Before the



Washington, D.C.  20230



In the Matter of                                                            )


Deployment of Broadband Networks                            )           Docket No. 011109273-1273-01

And Advanced Telecommunications                              )



















                                                                                    Daniel L. Brenner

                                                                                    Loretta P. Polk

                                                                                    David L. Nicoll

                                                                                    Counsel for the National Cable &

                                                                                       Telecommunications Association

                                                                                    1724 Massachusetts Avenue, N.W.

                                                                                    Washington, D.C.  20036-1903



December 19, 2001




INTRODUCTION........................................................................................................................... 1


A........ The FCC’s  Market-Oriented Approach Has Enabled Broadband Technology and Networks to Grow at a Remarkable Pace.................................................................. 5

B......... Cable Companies are Moving Forward with Various Multiple Broadband ISP Access  Scenarios through Technical Trials and Commercial Agreements................................. 8


A........ Deployment of Broadband Services......................................................................... 11

B......... Broadband Penetration............................................................................................ 15

C........ Access to All Americans.......................................................................................... 20

III.       BROADBAND SERVICES SHOULD BE DEFINED IN TERMS OF THEIR DOWNSTREAM CAPACITY........................................................................................................................ 22

IV.       GIVEN THE HISTORY AND RATIONALE FOR REGULATING broadband providers dIFFERENTLY, THE GOVERNMENT SHOULD NOT IMPOSE A “ONE SIZE FITS ALL” APPROACH TO BROADBAND POLICY....................................................................... 24

conclusion............................................................................................................................. 27



Before the



Washington, D.C.  20230



In the Matter of                                                            )


Deployment of Broadband Networks                            )           Docket No. 011109273-1273-01

And Advanced Telecommunications                              )







The National Cable & Telecommunications Association (“NCTA”) hereby submits its comments on the deployment of broadband networks and advanced telecommunications.  NCTA is the principal trade association of the cable television industry, representing operators serving over 90 percent of the nation’s cable customers.  Its members provide broadband Internet access services throughout the United States.  NCTA’s members also include more than 200 cable program networks, as well as companies that provide equipment and services to the industry. 


In this proceeding, the National Telecommunications and Information Administration (“NTIA”) seeks information on the state of deployment of broadband technology over a variety of delivery platforms.  NTIA invites comment on supply and demand for broadband services, the technical, economic or regulatory barriers to broadband deployment, and the primary considerations in formulating broadband policy.  The agency also asks, among other things, about the definition of broadband services and the pace of deployment.   

As policymakers, regulators, analysts and business people assess the future of broadband technology, it is important not to lose sight of how far the broadband industry has come in just five short years.  Since the 1996 Telecommunications Act, the cable industry alone has invested more than $55 billion in private capital to upgrade more than one million miles of plant with fiber optics, making cable’s networks two-way capable and highly reliable.  This new broadband infrastructure – which by year-end will be approximately 80 percent complete – is providing the pipeline for delivery of advanced services to more than 70 million households in urban, suburban and rural America.  These services include digital video (which offers more channels, better pictures, video-on-demand, and interactive program guides), and high-speed Internet service, cable telephony and interactive television.

By third quarter 2001, consumers had purchased more than 21 million new broadband service units (digital video, high speed Internet and cable telephony) from cable operators.  Over six million of these customers have signed up for cable modem service, which offers significantly faster transmission speed and “always on” capability.   

Cable’s $55 billion investment has been the catalyst for vigorous competition and rapid growth in the high-speed Internet sector of the economy.  The success of cable modems spurred the regional Bell operating companies to push forward with DSL technology, which had been developed more than a decade ago.  Indeed, it was only when cable launched affordable high speed Internet service that the RBOCs began to rapidly deploy DSL to their customers.  As NTIA’s recent Broadband Forum demonstrated, consumers now have a variety of competitive broadband technology platforms to choose from, including not only wireline cable modem and DSL service, but also MMDS/ITFS, satellite, and other wireless platforms.[1]


According to a recent Morgan Stanley Dean Witter report, nearly 95.1 million U.S. homes (or nearly 90% of homes passed by cable) should have access to cable broadband by year-end 2002.[2]  When combined with DSL and other distribution media, by mid-2001 broadband subscribership exceeded 8% of U.S. households.  Morgan Stanley estimates that by the end of this year, 27% of all Internet access subscribers will use some form of broadband Internet access as their primary means of accessing the Internet.[3] 

The evidence with regard to the availability of broadband services to all Americans is also extremely promising.  It is the practice of cable companies to serve their entire franchise areas.  As the cable industry moves toward completion of its infrastructure upgrade in the next few years, increasing numbers of subscribers will be offered broadband services.  This phenomenon is already being borne out in the FCC’s most recently reported zip code data.  According to that data, as of December 31, 2000, at least one subscriber in at least 75% of the nation’s zip codes purchased broadband services, and 96% of the population lived in these zip codes.[4]

NCTA’s comments also address the evolving definition of broadband services.  Under current technology, broadband service should take account of the substantially greater demand of consumers for downstream capacity.  Most cable systems have determined, based upon their analysis of usage requirements and bandwidth availability, that 128 kbps is adequate to


accommodate the current needs of broadband users under most circumstances.  But most cable systems have found significantly greater downstream rates, varying from 512 kbps to 3 Mbps, are optimal under today’s technology.  Over time, if consumers require greater upstream capabilities to accommodate new applications, a “bi-directional” definition may become appropriate.

