December 19, 2001

 

Honorable Nancy J. Victory   

Assistant Secretary for Communications and Information

National Telecommunications and Information Administration (NTIA)

1401 Constitution Avenue NW

Washington, DC 20230

Dear Ms. Victory,

On behalf of Comcast Corporation, we are pleased to submit the following response to your recent inquiry concerning deployment of broadband networks and advanced telecommunications services.[1]

There can be little question that the pace of broadband deployment facilities in America is strong.Comcast’s commitment to broadband deployment is a case in point.Comcast is investing heavily (over $5 billion since 1996) to upgrade its cable systems to broadband as quickly as possible.We are also committed to the careful but expeditious rollout of broadband services, beginning in 1999 with digital cable, followed in 2000 with high-speed Internet service through cable modems, and continuing this year with Video On Demand (VOD).

Comcast will have upgraded 95% of its plant by year-end 2001, and we expect to substantially complete upgrades to all current systems next year.It should be noted that, in our effort to create the kind of dense cable system clusters that provide the scale for cost-effective broadband rollouts, we continue to acquire cable systems that have not yet been upgraded, sometimes in exchange for systems that we have already upgraded.For example, in our Mid-Atlantic region, Comcast’s upgrade of the Montgomery County system, acquired in 1999, was completed a year ahead of schedule.Comcast is currently upgrading the District of Columbia cable system, acquired last New Year’s Eve, and the first phase is due for completion shortly in the Anacostia neighborhood.Comcast outlined its broadband deployment strategy in comments recently filed with the FCC, a copy of which is attached for your reference.[2]

As of the end of the third quarter, Comcast@Home was available to 8.0 million households, or approximately 60% of homes passed.We expect this to rise to nearly 10 million homes – or 73% of homes passed – by YE 01.By contrast, the service was available to 4.4 million households last year.Penetration now frequently averages 10% in those areas where Comcast currently offers high-speed Internet service, and is well over 20% in some service areas.[3]

We strongly believe that the federal government should maintain a policy of allowing the marketplace to work to deploy broadband.There are multiple facilities-based competitors – including cable, phone companies (using DSL), two DBS companies, various wireless companies, and other CLECs and DLECs – continuing to deploy last-mile solutions, and no one technology has established market dominance.Rather, competition continues to grow among all of these market participants.[4]Deployment of some of these technologies may vary somewhat in particular locations in a competitive environment – and especially in rural areas -- as technologies gravitate toward natural advantage.Yet, data show that, where cable companies deploy high-speed Internet services, other technologies usually follow, and vice versa.

Significant and widespread market offerings of DSL, cable modem, wireless, DBS and other broadband services allow consumers to choose their broadband medium.Among the nation’s top 10 broadband providers, six are cable companies, and four are RBOCs.SBC has 1.19 million DSL subscribers, and Time Warner has 1.66 million cable modem subscribers.[5]Deployment is driven by investment.Cable companies have invested $55 billion since the 1996 Telecommunications Act to upgrade plant and equipment.[6]As a result, The Wall Street Journal reports that, by the end of 2002, 90% of cable homes are expected to have cable modem[7] access, up from 74.5% today.[8]This plant upgrade, funded completely by private investment, has allowed cable to offer an ever increasing array of services – including analog video, high-speed Internet, digital video, Video On Demand (VOD), and in some cases telephone services as well -- to meet rising customer expectations.

Meanwhile, the top five DSL providers -- SBC, Verizon, Qwest, BellSouth, and Covad -- added customers at a rate of 12.9% in 3Q2001.[9]DBS providers such as DirecTV and DISH Network now provide a full range of broadband data services.DirecTV Broadband data service had the highest growth rate, almost 300%, in 3Q2001 among all broadband providers.[10]

The Gartner Group predicts that, by 2005, 12 million households will subscribe to cable modem services, nine million to DSL, and five million to fixed wireless systems.Assuming an adoption rate of 10% (the rate of cable Internet adoption), DBS subscribers will have 3.5 million broadband data subscribers by 2005 at current growth projections.Jupiter Research estimates that 35.1 million households will have broadband access by 2006.[11]This rapid growth and readily apparent competition among facilities-based providers stands as compelling evidence that federal policies to promote facilities-based competition and reduce regulation are working.

Your Notice asks whether there would be value in establishing a “single regulatory regime” for all broadband services.This notion is sometimes characterized as “regulatory parity” among competitors. We respectfully suggest that this would not be an exercise that would advance the goals of promoting broadband deployment.

As providers enter the broadband market, they do so with a variety of legacy regulatory frameworks.There are significant variations in the regulatory status of each category of broadband provider, some dating back many decades.Providers are subject to widely varying degrees of federal, state and local regulatory authority.

