Before the
DEPARTMENT OF COMMERCE
National Telecommunications
and Information Administration
[Docket No.
011109273-1273-01]
RIN 0660-XX13
Notice, Request for Comments
on Deployment of Broadband Networks and Advanced Telecommunications
COMMENTS OF
THE
TELECOMMUNICATIONS
INDUSTRY ASSOCIATION
Matthew
J. Flanigan
President
Grant
E. Seiffert
Vice
President,
External Affairs and Global Policy
Derek R. Khlopin
Director, Law and Public Policy
1300 Pennsylvania Avenue, NW Suite 350
Washington, DC 20004
202.383.1480
December 19, 2001
COMMENTS OF
THE
TELECOMMUNICATIONS
INDUSTRY ASSOCIATION TO NTIA REGARDING THE DEPLOYMENT OF BROADBAND NETWORKS AND
ADVANCED TELECOMMUNICATIONS
I. Introduction
The Telecommunications Industry Association
(TIA) appreciates this opportunity to comment on broadband deployment in the
United States. TIA includes among its
membership 1,100 large and small companies that manufacture and provide
communications and information technology products, materials, systems,
distribution services, and professional services in the United States and
around the globe. TIA represents its
members on the full range of public policy issues affecting the
telecommunications industry, forges consensus on industry standards, organizes
and co-owns SUPERCOMM, the world's largest annual communications exhibition and
conference, and hosts the broadband-focused SUPERnet each year in Silicon
Valley.
TIA member companies offer for sale the wide range
of landline and wireless technologies, both terrestrial and satellite, that
enable high-speed and broadband access to the Internet for commercial and
residential users. TIA members sell to
all classes of providers holding the potential to provide these types of
services. TIA’s views thus are
necessarily both technology-neutral and service provider-neutral, affording it
a unique perspective.
TIA is very pleased to see NTIA taking an active
interest in issues surrounding broadband deployment. As the principal advisor to the President on telecommunications
policy, NTIA is in a unique position to make reasoned and well-informed
recommendations on what policies the Administration should support.
II. Specific Answers to NTIA Questions
A. What should be the primary policy
considerations in formulating broadband policy for the country? Please discuss
the relative importance of the following: access for all; facilities-based
competition; minimal regulation; technological neutrality; intra-modal competition;
inter-modal competition; and any other policy consideration.
TIA believes that all of the above considerations
are very important elements of a sound broadband policy. TIA also would add the speed of deployment
as an additional factor for consideration.
In general, a combination of policy and deregulatory considerations,
fiscal incentives, and government and private sector aggregated demand
strategies should be considered necessary ingredients in the formulation of a
U.S. policy on broadband deployment.
TIA has urged the President to make it a national
priority that all Americans get access to broadband communications services.[1] The need is particularly important if the
United States intends to maintain one of the leading positions among the world’s
top information technology economies.[2] The operation of the market likely will
demonstrate a typical diffusion pattern where some consumers have access to
services at an earlier point in time than others. The question is whether we can expect all Americans to get broadband access in a reasonable period of
time and, if not, what should be done about it. The answer to whether broadband services are made available to
most, if not all, Americans within the next five years may also affect the
competitive advantage of the U.S. in broadband technology and service
applications internationally. This is
because many countries, particularly in Europe and Asia, have set date-specific
targets within this time frame for achieving widespread access to both urban and
rural populations.[3]
TIA believes that competition is essential to drive
industry participants to invest in new technologies and their networks, in turn
leading to waves of innovation and protecting consumers from unreasonable price
escalation. Effective intra-modal
competition, particularly in the residential market, has proven difficult,
although it is not necessarily impossible in theory. In many ways, however, inter-modal competition may be even more
important for several reasons. The
existence, in the market, of similar services offered over competing technology
platforms expands the universe of continued innovative breakthroughs and
reduces reliance on a single class of infrastructure. The latter point is especially important in light of the need for
the network security and availability that redundant networks and facilities
can provide in the wake of the terrorist attacks on the United States.
For similar reasons, facilities-based competition
should be the ultimate objective.