The explosive growth and investment in broadband infrastructure since 1996 is a testament to the wisdom of the government’s policy of “vigilant restraint,” where regulators eschew government mandates in favor of monitoring carefully for market irregularities.[5]  As the technology evolves and consumer demands become clearer, broadband providers need the flexibility to adapt their business plans and respond to a shifting market.  Imposing complicated and burdensome regulation – where there is no evidence that government intervention is needed – would lock companies into particular business models and hamper their ability to respond to the dynamics of the marketplace.  It also would deter investment and innovation.    

Furthermore, a “one size fits all” approach to broadband policy would be equally bad.  It would ignore fundamental and sound historical differences in how various broadband providers are regulated. 

In sum, consistent with the deregulatory purpose of the 1996 Telecommunications Act, broadband policy has and should be rooted in encouraging competitive risk-taking, unleashing market forces, and monitoring for market failures.  Recent history has shown that competition, not regulation, will best further the public interest and serve the needs of consumers.

I.                   BROADBAND POLICY SHOULD CONTINUE TO FOCUS ON RAPID DEPLOYMENT THROUGH MARKET FORCES AND minimal GOVERNMENT INTRUSION                                                                         

A.                 The FCC’s  Market-Oriented Approach Has Enabled Broadband Technology and Networks to Grow at a Remarkable Pace               

Buoyed by government deregulation, the cable industry is investing billions of dollars in network enhancements, new facilities, hardware, and software needed to bring broadband to the American public.  It is spending millions more on research and development to keep pace with rapidly changing technology.  This investment provides an immediate improvement to traditional video and non-video services, and lays the foundation for full-scale delivery of integrated voice, video, and data services to consumers.  By integrating broadband facilities with rich content and features, cable has made cable modem service something new and valuable in the marketplace. 

The Federal Communications Commission’s policy of non-intervention while monitoring closely for market failures has fostered cable’s transformation to a broadband platform.  In section 706 of the Telecommunications Act, Congress directed the FCC to determine “whether advanced telecommunications capability is being deployed to all Americans in a reasonable and timely fashion.”[6]  Over the past two years, the FCC has concluded that broadband deployment is occurring in a reasonable and timely fashion and that the multiplicity of broadband providers engaging in the marketplace renders significant government involvement unnecessary.  In its first section 706 Report, the Commission noted the “large number of actual participants and potential entrants in this market,”[7] and stated that “all methods of providing additional bandwidth to customers, not just those methods provided by cable companies or other particular types of service providers” must be considered when developing federal broadband policy.[8]

In opposing calls to apply “prophylactic ‘open access’ measures on cable,” the FCC’s Cable Bureau found “no evidence of anti-competitive or monopolistic practices to justify the imposition of new regulations on cable companies” – particularly where it would have the unintended effect of impeding the rapid development of the broadband industry.[9]  The Commission’s Second Section 706 Report reaffirmed these conclusions.  Given the variety of providers using a multitude of technologies, the FCC held that the most effective way to meet the goals of Section 706 is to allow the market to develop free from regulatory intervention, because “competition, not regulation, holds the key to stimulating further deployment of advanced telecommunications capability."[10]

In the months since the last Section 706 report, the broadband market has become even more robust.  Competitors offering high-speed service have sprung up among incumbent local exchange carriers, competitive local exchange carriers, satellite providers, cable operators, wireless companies, and other entities.  According to a recent Yankee Group Report, alternative access platforms such as fiber-based technologies, fixed wireless, and powerline communications (PLC) will continue to drive broadband competition and availability.[11]  The report concludes that these alternative platforms “will continue to make inroads into the overall broadband competitive landscape” with “the ability to deliver converged solutions (i.e. voice, data, and video over a single network).”[12]

            Similarly, the National Research Council’s Computer Science and Telecommunications Board has just completed a comprehensive report, “Broadband: Bringing Home the Bits,” which examines the technologies, economics, policies and strategies associated with broadband deployment.[13]  In discussing the diverse and complex broadband environment, the Board points out:

While broadband is sometimes cast in terms of a horserace between DSL and cable and between the incumbents that use these technologies, the committee believes that the long term will be technologically diverse, reflecting geographical and market variation, the maturity of and experience with different technologies, topography, and the condition of existing infrastructure.[14]


As incumbents and new entrants sort out the combination of broadband applications that will attract Internet consumers currently using narrowband Internet service, analysts project a continued upward growth trend in broadband deployment and penetration in the next few years.[15] 

Under these circumstances, there is no need for regulatory intervention in the marketplace in order to promote the deployment of advanced broadband capability, or the availability of competitive alternatives to the delivery of advanced services.  As the FCC has concluded each time it has examined the state of the industry, “competition is emerging, rapid buildout of necessary infrastructure continues, and extensive investment is pouring into this segment of the economy.”[16]  And, as we show below, market forces in the cable sector alone are opening pathways to greater choice of Internet Service Providers (“ISPs”) and other developments in new technology.