That said, “regulatory parity” has not been a goal of federal law, nor should it be.First, there is no way to achieve true parity absent a wholesale revision of regulatory regimes, which would require a hugely complex statutory revision – for no clear purpose.Second, the implication of “parity” is that regulatory burdens could be increased on some providers in order to bring them to parity with other providers; that would be counterproductive and contrary to the Administration’s goals of reducing regulation.Therefore, we respectfully recommend that the better policy goal is to find ways to reduce regulatory burdens on all competitors.As FCC Chairman Michael Powell stated in a recent speech, “Broadband service should exist in a minimally regulated space.”[12]NTIA should likewise conclude that public policy should focus on promoting new entry and reducing unneeded regulations, and not an effort to achieve “regulatory parity” for its own sake.

Comcast commends those Administration officials who have affirmed that facilities-based competition for telecommunications and broadband is the best path for ensuring consumer choice and promoting consumer welfare.[13]The national interest is served, first and foremost, by promoting investment in multiple, competing technologies.Facilities-based competition creates the right kind of incentives for investment, it is more likely to be sustainable, it promotes greater innovation, and it minimizes the need for government as referee or arbiter.

In addition, Administration officials have correctly observed that the demand for broadband services (i.e., the consumer “take rate”), not the supply of broadband facilities, may be the real issue requiring attention.The availability of attractive content and applications – for both residential and business purposes – will be an important factor in broadband penetration of homes and businesses, which in turn will determine the importance of broadband as a driver for the overall economy.

Comcast also believes that the federal government should monitor – and, where needed, address -- barriers to deployment that may arise from local government actions and actions of certain utilities.Local actions to collect fees that exceed the reasonable costs of street cuts create cost barriers to broadband deployment, as do escalating charges by utilities to cable companies for the right to attach broadband wires to their poles.

Finally, we note our concurrence with the additional points in the comments filed today by the National Cable & Telecommunications Association.

We would be pleased to elaborate on any of these views at your convenience, and we look forward to assisting you in any way as you fashion your policies on broadband.

Sincerely yours,

 

Joseph W. Waz, Jr.James R. Coltharp

Vice President, External AffairsSenior Director, Public Policy

and Public Policy Counsel

cc:Josephine Scarlett



[1] NTIA Broadband Inquiry Docket No. 011109273-1273-01, November 14, 2001.
[2] See Attachment 1, Comcast Corporation, Reply Comments for Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming, “Comcast Video Competition Replies,” CS Docket No. 01-129, September 5, 2001.
[3] Comcast has announced that its current high speed Internet customers who have been served through Comcast@Home will be transitioned to a Comcast-managed service starting in early 2002.See Comcast Press Release, “Comcast Unveils High-Speed Internet Network Plans; Gains Final Approval for Excite@Home Agreement,” December 11, 2001.The ability of our company and others to respond rapidly and in the best interest of our customers to the anticipated discontinuation of the Excite@Home service suggests that reliance on market forces, not regulation, continues to be the best public policy to promote broadband deployment.
[4] The business models for each of these technologies differ.Local exchange carriers, for example, are subject to common carrier obligations and are required to unbundle their communications service from Internet access (an “information service”).Cable companies, by contrast, provide high speed Internet access only on an unregulated basis and are not subject to common carrier obligations.Comcast is currently exploring, nonetheless, the technical feasibility and market demand for “multiple ISP access” through evolving arrangements with Juno and Earthlink.Refer to Comcast Press Release, “Comcast and Earthlink Announce Technical Trial of High-Speed Cable-Based Internet Service,” March 27, 2001; and Comcast Press Release, “Comcast and Juno Announce Multiple ISP Trial,” November 29, 2000.
[5] Telecom Resource Group quoted in Warren’s Cable Regulation Monitor, November 19, 2001.
[6] Robert Sachs, President and CEO NCTA, testimony to House Subcommittee on Telecommunications and the Internet on Multichannel Video Programming Distributor Competition, December 4, 2001, p. 2.
[7] Solomon, Deborah and Buckman, Rebecca, “Microsoft Hedges Its Bets to Thwart AOL Bid for AT&T Broadband,” The Wall Street Journal, December 5, 2001, p. B1.
[8] Morgan Stanley Dean Witter, Telecom – Cable Industry Report, dated June 29, 2001.See also Cable & Telecommunications Industry Overview, NCTA,December 2001, p. 2.
[9] Telecom Resource Group quoted in Warren’s Cable Regulation Monitor, November 19, 2001.
[10] Electronic Information Report November 16, 2001.
[11] ZD Wire, November 17, 2001.
[12] National Journal, November 10, 2001.
[13] Remarks by Nancy J. Victory, Assistant Secretary for Communications and Information, Department of Commerce, before Competition Policy Institute’s Conference, December 6, 2001; Remarks by Bruce P. Mehlman, Assistant Secretary for Technology Policy, Department of Commerce, before Association for Local Telecommunications Services, November 30, 2001.