Principles for an Open Broadband Future

The deployment of broadband telecommunications services1 could have as great an impact on society as the appearance of the printing press in the 15th century and television and radio in the 20th. Broadband technologies are bringing about a paradigm shift in how we live our lives. Distance learning, telemedicine, web conferencing, unlimited and uncensored information, feature-rich communications and high-resolution entertainment can all be delivered to consumers over broadband connections at a fraction of the cost and at an order of magnitude faster speed than today.
If the U.S. adopts the right policy framework, emphasizing competition and limited regulation, the growth of broadband technologies can significantly increase and enhance the sharing of knowledge, strengthen our democracy and enhance every individual’s economic empowerment. Our goal should be to ensure that all consumers have access to widespread and competitive broadband services at affordable prices, using a variety of technologies, to permit any commercial or governmental entity to develop new and customer-driven applications and information services, and to allow consumers to enjoy their first amendment rights to have access to and disseminate their own unlimited and uncensored information.
Unfortunately, these objectives are in grave danger. Some recent developments show the country moving in the opposite direction:
Low-income, rural and minority consumers have less access to broadband services than higher-income, urban and white, consumers.2
In most markets, just two providers - the cable company and the telephone company - dominate the provision of broadband services.3
The U.S. ranks 16th worldwide in broadband adoption per 100 inhabitants4, in large part because the prices for broadband services are unaffordably high.5
Unlicensed wireless broadband providers are relegated to a much smaller portion of the electromagnetic spectrum than technology allows.6
Some companies are retaining the authority to build proprietary broadband networks and may restrict or degrade consumers’ access to certain Internet sites or certain applications.7
The FCC has allowed telephone companies to force consumers to buy landline telephone service even when they wish to purchase only broadband service.8
Fifteen states bar or limit municipalities’ ability to build broadband networks.9
These trends demonstrate that the country’s current communications policies are simply inadequate; they provide no assurance that consumers will reap all the benefits of these broadband technologies. Instead, broadband technologies are operating in a policy vacuum. Today, there is no plan to ensure that broadband will be affordable; there are no enforceable rules to ensure that all public broadband networks are open and transparent; there is no plan to maximize the provision of unlicensed wireless broadband services, and there is no guarantee that municipalities have the right to deploy broadband services for their consumers. This policy vacuum creates uncertainty, chills innovation, and depresses both the demand and supply of broadband services and technologies.10
As Congress re-examines the nation’s telecommunications laws, it must do so guided by key principles that will ensure that broadband services are deployed to serve the interests of consumers and the economic interests of the country. Without such principles, there is great danger that any proposed legislation will become a grab bag of special interest benefits, with each corporate interest trying to strengthen its position in the marketplace. Broadband networks must not become closed and under the control of gatekeepers seeking to promote narrow political or corporate agendas. While the legislative process certainly allows companies to advocate for their own interests, it is vitally important that Congress focus first and foremost on the consumer’s interest in broadband networks of the future.
In short, American consumers need a new set of Principles for an Open Broadband Future that will ensure that broadband networks are deployed to maximize consumer welfare. These principles need to address each aspect of the broadband universe - the physical construction of broadband pipes (wireless or wireline), the access to those pipes by consumers, equipment manufacturers, applications developers and content providers, and the use of those pipes to transmit, share and publish information. These principles must walk a fine line: they must be clear and enforceable, so as to stimulate broadband deployment and guarantee consumer access; at the same time they must operate with as light a regulatory touch as possible to avoid burdening network owners with such excessive rules that they lose their incentives to construct these new networks. Setting forth a clear set of principles to guide the development of broadband policy will provide additional certainty to investors, network planners, equipment and application developers, content providers and consumers, so that the broadband future becomes a reality soon.
The overriding goal of these principles can be summarized in one word: openness. If made open and accessible to all Americans, broadband services and applications can ignite new opportunities for innovation, creativity, and economic value for all Americans. Furthermore, safeguarding access to the free flow of information over broadband networks can strengthen our democracy and freedom of expression. Congress’ most important objective should be to ensure that consumers’ rights to access and use broadband networks are preserved and enhanced, to allow the unfettered sharing of knowledge.
This white paper sets out the rationale for the Principles for an Open Broadband Future. Adoption of these principles will promote the deployment of broadband technologies and ensure that they remain open and accessible by the public. These principles should form the foundation of any new effort to re-write the Communications Act in the 109th Congress.