B.                 Cable Companies are Moving Forward with Various Multiple Broadband ISP Access  Scenarios through Technical Trials and Commercial Agreements                                                                        

NTIA asks for information on cable companies that are currently engaged in evaluating how to accommodate multiple Internet Service Providers on the cable modem platform.  Cable companies have undertaken various initiatives to assess the technical, administrative and operational issues associated with offering multiple ISPs to cable modem subscribers.  These companies are conducting technical trials and signing commercial agreements with a number of unaffiliated ISPs.  For example: 

(1) AT&T Broadband.  AT&T Broadband conducted a successful six-month trial of multiple ISPs in Boulder, Colorado this year.  Before the trial began, AT&T had already invested $20 million in developing technology to facilitate the experiment and had enlisted more than 300 users and four ISPs.  During the trial, users managed their ISP accounts via a specially created software package, which allowed them to choose an ISP, change ISPs, vary speeds, seek customer care and troubleshoot problems with diagnostic tools.  Users were able to install the


software and register for an ISP in about five minutes.  AT&T extended the technical trial in a limited area of Boulder to further test the software and the billing and customer care systems.

(2) AOL Time Warner.  Through partnering arrangements with ISPs, Time Warner Cable is offering consumers a choice of ISPs in each of its top twenty divisions, serving over seventy percent of all Time Warner Cable subscribers.  Consumers in these service areas currently have a choice among three ISPs, and Time Warner Cable is working to implement additional agreements which will make it possible to offer these consumers a choice of at least five national ISPs, as well as local and/or regional ISPs in most divisions.  Time Warner Cable continues to negotiate additional arrangements with other ISPs, and is moving forward in deploying its multiple ISP initiative in its remaining systems.

(3) Comcast.  Comcast is conducting multiple ISP technical trials with Juno Online Services, Inc. and Earthlink on cable systems in the Philadelphia, Pennsylvania area.  Under the trial, selected Comcast customers will be offered the option of using Juno Express or Earthlink’s broadband service through a Comcast cable connection.  Comcast has said it hopes the trials will pave the way for a definitive agreement with these ISPs.

(4) Cox Communications.  On November 6, 2001, Cox and Earthlink announced the start of high-speed Internet technical trials over Cox’s El Dorado, Arkansas broadband cable system.  The trials resulted from an agreement reached between the two companies in April of this year.  In June 2001, AOL and Cox announced that AOL would join the El Dorado trial, offering its AOL Plus high-speed service.  Cox hopes to begin offering multiple ISP choice in some markets next year.

(5) Insight Communications.  Insight announced an agreement in April to install RiverDelta Networks broadband service routers for its residential and business customers, starting in the Lexington, Kentucky area.  These routers will allow delivery of tiered service in Insight’s high speed Internet access offerings and will also support offering of multiple ISPs over Insight’s broadband network.

The challenge facing all of these cable companies in accommodating multiple ISPs is managing the bandwidth effectively and preventing the network from becoming overloaded by the different needs of different providers and users.  In the beginning, some thought these challenges were insurmountable.  But the industry now understands that while it is a complicated and expensive effort to reconfigure headends and revise back-office systems to allow multiple ISPs either direct or indirect access, it is feasible without jeopardizing system management.    

Indeed, cable took the risk of entering the broadband field without knowing how high-speed Internet access would evolve and how subscribers would react to the new service.  It is only in recent years that equipment vendors have even begun developing tools to support multiple ISPs.  Operators are also grappling with the myriad of billing and customer care issues that arise from offering multiple ISPs to cable customers.  For example, if a malfunction in service occurs, cable operators must have systems in place to insure that their customers are not sent back and forth between the cable operator and ISP while seeking to resolve the problem. 

The cable industry is working hard to resolve these technical and operational issues.  The industry’s research and development consortium, CableLabs, launched its CableB2B program earlier this year.[17]  This initiative will create specifications that support the technical integration of cable system operators and ISPs.  Working with various vendors, CableLabs is proceeding to

resolve complex issues such as service provisioning, performance management, billing and customer care.  The goal is to make the availability of independent ISPs smooth and virtually seamless to the customer. 

The imposition of government regulation at this stage of this still-developing business would be counterproductive to the goal of consumer choice.  The record in the FCC’s inquiry concerning high-speed access to the Internet over cable and other facilities shows that mandating multiple ISP availability to consumers would draw federal regulators into lengthy and complicated proceedings, involving among other things, the rates, terms, and conditions of such access.  And it would embroil regulators in numerous complex technical issues, which are better left to private negotiations and commercial trial and error.   

