FCC Has National Broadband Authority, Say 2 Former FCC Commissioners

Former FCC chairmen Reed Hundt (D) and Michael Powell (R) say that, contrary to much speculation, the Federal Communications Commission continues to have the authority it requires to set in motion the "National Broadband Plan."

Both Powell and Hundt agreed that the FCC still has jurisdiction on the Broadband Plan and net neutrality and that there isn’t “Armageddon” because of the DC Circuit ruling on the Comcast complaint.

Powell pointed out that Title II reclassification would have a “destabilizing nature” to the industry because it would change decades-long policy and that it would frustrate investments made under the current regulatory environment (for example the $23 billion investment Verizon made on their “FiOS” service).

The argument that the FCC now "lacks jurisdiction," though incorrect, is being used to advance the notion of wider and more-disruptive changes in the basic regulatory framework governing broadband access services.

Post Tech - The Full Video: Ex-FCC heads Hundt and Powell discuss broadband policy

Value Chain Conflict Takes Contradictory Forms

Struggles over value and revenue in the Internet ecosystem take the form of "network neutrality" debates in the United States, and oddly enough may take the reverse form in the European market. In the U.S. market, the effort is to induce the government to bar revenue sharing, where in the European market there may be pressure to get governments to compel revenue sharing.

Telefónica, France Telecom and Deutsche Telekom all say Google should start paying them for carrying bandwidth-hungry content such as YouTube video over their networks.

César Alierta, chairman of Telefónica, said Google should share some of its online advertising revenue to compensate the network operators for carrying the technology company’s bandwidth-hungry content over their infrastructure.

Alierta says that if no revenue sharing agreement was possible between the internet search engines led by Google and the network operators, regulators should supervise a settlement.

“Let’s see the development of digital society in terms of the winners and the victims," says Stéphane Richard, France CEO. "And today, there is a winner who is Google, there are victims that are content providers, and to a certain extent, network operators."

"We cannot accept this,” says Richard.

René Obermann, Deutsche Telekom’s chief executive, likewise says Google and others should pay telecoms groups for carrying content on their networks. “There is not a single Google service that is not reliant on network service,” he says. “We cannot offer our networks for free.”

source

Will Apple Make History?

Those of you familiar with the evolution of computing technology over the past few decades are aware of the way historians describe the key "eras" of that history. We begin with mainframe computing, transition to mini-computers, then to personal computers, then to a period we generally call the "Internet" or "Web" era and now seem to be at the beginning of the next era, for which we do not generally agree on a name.

The point we like to make is that, in each era, and eras do not break cleanly and neatly into 10-year periods, there are some firms which dominate the business in terms of market share and influence. What we also have seen, though, is a different set of leaders in each era.

(click on the image for a larger view)

The leaders of one era do not lead the next era. Again, this is a matter of relative influence and character, not an indication of enterprise death, though that has happened in some cases. So the interesting question right now is what companies, or what sorts of companies might arise to challenge even firms that are dominant today, such as Google.

All of this matters to companies in the communications business because each era of computing has created new requirements and opportunities for providers of computer communications. Generally speaking, as computing has migrated into the fabric of everyday life, the need for communications has grown steadily.

Arguably the biggest change in volume of devices requiring communications came with the "Internet" era, when virtually every computing appliance began to require communications.

Today, we can point to smartphones as the latest wave of computing devices that require communications.

To be sure, executives in the business are well aware of the historical implications of changing eras. And the fascinating question right now is  whether any company that has been a leader in any of the previous eras can make the transition to leadership in a subsequent era. The question is interesting simply because it has not ever happened.

But then there is Apple. And one way to make Apple "fit" into the typology is to remove it from the ranks of 1980s leaders, and then place it into the era of mobile Internet computing. Or one can leave Apple where it logically is categorized, and then assume that it is a candidate to make history, by becoming one of the dominant firms in the coming era.

That, in any case, is why some observers might believe Apple is better positioned than Google, as fearsome as Google seemed two or three years ago, as a possible "leading" firm in the era that is coming. Already there is some thinking that "desktop search," as key as it has been to Google's prominence, will be challenged in the era to come by "mobile applications."

It might seem odd to say Apple is a more-likely candidate to lead the next wave of computing than Google. The "safe" answer is to say neither will be a market leader in the next era. But Apple could make history, in more ways than one.

Apple always has been a believer in the power of "closed" ecosystems, at a time when the rest of the world has shifted to "open" systems. Observers who think "network neutrality" is important because it is seen as related to the preservation of an "open" applications environment could well be "barking up the wrong tree" entirely.

Title II Debate Redux

If you were following debates over Federal Communications Commission policy relating to the Internet back in 2006, you might remember that we were debating whether the Internet, and broadband access, should continue to be regulated as other data services are, under Title I, or as common carrier services, under Title II.