Examination of the wording and legislative history of the
Telecommunications Act of 1996 reveals its drafters envisioned this goal. Certainly, some competitive service
providers need access to the essential facilities of the local loop, but a
business model relying exclusively on another company's assets must be viewed
as a short-range one, whether that competitive provider sees it that way or
not.
TIA believes that companies are not going to invest
substantially in upgrading their communications networks or installing new
facilities in a heavily regulated environment or one rife with regulatory
uncertainty. TIA thus supports the FCC
Chairman's objective of establishing a "minimally regulated space"
for broadband services.[4] Ultimately, the platform over which similar
broadband services are being offered also should not matter, although some
period of transition is likely before a true technology-neutral broadband
policy could be implemented. To that
end, TIA strongly believes that any move toward commonality in regulatory
treatment should be toward minimal regulation, rather than subjecting the
technologies of today and tomorrow to yesterday's regulatory morass. This is particularly important in light of
the nascent stage of broadband technologies.
The Communications Act is the law of the land, and its bedrock elements
of competition policy should continue to apply; however, within its pages is
the flexibility to allow their application to be governed by principles of a light regulatory touch for broadband
services.
TIA also is of the opinion that a regulatory
approach to diffusion of broadband availability may not be sufficient as a sole
determinant of U.S. broadband policy.
Fiscal measures, in the form of tax incentives, explicit and targeted
subsidies or pilot project funding, as well as low interest loans and
guarantees for infrastructure and service deployment should be considered as
well. A combination of regulatory and
fiscal incentives could provide additional flexibility, promote competition,
and bring advanced telecommunications services to unserved or underserved areas
that currently may be deemed by service providers as too risky or not
financially lucrative. Fiscal
incentives also may be necessary to maintain national competitiveness among
other countries that currently implement their own incentive packages.[5]
B. How should broadband services be defined?
Please discuss (1) what criteria should be used to determine whether a facility
or service has sufficient transmission capacity to be classified as
"broadband;" (2) how the definition should evolve over time; and (3)
the policy implications of how the term is defined.
TIA believes that the term
"broadband" has been used inappropriately and too generically in the
policy arena. The result has become
that policymakers and others fail to understand its essence and its usefulness
as a term of reference is compromised.
TIA thus has made an extensive effort to draw a distinction between the
Internet access services generally available in the residential market today
and the next-generation, higher bandwidth broadband communications technologies
that will make possible the converged voice, high-quality video and data
services that enable fast, content-rich applications.
In order for a communications
technology platform to be considered as supporting "broadband
services" in the truest sense, the user should have the capability to
transmit and receive high-quality video, high speed Internet access, and voice
telephony. The precise converged
services will evolve over time, and so will the conception of broadband. Today, however, the fact that the user
should be empowered to originate and receive high-quality video signals could
suggest a minimum transmission speed of 4 Megabits per second (Mbps) (a
standard compressed television signal currently requires 4 to 6 Mbps of
transmission capacity, although improvements in compression technologies may
change this). Others suggest 6
Mbps. TIA suggested 10 Mbps in comments
to the FCC in its cable open access proceeding.[6] TIA further has expressed support for a goal
of widespread availability of 100 Mbps connections by the year 2010.[7]
The fact of the matter is that
a lot of the newer services being offered today are not quite broadband,
although clearly most are improvements over standard dial-up Internet access at
a maximum speed of 56 kilobits per second (kbps). These services more appropriately should be deemed
"high-speed Internet access services."[8] If a decision, nonetheless, is made to use
the term "broadband" more generically to include essentially any
capability beyond dial-up Internet access speeds, TIA suggests that today's
high-speed Internet access services be referred to as "current-generation
broadband." The higher-speed
services suggested in the previous paragraph could then be labeled as
"next-generation broadband."
This distinction recognizes that "true" broadband is more than
experiencing somewhat quicker downloading of web page images and a slight improvement in rudimentary video
streaming. Rather, it is an entirely
new experience of connectivity that will enable yet-to-be-seen content-rich
applications and completely new functionalities.
TIA believes that while
policymakers need not get "hung up" on the exact speed thresholds
required for a technology or service to be considered broadband, it is
important to understand what broadband enables: converged voice, high-quality
video and data applications. It also
means that this combined platform of converged services challenges the
paradigms in place at the statutory and regulatory levels. Laws and regulations aimed at the basic
telephony world have become out of place, and they threaten the deployment and
further investment in these new technologies, as discussed further below.