As described below, the cable industry has made cable modem service available to 70 million American households and more than six million have subscribed to the service.  This growth would be completely stymied if complex – and clearly unnecessary – access obligations were now imposed on cable operators.  The next stage of broadband deployment – consumer choice of multiple ISPs in the cable environment – is being addressed through market trials and voluntary business negotiations under the watchful eye of regulators.

II.                BROADBAND SERVICES ARE BEING DEPLOYED RAPIDLY AND PENETRATION IS GROWING AGGRESSIVELY THROUGHOUT THE UNITED STATES                                                                                                         

A.                 Deployment of Broadband Services

The availability to residential consumers of cable system-provided broadband Internet access has grown dramatically in recent years.  According to a report issued several months ago by Morgan Stanley Dean Witter (“Morgan Stanley”), “Industry Overview: Broadband Cable Second Quarter Review,” by mid-2001 cable companies had made broadband Internet access available to 66,148,000 subscribers, or approximately 64% of homes.  This compares to 35,466,000, or 34% of homes, just eighteen months prior to that time, which represents an increase of 86.5% during this brief period.





Source:  Morgan Stanley Dean Witter


More importantly, Morgan Stanley projects that by year-end 2002, cable systems will offer broadband service to 95,184,000 homes, or more than 90% of their potential subscriber base.[18]  According to Morgan Stanley’s projections, the push in cable industry deployment between mid-year 2001 and the end of 2002 will increase the number of customers to whom cable’s broadband service is available by more than 29 million.  If these projections remain on track, the completion of the cable industry’s wiring of America for broadband Internet access is within sight.  Indeed, according to Morgan Stanley’s estimates, deployment will be substantially completed for seven of the eight largest cable MSOs by the end of 2002.  For these companies, and for many other firms, too, further increases in broadband availability after the beginning of 2003 will be due primarily to the growth of the populations within their service areas.

The rapid expansion of the availability of cable-delivered broadband Internet access has been facilitated by a regulatory environment that encourages broadband deployment, but does not compel companies to deploy the service through either legislation or regulation.  Cable-provided broadband Internet access is one of the great success stories of the 1996 Telecommunications Act to this point.  The data demonstrate the substantial growth in customers who have access to cable modem service over the short period of only a few years.  This remarkable expansion in customer access has occurred at an unusually rapid pace for a newly developing communications offering.

Moreover, cable companies face vigorous competition in the still developing broadband Internet access marketplace.  Telephone companies and DBS operators, in particular, have reacted to cable’s broadband service by developing and offering their own versions of broadband packages.

Telephone companies are actively engaged in competing with cable systems for broadband Internet access customers.  Morgan Stanley reports that the number of homes passed by telephone company DSL service increased from 25,809,000 at year-end 1999 to 37, 573,000 by the end of 2000.  Morgan Stanley’s estimate of future expansion in DSL availability is even more telling.  DSL availability is expected to increase to 51,548,000 by the end of this year, 63,601,000 by the end of 2002, 67,515,000 by year-end 2003, and 69,623,000 by December 31, 2004.[19]



Source: Morgan Stanley Dean Witter

In a continuing contest being fought out in the marketplace, cable systems are contending aggressively for the favor of broadband customers.  Consumers will decide the outcome of the contest based upon their assessment of the relative merits of cable broadband, DSL and DBS.  And, the providers of broadband service continue to contend with the dominant narrowband services provided by local telephone companies in conjunction with hundreds of ISPs. 

            Deployment of broadband Internet access by the cable industry is a success story in which marketplace forces, not regulatory mandates, have brought a valuable new service to residential consumers by large and small systems.  Consistent with cable’s practice of offering video programming throughout its franchised territories, cable systems are in the process of making broadband Internet access available in all areas which they are authorized to serve.  Cable’s system-wide service policy should ameliorate any concern that a “digital divide” might occur if broadband providers were to limit service to more affluent areas.  

B.                 Broadband Penetration

Based on data submitted by firms in accordance with the FCC’s reporting requirements, the agency found “continued and rapid growth of subscription to high-speed and advanced services on a nationwide basis.”  The FCC reported that, “as of December 2000, 4.7% of the country’s residences and small businesses subscribe to high-speed services and 2.6 % of the country’s residences and small businesses subscribe to advanced services.”  The FCC also found that while DSL subscribership had improved “significantly” relative to cable, cable remained in the lead.

            More recent data from Morgan Stanley confirm the continuation of this trend.  Cable modem subscribership, as of June 30, 2001, was 5.5 million, or 5.3% of U.S. households.[20]  DSL subscribership, as of the same date, was at 2.9 million customers, or 2.8% of U.S. households. 