1. Open Competition Among Broadband Providers
*Principles:
a. Every consumer should be able to choose among multiple, competing broadband networks, services, applications and content providers, including municipalities.
b. Government policies should be technology-neutral and should forbear from regulating broadband networks except where necessary to promote competition.*
Every consumer should be able to choose among multiple, competing broadband networks, services, applications and content providers. Eliminating barriers to competitive entry in each of these markets has many benefits. Open competition will provide network builders the maximum incentive to provide consumers the best quality, service, and price that it is possible to deliver. Competition has been shown time and again to promote innovation and the development of new technologies. As firms seek to win market share, they will develop the most efficient technology possible. This incentive to innovate benefits the entire American economy by spawning a healthy high-tech community of research and entrepreneurship. Finally, competition promotes the first amendment value of information diversity. Consumers benefit from an active “marketplace of ideas,” in which the general public is permitted to hear and voice their political, religious, and economic views. Promoting an open competitive market for all aspects of broadband is thus one of the highest values government policy can promote.
To reach this goal, government must carefully assess its role. Where a vibrant competitive market for broadband already exists, government should forbear from regulating as much as possible. Excessive government regulation on broadband providers and suppliers can burden companies and stifle innovation and investment. Government should instead ensure that the market operates in a way that maximizes the flow of information and encourages competition.
At limited times, however, affirmative government policies may be required to open markets to competitive entry. Specific government action may be especially necessary when the government itself erected barriers to entry by prohibiting competition, or where a firm holds market power or bottleneck control over an essential communications commodity. For instance, transmission services provide the equivalent of “raw material,” without which no information services, applications or uses can be developed or deployed. Government must ensure that the transmission path is open to competing service providers, application developers, content providers and consumers in order to promote an open market in which investment and innovation are stimulated. Otherwise, the uses of the network will be skewed in the interests of those who own the network.
In short, government policy must be limited, targeted, and effective. Government policy should be smart, not smothering.
Congress should also explore new ways to stimulate competition to the duopoly currently held by the cable and telecom companies.11 This is especially important in the wake of the announced mergers of large long distance companies with the two largest Bell companies (i.e., AT&T/SBC and MCI/Verizon). One approach Congress should strongly consider is to guarantee the right of municipalities to provide their own broadband services. Competition from governmental entities could encourage private sector entities to increase deployment, innovate and drive broadband prices down. Indeed, municipal broadband networks provide a business opportunity for small businesses and entrepreneurs. Municipalities that build their own local broadband networks stimulate economic growth by creating jobs, purchasing equipment and services from local businesses, and attracting companies to locate offices in that city.12
Unfortunately, at least 15 states have adopted laws banning or limiting these municipal networks. These laws are often anticompetitive and contrary to the public interest. 13 While the citizens of certain municipalities may decide that taxpayer dollars should not be spent on broadband services, that is a decision that should not be taken away from them by surreptitious legislation that places flat bans on municipal broadband service. Therefore, Congress should preempt these state laws and permit municipalities to serve the needs of their local communities.
Another approach to promoting competition that Congress should consider is codifying a national franchise for new entrants into broadband video services, particularly where those new entrants are authorized to deploy and already deploy a network. Those seeking to compete in the provision of broadband video will be severely delayed if they must seek franchises from 10,000+ local authorities throughout the country. The provision of a national franchise need not deprive localities of any income - the franchise can be conditioned on receipt of the same fee on revenues that cable providers now pay. This fee can be passed down to the localities where competitors seek to provide services. At the same time, Congress should be cognizant of the important role of local authorities in the provision of multi-channel video services, including, but not limited to, ensuring universal access, promoting competition and community media, and protecting public safety.
Until broadband competition matures, policy-makers should also take action to prevent the dominant firms from extending their market power into competitive markets. BellSouth, for instance, is requiring consumers to purchase basic telephone service before the consumer can purchase DSL. The FCC recently upheld this practice. Similarly, some cable companies require consumers to purchase basic cable service to receive their cable modem offerings. These practices make it more difficult, if not impossible, for consumers to purchase stand-alone broadband services.
Furthermore, markets work best if policies are technology-neutral and do not favor one provider over another. To the extent practicable, government policy should seek to promote all technologies and should not artificially favor one technology over another. For instance, any requirement of openness (discussed below) should be applied equally to all broadband networks, regardless of their history or technology.