C. Several studies indicate that the rate of
deployment of broadband services is equal to or greater than the deployment
rates for other technologies. What is the current status of (1) supply and (2)
demand of broadband services in the United States? When addressing supply, please
discuss current deployment rates and any regulatory policies impeding supply.
When addressing demand, please discuss both actual take rates and any evidence
of unserved demand. Please also address potential underlying causes of low
subscribership rates, such as current economic conditions, price,
cost-structure, impediments to the development of broadband content, or any
other factor. To what extent has the growth in competition for broadband and
other services been slowed by the existing rates and rate structures for
regulated telecommunications services?
TIA firmly believes that the lack of speed with which high-speed Internet access and broadband communications services are being rolled out across this country is troubling. While a variety of factors are contributing to low subscribership rates in today's consumer market for high-speed Internet access services, TIA refutes any notion that this is indicative of broadband’s failure or that broadband services are not of critical importance to the future of the United States.
First and foremost, rare is it where demand is stimulated in precise lockstep with supply (in this case, the infrastructure, services/applications and content). Thus, oftentimes the capacity, services and content will develop at different rates, thus creating the appearance of excess supply or demand. However, because of the nascent nature of broadband technology and the market distorting effects of current regulatory policy, TIA believes it is premature to judge broadband’s success or failure. On the other hand, it is not too early in the broadband story to begin addressing, in a meaningful way, the regulatory and market disincentives that impede investment in current-generation and next-generation broadband technologies.
Regarding demand for broadband and high-speed Internet access, the price of the service is a complicating factor. A primary consideration has to be the lack of effective competition and the price pressure on service providers that results when consumers have a choice among substitutable offerings. It also is clear that "price points" exist at which subscriber levels can be expected to either remain low or accelerate rapidly. This appears to be influenced by the fact that broadband applications and content are still in their early stages, meaning that many consumers may not see enough value in broadband services to pay current market prices.
Some argue that broadband "take" rates have exceeded those for other technologies when they were introduced, such as the television, audio compact discs (CDs), and the rural electrification program. TIA, however, questions whether the relevance of comparisons to other technology adoption rates has been established. Considering the impact of the first Internet wave on the economy and the lives of most Americans, broadband's infinite transformative potential makes it much more critical and urgent that its power be unleashed as quickly as possible. Its economic implications alone lend support to a view that the role of broadband deployment in helping today's gigantic U.S. economy continue to grow makes past precedents seem less significant. Another important distinction is that users already are accessing the Internet through dial-up methods, meaning that broadband is an expansion of current service (faster, more services). Consequently, it's logical that "early adopters" would be inclined to opt for the upgrade. On the other hand, CDs required an abandonment of consumer investment (tapes and LPs), televisions early on were beyond the reach of many Americans, and rural electrification required time intensive, massive facilities build out.
TIA believes that an important driver in demand for broadband communications services is the compounding effect that aggregated public sector demand can have on increasing the overall demand for improved telecommunications infrastructure and services. In the case of broadband, the government – at the federal, state and local levels – can itself benefit tremendously in terms of internal operational efficiencies, while simultaneously demonstrating to the public the benefits of broadband in several areas, including public services, procurement, health care, and education. Currently, use of broadband communications technologies in each of these areas is minimal or non-existent. The public sector has the opportunity to become an “IT Locomotive,”[9] leading the demand-pull not only for infrastructure, but also for content to meet the needs of these and other services. The Administration has acknowledged the significance of "e-government" initiatives. TIA is of the opinion that the government not only needs to become more "wired," but those wires must be broadband enabled.
The terrorist attacks on the U.S. and, as a result, the focus on homeland security also means that governments must address not only the public national communications infrastructure, but the security, redundancy, scalability and reliability of their own networks. Possible government beneficiaries of broadband use are limitless - the Department of Defense, law enforcement, the Federal Aviation Administration, immigration authorities, public health authorities, etc.