These numbers are, however, somewhat deceptive.  A subscriber must generally acquire a PC prior to making use of a broadband Internet access service.  And the potential pool for broadband subscribers generally would consist of current narrowband Internet access customers.  Table 1 indicates when PC and Internet access device usage are accounted for, subscriber household penetration is 16% of U.S. households with PCs, and 19% of U.S. households with Internet access, as of June 30, 2001.[21]




(As a % of U.S. homes, PC homes and Internet device homes)




Penetration as a Percent of US Homes

Penetration as a Percent of PC Homes

Penetration as a Percent of Internet Homes

Cable Modem

5.5 Million





2.9 Million










8.4 Million




Source: Morgan Stanley Dean Witter and NCTA Research



The growth of broadband Internet access is particularly dramatic when measured against the expansion of narrowband dial-up Internet access service.  At the end 2000, the proportion of dial-up Internet access subscribers began to decline in relation to all Internet access subscribers for the first time.  Dial-up customer subscribership continued to grow in absolute terms, and this growth trend in the absolute number of dial-up subscribers is expected to continue for several years.  Nonetheless, Morgan Stanley estimates that by the end of this year, 27% of all Internet access subscribers will use some form of broadband Internet access as their primary means of accessing the Internet.[22] 






47,467,000 Subscribers

Source: Morgan Stanley Dean Witter

Movement in the direction of enhanced broadband relative to dial-up penetration is expected to accelerate rapidly.  By year-end 2004, total residential broadband customers – in the form of subscribers to cable modem, DSL, and other distribution media– is projected to be greater than total dial-up subscribers.





70,077,000 Subscribers

Source: Morgan Stanley Dean Witter


The above data demonstrate that consumers in virtually every part of the country have or soon will have access to broadband service.  There is not a deployment or availability problem.  Yet, even though broadband penetration has spread more rapidly than other consumer services have (e.g., color TVs, cell phones, CD players), some still ask why broadband take-up rates are not keeping pace with broadband deployment.  The answer seems to be a simple one: Many – if not most – consumers feel no need for high-speed access either because narrowband access is sufficient for their purposes or they have no need for high-speed service at all.  According to a recent survey by Hart Research and the Winston Group, among people likely to subscribe to high-speed Internet access, the obstacles are “price and lack of appeal.”[23]

            But even price does not appear to explain entirely why consumers do not take broadband service available to them.  For example, in La Grange, Georgia, Charter Communications has offered cable modem service for free to community residences for the past year.[24]  Much to Charter’s surprise, only a limited percentage of subscribers offered the free service have agreed to take it.  Charter discovered in La Grange that, even at subsidized rates, ubiquitous broadband penetration was not achieved.  Charter found that demand for broadband service, like the demand for other consumer services, even at the zero price, was a function of education, marketing, new applications and changes in consumer perceptions. 

Several conclusions can be drawn from the available penetration data.  First, the pace of broadband penetration, measured by the number of “raw” subscribers, satisfies the “reasonable and timely” standard of Section 706. Expansion of broadband penetration has been dramatic: the service has been available for only a short time, and subscribers generally have the choice of acquiring dial-up service at a lesser cost.  Projections of future growth by cable broadband providers and competitors indicate that these companies are helping to fulfill the goals of Section 706.

Second, broadband Internet access is a competitive service offering.  Consumers of broadband Internet access are increasingly enjoying the advantages of choice.  Telephone companies, which came late to the broadband market in response to cable’s initiative, are competing aggressively in increasing numbers of markets.  Moreover, in the future, the two more established players, cable and DSL, will not have the marketplace to themselves.  DBS and other wireless entities already are beginning to offer consumers additional facilities-based options.[25]

Third, some consumers remain reluctant to purchase broadband Internet access for reasons other than cost.  For these customers, greater demand will evolve over time as new applications develop and consumers perceive greater value in the product.

The FCC’s Section 706 reports have set the right regulatory tone.  By (1) maintaining vigilant oversight of deployment; (2) requiring the regular reporting of subscribership by all significant providers; and (3) evaluating the submissions of interested parties in annual Section 706 proceedings, the FCC has ensured its ability to act should it determine that market forces are not working efficiently.

C.                 Access to All Americans

In the Notice, NTIA asks whether the government should adopt as a goal “access for all” to broadband service.  Congress already signaled its desire to ensure the availability of broadband technology across geographic and economic lines when it enacted section 706 of the Telecommunications Act.  Section 706 calls for the deployment of “advanced telecommunications capability” on a “reasonable and timely basis” to “all Americans.”  Through its 706 proceedings and its semi-annual data reporting process, the FCC has gathered data on the state of deployment in all areas and among all groups.  The FCC has concluded that “by comparing levels of subscribership over time . . . [it is] able to determine the pace at which advanced telecommunications capabilities are being deployed in different parts of the country and across different demographic groups.”[26]

The FCC is also able to evaluate the state of deployment in potentially underserved areas by examining the state-by-state data submitted by reporting companies.  If, for example, the aggregate data contained in reports submitted to the agency demonstrate a trend that subscriber counts in the more rural states are lower than would be anticipated solely by state population trends, one possible explanation is that broadband service is not as widely available in these areas as is other jurisdictions. 

