and Google. But the cable companies were skeptical, because a prior cellphone partnership with Sprint, called Pivot, was a failure and essentially dissolved last year.

Last January, Mr. Hesse called Comcast Chief Executive Brian L. Roberts to explore a deal. Mr. Roberts was receptive partly because he thought the new Sprint CEO might be easier to work with, and partly because he was beginning to see WiMax as an opportunity to confront his own strategic dilemma. Phone companies such as Verizon anc AT&T are encroaching on cable companies' turf by offering video, data, and voice services. Their abilility to bundle these services with wireless phone service is seen as a key advantage, and cable companies had struggled to respond with their own wireless strategy.

In early February, Mr. Roberts took a trip out to Portland, Ore., to test Clearwire's nascent WiMax service there and meet with Mr. McCaw. He
came away impressed with the technology, say people familiar with the meeting leaned on Roberts to round up other cable operators, including Time Warner Cable and a regional provider Bright House. In late February, the two executives orchestrated a meeting of all the principals at the Time Warner building in Manyhatten. The cable executives raise several concerns, people familiar with the meeting say. The most pressing issue: they wanted to make sure the new company would be able to use Sprint's existing "third-generation" broadband network until the WiMax network is nationwide, which could take a few years. That would require complex pricing negotations, but Mr. Hesse and the cable consortium agreed to move forward.

Reeling in Google proved especially difficult. The Internet company wanted an easier way to distribute its software on mobile devices, but wasn't convinces the WiMax partnership was the right move. Google CEO Eric Schmidt wouldn't return Mr. Hess's phone calls. Mr. Roberts, who had developed a close relationship with the Google CEO, stepped in. He made a pitch on Mr. Hesse's behalf, then connected the two via email to get a discussion going, according to people familiar with the matter. Mr. Hesse promised to make Google the preferred software developer on the WiMaz network, meaning its search service would be the default on new mobile devices. He also agreeed to put Google's mobile operating system, Android, in some Sprint phones.

All the while, negotiators from the various companies - flanked by a throng of lawyers, bankers, and advisers - were locking horns over issues ranging from the new company's tax structure to what kinds of veto rights the minority investors should have. At times, the sessions got heated. At one meeting in the New York offices of law firm Kirkland & Ellis, Clearwire Chief Executive Ben Wolff was so frustrated with the lack of progress that he pulled his team from the room, shouting "That's it, the deal's off," according to a person at the meeting.

By mid-March, the outlines of a deal were in place, though it would take another two months to iron out details. The new company secured $1.05 billion from Comcast, $1 billion from Intel, $500 million from Google, $550 million from Time Warner and $100 million from Bright House. Sprint will hold a majority stake in the new venture. But to appease concerns that Sprint might try to quash the new company's ability to compete with Sprint, Mr. Hesse agreed to give up day-to-day control to Clearwire's Mr. Wolff, who is slated to be CEO. Mr. McCaw is expected to be named chairman. The new company will take on Clearwire's name.

There are still big hurdles ahead. WiMax is a new technology that hasn't been tested on the scale propbsed. Diverging corporate interests pose an
other set of challenges. Few big technology collaborations deliver on their founders' goals.

But neither Mr. Hesse nor Mr. McCaw are allowing any doubts. During an April phone meeting the two marveled at their accomplishment, particularly their Brian L. Roberts agreement to pool their vast radio-spectrum resources. "Has any company ever had a spectrum position like this? It's absolutely perfect for this technology," raved Mr. Hesse, according to a person familiar with the call.

By: Amol Sharma & Vishesh Kumar
Wall Street Journal; May 7, 2008