D. Should government adopt as a goal
"access for all" to broadband service? What would be the costs of
such a goal? What policy initiatives, if any, should be considered to achieve
that goal? Are there areas or persons that are unlikely to be served through
marketplace forces?
The government should have the objective of
ubiquitous availability of broadband
services. Government should remain
technology-neutral, however, regarding the methods of delivery of broadband
services. While the Universal Service
program in many ways has been a success in affording access to basic telephone
service for most Americans, the complicated hidden subsidy formulas inherent in
the legacy system could threaten the efficient development of a broadband
services market, thus inadvertently picking "winners and losers" in
the broadband space. It is very likely,
however, that typical broadband service providers will not target pockets of
the U.S. population. Thus, the
government likely will need to step in and help. Efforts are already underway, such as the strong bi-partisan
efforts to enact the Broadband Internet Access Act (S. 88/HR. 267), a bill that
would offer a two-tiered tax credit for deployment of current-generation and
next-generation broadband services.[10] In addition to these type of tax incentives,
other fiscal measures such as the provision of low-interest loans, explicit and
targeted subsidies, grants, pilot-project funding, or development funds are
other alternatives that could be considered in the context of developing a U.S.
national strategy to facilitate meaningful broadband deployment. Especially favorable and light regulatory
treatment for those companies investing in "risky" markets also could
be helpful. The availability of fiscal incentives, combined with policy and
regulatory measures to increase competition and spur innovation and deployment,
will enable the U.S. to maintain its international competitiveness in the
broadband market.
As mentioned earlier, the national priority of
enhancing homeland security also means putting an emphasis on improving
communications and information. This is
important not just for government entities but for all citizens and the
national economy. A robust national
telecommunications infrastructure, with redundant and secure facilities,
clearly is necessary in light of the permanent threat of further terrorist
attacks and the growing need of the labor force to work from home or
alternative locations in the event of travel restrictions, a city being
quarantined, or even primary workplace destruction. The potentially intensive use of communications technologies
makes it essential that broadband be at the center of these efforts.
E. Do the interconnection, unbundling, and
resale requirements of the Telecommunications Act of 1996 reduce incumbent
local exchange carriers' (ILECs') incentives to invest in broadband facilities
and services?
As NTIA of course is aware, the ILECs have been
making this argument for a while. Many
economists have expressed similar views.
TIA believes it holds some truth as well.
ILECs are by far the largest
class of facilities-based residential "last mile" telecommunications
service providers. They control
"essential" facilities, conduits and rights-of-way, and hence
effectively are the "gatekeepers" of the national, local wired
telecommunications infrastructure.
Recognizing, of course, that a wide variety of communications companies
contribute to the functioning and upkeep of the telecommunications network, in
the end, it is critical for the ILECs to make the investments needed to equip
their networks with the capability to meet the increasing demand for broadband
connectivity. An upgraded
telecommunications infrastructure is essential to its usability as an important
competitive alternative to the high-speed networks of cable operators, the
other primary communications "pipe" into most American homes at this
point in time.[11]
TIA observes that as ILECs have in fact slowed
down their capital expenditures in recent months and project further reductions
in spending for 2002, their investments in high-speed networks are suffering
the bulk of the reductions. They are hesitating to upgrade their networks
to enable remote subscribers to have access to DSL services, at least in part
because of regulatory obligations and uncertainty surrounding unbundling,
pricing, and collocation obligations.
Further, the ILECs continue to lay copper in new builds and total plant
rehabilitations when forward-looking and bandwidth-rich fiber solutions can be
deployed economically, again apparently at least in part due to the unbundling,
resale, and pricing rules.
In contrast, it has been documented that the
spending of the same ILECs on their wireless networks, a largely unregulated
and competitive side of the industry, has not suffered such a sharp
decline. This contrast is not likely a
coincidence. Uncertainty remains as to
what exactly the rules are and will be in the wired high-speed Internet access
and broadband services market. It would
seem rational for an ILEC to reduce or simply stop necessary network upgrades
if it fears bearing all of the risks of facilities upgrade investments and
being forced to share the results of these investments with its
competitors. Regulatory obligations
threaten to reduce the ILECs’ return on
investment while increasing their risks, thereby undermining the incentive to
innovate. The unfortunate result
is a lost opportunity to begin "future-proofing" the U.S.
telecommunications infrastructure.