The zip code data gathered semiannually through the FCC’s Form 477, which reports whether at least one subscriber is receiving broadband Internet access in a particular zip code, is also instructive.  Zip codes divide the nation into tens of thousands of geographic subsets.  If a disproportionate number of zip codes in which service is not offered were to match the census definition of a rural area or an area in which a disproportionate number of low-income persons reside, the FCC might conclude that advanced broadband capability is not being made available fast enough to these areas.

For example, Mediacom, a cable company serving the nation’s smaller markets, is providing broadband service to small, rural areas such as Pocahontas, Fairbank and Manly, Iowa.  In fact, over 90% of the communities Mediacom serves in Iowa contain fewer than 20,000 inhabitants, and about 50% contain fewer than 2, 000 inhabitants.  Since its inception six years ago, Mediacom has privately invested hundreds of millions of dollars to provide state-of-the-art broadband products – from high speed Internet services to advanced digital programming – to previously under-served communities.   Similarly, Midcontinent Communications, a cable company serving 200,000 subscribers primarily in North and South Dakota, has spent over $23 million in the past two years to upgrade facilities to provide high speed Internet access and advanced services to rural communities in South Dakota. 

The FCC’s company-wide subscribership, state-by-state and zip code data, as well as the data contained in the Morgan Stanley reports, evidence significant expansion in service availability to low-income and rural areas.  According to the FCC’s Third Section 706 Notice, “as of December 31, 1999, there was at least one subscriber to high-speed services in 56% of the country’s zip codes, and 91% of the country’s population lives in those zip codes.  By December 31, 2000, 75% of the country’s zip codes had subscribers reported and 96% of the population lived in those zip codes.”[27]  This trend demonstrates considerable growth in high-speed service availability to increasing numbers of geographic areas, as well as the general availability of high-speed services without regard to an area’s income.

The trend toward increased service availability is further demonstrated by the FCC’s disaggregation of geographic area and income data.  According to that data, by December 31, 1999, only 19% of the most sparsely populated zip codes had a single subscriber, but a year later 35% of these zip codes had at least one subscriber.[28]  The FCC also reported with respect to low-income areas that as of December 31, 1999, 42% of “low-income” zip codes contained at least one subscriber, but by December 31, 2000, 56% of “low-income” zip codes had at least one subscriber.[29]  The FCC’s Form 477 data also reveal significant gains in service availability to small towns and tribal lands.[30]

The FCC’s data show decisive trends toward increased broadband subscribership and the availability of broadband services.  This data, as well as the projections in the Morgan Stanley reports, strongly suggest that the Section 706 vision of widespread availability of broadband services will be realized in the next several years. 

III.             BROADBAND SERVICES SHOULD BE DEFINED IN TERMS OF THEIR DOWNSTREAM CAPACITY                                                                           

            NTIA asks how broadband services should be defined.  Currently, the FCC defines “advanced telecommunications capability” as “having the capability of supporting, in both the provider-to-consumer (downstream) and the consumer to provider (upstream) directions, a speed (in technical terms, ‘bandwidth’) in excess of 200 kilobits per second (kbps) in the last mile.”[31]  This symmetrical approach does not properly account for the substantially greater demand of consumers to receive broadband transmissions.

Consumers who choose to acquire cable modem service focus almost exclusively on the downstream capability.  The vast majority of these residential customers do not operate servers in their homes.  As a result, they do not need the upstream speeds required to send sizable quantities of information to others.  Instead, they want to access data from the Internet or from other users efficiently, primarily in the form of mouseclicks or text from a computer keyboard.  Even though uploading of graphics related to the construction of a personalized web page may require more “upstream” capacity, this comparatively rare event does not warrant defining “upstream” and “downstream” capacity symmetrically.  The definition of advanced capability should be modified, therefore, to account for the fact that at present few residential customers demand 200 kilobits in the upstream path.  Cable systems have determined, based upon their analysis of usage requirements and bandwidth availability, that 128 kbps upstream is the optimum speed to meet the needs of subscribers.  Upstream capacity of 128 kbps is fully adequate to accommodate current and foreseeable needs of broadband users under most circumstances. 

A minimum downstream capacity of 200 kbps satisfies the FCC’s current standard for satisfying the requirements of broadband customers.  But most cable MSOs exceed the minimum 200 kbps downstream goal established by the FCC.  By managing peak data rates to optimize end-to-end performance, they are able to provide superior service to customers.  Cable company downstream rates vary from 512 kbps to 3 Mbps.

Traffic on the cable plant so that it operates at optimum upstream and downstream data rates are interrelated activities that must be managed.  Proper selection of the upstream and downstream data rates facilitates the efficient functioning of the network.  If upstream rates are set too high, for example, the available downstream capacity will be limited.  By setting the peak upstream rate at 128 kbps, the network is optimized to provide the very fast downstream rates that consumers expect from their broadband cable networks.   