The economic, financial and policy stakes are no less important this time around, as we might be setting up for yet another lengthy battle over how best to regulate broadband access. Lots has changed since 2006. Broadband access by fixed line networks has become a legacy service. Mobile broadband is about to explode. Application innovation arguably is more robust than it was in 2006, and almost all of the innovation has something to do with mobility, not the fixed line Internet.

Congress could "remedy" the situation by passing new laws directly the FCC to take regulatory control of broadband access services. A majority of Americans might regard almost any such congressional moves with derision, given the general contempt that institution now inspires in the overwhelming majority of Americans who are polled about their impressions of Congress.

Will FCC Take "Nuclear Option"?

With the caveat that there is no direct relationship between the Federal Communication Commission's "National Broadband Plan" and the separate issue of "network neutrality," the two arguably might be related. The reason is that
a U.S. Court of Appeals for the District of Columbia Circuit could rule that, in fact, the Federal Communications Commission lacks sufficient authority to regulate broadband services, for reasons of network neutrality or mostly anything else related to broadband access and applications.

The Court of Appeals challenge by Comcast argues that the FCC has no authority to censure Comcast for throttling Bittorrent access by its broadband access customers.

New and express authority could, of course, be granted by Congress, but that would take some time. And if the FCC has not current statutory authority to create rules for broadband services, does it have authority to push through a reallocation of 500 megaHertz of wireless spectrum, arguably the centerpiece of its national plan?

If it loses, the FCC can appeal to the Supreme Court. But the court might not take the case, and even if it does, it could take years to get a decision.

So the FCC might try to move based on its current authority to regulate "telecommunications" services such as voice. That would overturn all existing federal rules relating to data services, and would incite a nuclear war with telecommunications providers, just as a threat to regulate cable TV industry as a common carrier also would trigger an all-out legal war with the cable industry.

Whether the FCC wants to trigger first an industry uprising and then years of legislation that will introduce massive uncertainty into the market, is unclear. Certainly the FCC cannot be unmindful of the industry response.

That is why any moves to reclassify broadband access, now a "Title I" data service, as a "Title II" common carrier service, will be a nuclear option. It guarantees that the full weight of the telecommunications industry, and possibly the cable TV industry as well, could be marshalled against any such changes.

And since all FCC thinking now is that only private investment will lead to advances in broadband access, a nuclear war with those interests seems self defeating. Not only will the regulatory fights be huge and determined, but no matter what the outcome, lawsuits will fly for years, further obstructing any serious progress. In the five years after the bloody battle, we will be about where we are now, but five years will have passed.

At a time of tumultuous change in the larger business, a six-year to seven-year period of extreme regulatory uncertainty would be damaging in the extreme, partly because investors would balk at investing and service providers would stop investing in wired facilities.

That's thing about what we used to call "mutually assured destruction." The problem with nuclear weapons under the old "deterrence" doctrine is that actual use of the weapons means failure. The only logic to nuclear weapons is not to use them. Oddly enough, we might stand on the precipice of just such a failure.

Google to Leave China?

Google has drawn up detailed plans for the closure of its Chinese search engine and is now “99.9 per cent” certain to go ahead as talks over censorship with the Chinese authorities have reached an apparent impasse, according to the Financial Times.

Google's search results are censored in China, as are results provided by all other search engines as well.

Google is also seeking ways to keep its other operations in China going, although some executives fear that a backlash from the Chinese authorities could make it almost impossible to keep a presence in the country, the Financial Times says.

But Google’s executives have made it clear that they still hope to stay in the country, whatever the fate of Google.cn. “It’s very important to know we are not pulling out of China,” Eric Schmidt, Google’s chief executive, told the Financial Times at the time. “We have a good business in China. This is about the censorship rules, not anything else.”

The company’s other operations, which pre-date the launch of Google.cn four years ago, include its research centre in Beijing and a sales force that sells advertising on the Chinese-language Google.com search service, based outside China, to advertisers inside the country.

This sort of issue has been tough for any companies doing business in China, in the past. Software and hardware sold by companies into China can, and are, used in ways that violate sensibilities in the West. Suppression of dissent, spying on citizens and so forth do happen in China, and technology supplied by Western firms is used to do so.

Google might have to take steps that many would agree are principled and just, but will harm its business interests. Similar thorny decisions have been made by other software and hardware suppliers to the Chinese market, with different outcomes. It's an area of moral tension executives cannot escape, though most seem to prefer not to talk about it.

Beyond all that, the dilemma shows that the old Internet, where any user could communicate freely with any other user, is gone. When the any government shuts down applications people use to communicate with each other, the old Internet is gone.

Financial Times article