F. Some have suggested that a regulatory
dividing line should be drawn between legacy "non-broadband"
facilities and/or services and new "broadband" facilities and/or
services. Is this a feasible approach? If so, how would it work?
TIA believes that this
line can and should be drawn if a broadband policy is going to be successful in
jumpstarting the necessary investment in technology upgrades that will make
broadband services more widely available.
In the fall of 1999, TIA
first called on the Federal Communications Commission (FCC) to immediately
forbear from applying the unbundling obligations in instances where the network
provider (i.e. an ILEC) installs
next-generation broadband loop facilities in new build and total rehab
situations.[12] TIA believes that the FCC can take this
immediate action to implement this proposal due to its limited scope and the
fact that legacy facilities would not be implicated.
Moreover, TIA further suggests
that the time has come to seriously address the regulatory barriers to new
investment in the deployment of current-generation high-speed Internet access
technologies to all residences. The
FCC's recently adopted notices of proposed rulemakings in two related
proceedings present an opportunity to begin this process.[13] TIA has asked the FCC to adopt a sense of
urgency in making the difficult but critical decisions that will begin shaping
the broadband regulatory paradigm.[14] Extending high-speed Internet capability to
all Americans must be an important national priority. Regulations that have the practical effect of slowing network
operators from extending out further the DSL capability of their networks need
to be re-examined. For advanced
services to be available to a substantial number of consumers, fiber must be
pushed out further and further into the telecommunications network, i.e. first to remote terminals and
eventually beyond, and electronics components upgraded. The FCC and state public utility commissions
must address whether collocation, unbundling and pricing rules are impeding
this new investment, and remove or substantially modify them if that's the
case. In other words, a new or modified
regulatory approach is appropriate for this new investment. TIA believes that this can be accomplished
while leaving the regulatory regime in place for the core copper "local
loop" facilities, so long as oversight of ILEC compliance with the Telecom
Act's requirements for the core local loop remain vigilant and enforcement is
carried out swiftly and effectively.
I.
What problems have
companies experienced in deploying broadband services via wireless and
satellite? What regulatory changes would facilitate further growth in such
services? Is available spectrum adequate or inadequate? What additional
spectrum allocations, if any, are needed?
Is available spectrum
adequate or inadequate?
Current spectrum is inadequate to meet the constantly escalating capacity needs
of the commercial wireless industry.
Subscribership continues to increase and the evolution to new
generations of wireless technologies are creating data applications and
services that consume substantial amounts of bandwidth for extended periods of
time. For example, consider the
situation with respect to third-generation (3G) mobile wireless services. Advanced wireless services will add mobility
and convenience to the broadband experience.
It is well documented, however, that the U.S. is well behind other
countries in rolling out these networks.
Another example is the public safety community’s needs. Very little spectrum is available for public
safety wireless broadband deployment, particularly for mobile
applications. Broadband
public safety applications might include full motion real-time video, wireless
high speed data networks, high speed data transmissions of very large files at
specified locations (hot spots), and short range wireless networking of radios
and accessories on an officer or within a vehicle. Just as public safety users require dedicated mission-critical
voice systems, they also need dedicated, reliable, secure and enhanced featured
broadband solutions. Fifty (50)
megahertz (MHz) of spectrum for public protection and disaster relief can be
made available at 4.94 - 4.99 GHz.
With regard to the use of unlicensed spectrum, the explosive growth of wireless
local area network (WLAN) technologies is expected to quickly deplete the
spectrum that currently is available for use.
What additional spectrum
allocations, if any, are needed?
Global harmonization of domestic spectrum allocations should be a key priority
in how the limited spectrum resources are managed in the U.S. Inefficiencies arise in the absence of
harmonization, and U.S. consumers and companies are the losers since
inefficiencies lead to delays in making advanced services and the newest access
devices available to the consumer, while simultaneously raising costs. Spectrum suitable for 3G applications should
be made available in bands with some commonality on the global level (i.e. within 1.71-2.7 GHz). Additional unlicensed spectrum allocations
should be considered. Finally, as noted
above, spectrum needs to be made available for public safety broadband
applications at 4.94 - 4.99 GHz on a global basis.