The definition of advanced services will evolve over time.  As it does, consumers may require broadband upstream capabilities to accommodate new applications.  A “bi-directional” definition may be appropriate under these circumstances.  Until that occurs, an asymmetrical approach is the right course.          


            NTIA also asks whether it would be appropriate to establish a single regulatory regime for all broadband services and whether different broadband network architectures warrant different regulatory treatment.  Ideally, the government should promote competition via a technology neutral paradigm.[32]  But here “a one size fits all” approach would ignore fundamental differences between the broadband industries.  Congress purposely created different statutory regimes for different industries; cable and telephone services, for example, are regulated differently.  Thus, while regulatory parity is often a laudable goal in communications policymaking, applying a single regulatory regime may not fit where there are different histories, and legacy regulations, underlying each industry. 

Video programming, for example, delivered by broadcast, cable, MMDS, OVS and DBS looks and feels the same to the consumer – in fact, the programming is virtually indistinguishable – but the delivery of the programming by each of those distributors is subject to different rules for different reasons.  Cable and DBS are a good example. 

With respect to public interest obligations, the FCC declined to impose upon the DBS industry the broad range of regulations imposed on cable operators, such as local franchising, franchise renewal procedures, franchise fees, program access rules, and tier buy-through requirements, despite requests by some for regulatory parity.  The FCC decided that “DBS and cable are separate and distinct services, warranting separate and distinct obligations.”[33]  In limiting DBS’ regulatory burdens, the FCC was particularly mindful of DBS as then a “relatively new entrant attempting to compete with an established, financially stable cable industry.”[34] 

Moreover, cable and DBS services have very different set aside obligations for educational (and in cable’s case governmental and public access) programming.  In addition, cable services, unlike DBS services, are subject to generally applicable local taxation. 

Different regulatory treatment exists even within industries.  Not all local exchange carriers are regulated in an identical fashion, and even incumbent local exchange carriers are subject to different levels of regulation if serving rural areas or fewer than two percent of the nation’s subscriber lines in the aggregate or if they are Bell or non-Bell companies. For instance, Sections 251 and 271 of the 1996 Act draw stark distinctions between the obligations of CLECs, ILECs, and ILECs that are Bell telcos.[35]

ILECs and cable operators have a vastly different regulatory history and stand at vastly different places, in the communications marketplace, and have deployed vastly different broadband networks.  Section 621 of the Act, added in the 1984 Act, abjures common carrier treatment of a cable system which provides cable service. This statutory provision affirms decades-old rejection of a common carrier regime for cable television, despite policy advocates to the contrary.[36]  Cable companies are just beginning to serve telephone and Internet customers, and the FCC has so far declined to apply a common carrier style regulation, with no Commissioner advocating that path, despite appeals to move in that direction.

            ILECs, in stark contrast, have nearly all telephone and dial-up Internet access customers, an inevitable consequence of their ubiquitous facilities-based carrier status in the United States.  This nation-wide service is the result of decades of federal and state common carrier regulatory policies, from universal service to access charges, designed to promote affordable and available dial-up service.  That basic infrastructure used by ILECs to provide high-speed services was deployed under a regulatory regime that shielded them from competition and funded their investments with captive ratepayer charges.  And the ILECs faced no research and development risk with regard to the use of DSL technology – which was developed by Bell Labs in the 1980s.  Cable companies are risking private capital to develop and deploy cable modem services while trying to attract customers in a fiercely competitive market.  Whatever the case for relief from that regulatory for Bell ILECs may be, that case must not ignore the very different regulatory origins and capital availability and risk inhering in the creation of the cable and telephone networks.

Imposing a “one size fits all” approach on broadband deployment is particularly inappropriate where it fails to recognize the disparate market power of competitors.  This is particularly so where it would mean adding another layer of regulation to an industry for no other reason than to achieve some artificial parity.  Congress treated cable and telephone companies differently for good reasons. Regulators treat incumbents and new entrants, and seemingly like-service providers, differently to promote a variety of policy objectives – not the least of which to foster new technologies and competition.  Sound public policy is founded on careful consideration of an industry’s individual circumstances in the relevant market, not blind notions of regulatory parity. 


            As the foregoing evidence shows, there is an abundant supply of broadband technology and infrastructure available to the American public.  While the demand side of the broadband equation is still-evolving, as consumer interests and expectations take hold, the evidence shows that broadband providers, in fierce competition, will deliver the mix of services desired by consumers without reliance on government intervention.


                                                                        Respectfully submitted,



                                                                                    Daniel L. Brenner

                                                                                    Loretta P. Polk

                                                                                    David L. Nicoll

                                                                                    Counsel for the National Cable &

                                                                                       Telecommunications Association

                                                                                    1724 Massachusetts Avenue, N.W.

                                                                                    Washington, D.C.  20036-1903


December 19, 2001

[1]     NTIA Broadband Forum, October 12, 2001. 