What regulatory changes would
facilitate further growth in such services?
In bands that require incumbents to be relocated, any auction proceeds should
be used first to fund any relocation.
In spectrum reallocation decisions, a general policy of affording the
licensees unbridled discretion to determine spectrum uses leads to spectrum
anarchy, which flies in the face of sound spectrum management. Technical compatibility needs to be part of
the spectrum planning process.
K. Would it be appropriate to establish a
single regulatory regime for all broadband services? Are there differences in
particular broadband network architectures (e.g.,
differences between cable television networks and traditional telephone
networks) that warrant regulatory differences? What would be the essential
elements of a unified broadband regulatory regime?
See
discussion in TIA response to question A.
L. Are there local issues affecting broadband
deployment that should be addressed by federal policies? Please provide
specific information or examples regarding these problems. Should fees for
rights of way and street access reflect costs in addition to the direct
administrative costs to the municipalities affected? To what extent do state
laws and regulations limit municipalities' ability to establish
nondiscriminatory charges for carriers' use of public rights-of-way? Please
discuss the most appropriate relationship between federal, state, and local
governments to ensure minimal regulation while removing disincentives or
barriers to broadband deployment.
TIA believes that service providers have documented
ample evidence that local issues are a substantial impediment to the rollout of
broadband services. TIA supports
efforts to remove these obstacles and to create a more level playing field on a
national basis.
N. With respect to any proposed regulatory
changes suggested in response to the above questions, can those changes be made
under existing authority or is legislation required?
TIA believes that the type of regulatory changes
discussed in these comments can be accomplished at the FCC and in the states,
where applicable. The
Telecommunications Act of 1996 was enacted as compromise legislation, understandably
a necessity in an industry with eternally warring factions. The result is that the FCC was left with
substantial discretion in how it implemented many of the provisions dealing
with competition in the local telecommunications services market. The FCC should be able to reconsider some of
the regulatory decisions it has made, or it can clarify the application or
non-application of regulations designed for voice telephony networks to the
broadband services market.
Additionally, Section 706 of the 1996 Act mandates that the FCC take
steps to promote the reasonable and timely deployment of advanced
telecommunications capability to all Americans. In so doing, it specifically points to Section 10 forbearance
authority. The three-prong test of
Section 10 should allow the FCC to forbear from applying regulatory burdens,
such as the Section 252 pricing rules, to the deployment of advanced
services. Finally, the courts have
played a role in "refining" the FCC's decision-making process on
issues related to unbundling and the U.S. Supreme Court may act similarly with
respect to pricing.
TIA is optimistic that the FCC, as part of its
multi-pronged review of the regulatory framework for broadband services, will
use all of its available authority to remove regulatory impediments to
investment in broadband-enabled technologies and promote facilities-based
competition.
III.
Conclusion
TIA applauds NTIA's support for the removal of
obstacles to broadband deployment. TIA
recommends that, as part of its domestic telecommunications policy, the
Administration make extending broadband and high-speed communications
capabilities to all Americans an important national priority.
TIA remains unsatisfied with the pace of broadband rollout in the United
States. In order to maintain U.S.
international competitiveness in the broadband market, policy and deregulatory
measures should be combined with the availability of fiscal incentives, such as
tax credits, low interests loans, explicit and targeted subsidies, grants and
pilot-project funding. TIA believes
that, ultimately, facilities-based competition is essential to drive industry
participants to invest in new technologies and their networks, in turn leading
to waves of innovation.
TIA requests that NTIA take into consideration the comments herein in its
efforts to promote the removal of regulatory and other impediments to increased
competitive investment in a wide range of broadband communications facilities.
Respectfully submitted,
TELECOMMUNICATIONS INDUSTRY ASSOCIATION
__________________________
1300
Pennsylvania Ave., NW Matthew
J. Flanigan
Suite
350 President
Washington,
DC 20004
Grant E. Seiffert
202.383.1480 Vice
President, External Affairs and Global Policy
Derek R. Khlopin
December
19, 2001 Director,
Law and Public Policy