[2]    “Industry Overview: Broadband Cable Second Quarter Review,” Morgan Stanley Dean Witter, August 29, 2001, at 10 (“Morgan Stanley Second Quarter Report”)(Attached as Appendix A).

[3]     Id.

[4]     Inquiry Concerning the Deployment of Advanced Telecommunications Capability to All Americans in a Reasonable and Timely Fashion, and Possible Steps to Accelerate Such Deployment Pursuant to Section 706 of the Telecommunications Act of 1996, Third Notice of Inquiry, FCC 01-223, rel. Aug. 10, 2001 at ¶9 (“Third Section 706 Notice”).

[5]     “FCC Chairman Kennard Shares Goal of Local Governments to Achieve Open Access, Continues to Believe that Vigilant Restraint is the Right Way to Get There”, FCC Press Release, August 11, 1999; Cable Services Bureau, Federal Communications Commission, Broadband Today, A Staff Report to William E. Kennard, Chairman, Federal Communications Commission, on Industry Monitoring Sessions Convened by Cable Service Bureau (1999) (“Broadband Today”).

[6]     47 U.S.C. §706.

[7]     Inquiry Concerning the Deployment of Advanced Telecommunications Capability to All Americans in a Reasonable and Timely Fashion, and Possible Steps to Accelerate Such Deployment Pursuant to Section 706 of the Telecommunications Act of 1996, 14 FCC Rcd 2398, 2424 (1999)(“First Section 706 Report”).

[8]     Id. at 2449 ¶100.  In its broadband report, the FCC’s Cable Services Bureau confirmed that the “ policy of monitoring and restraint facilitates development of a fertile marketplace and consumers are best served if the broadband industry segments continue to pursue market-based solutions that will speed the deployment of broadband….  Market competition is developing in the absence of government intervention.” Broadband Today at 33-34.

[9]     Broadband Today at 42-44.

[10]   Inquiry Concerning the Deployment of Advanced Telecommunications Capability to All Americans in a Reasonable and Timely Fashion, and Possible Steps to Accelerate Such Deployment Pursuant to Section 706 of the Telecommunications Act of 1996, 15 FCC Rcd 20913, 21004 (2000) (“Second Section 706 Report”).

[11]   “Alternative Access Platforms Challenge Cable Modem’s and DSL’s Domination of Consumer Broadband Market”, Press Release, The Yankee Group, December 11, 2001 (discussing report entitled “Fiber-to-the-Curb, Fiber-to-the-Home, Fixed Wireless, and Powerline Communications: Threatening Cable Modem’s and DSL’s Hegemony?”).

[12]   Id.

[13]   “Broadband: Bringing Home the Bits,” Computer Science and Telecommunications Board, National Research Council (2001).

[14]   Id. at A-1.

[15]   See e.g., a recent study by Strategis Group Inc., which shows that customer satisfaction with high speed Internet services is high. Their research shows that the vast majority of both cable modem and DSL broadband Internet subscribers are satisfied with their service and would keep it even if the monthly rate increased by $10, “Satisfaction with Residential Broadband Increasing Study Shows,” Communications Today (, November 9, 2001.

[16]  Second Section 706 Report, 15 FCC Rcd at 20918 (2000).

[17]   “CableLabs Announces Cable B2B Program,” Press Release, May 4, 2001.

[18]   Morgan Stanley Second Quarter Report at 10.

[19]   “Industry Overview: The Sequel: Open Access is Better,” Morgan Stanley Dean Witter, Jun. 29, 2001, (“Morgan Stanley: The Sequel”).  Attached as Appendix B.

[20]   Morgan Stanley Second Quarter Report at 9.

[21]   Id.

[22]   Morgan Stanley: The Sequel at 10.

[23]   See also “Rating Cable Modem, DSL, Dial-up: What Consumers Are Saying, CTAM and Harris/Interactive, October 2001, at C-1.  (“Just like any other technological innovation, high-speed Internet service will reach critical mass and sustainability only when consumers perceive it as something of real and practical value.  With this in mind, high-speed service providers should promote customer-centered features and benefits of their services that will be perceived by consumers as critical and integral to their daily life.  As a result, consumers feel they can justify the relatively high price of high-speed services.”).

[24]   See “A Georgia city decided to provide its residents with a year of free ‘Internet access.  But only half have signed on.  Why La Grange isn’t more wired,” The Atlanta Journal and Constitution, Sept. 2, 2001, at 1Q.

[25]   See “StarBand Launches Third Generation Product for Two-Way, High-Speed Satellite Delivered Internet Service,” StarBand Press Release, Jun. 18, 2001.  StarBand reported that it had “installed over 40,000 satellite modems across the U.S.”

[26]   Third Section 706 Notice at ¶9.

[27]   Id. at ¶13 (citation omitted).

[28]   Id. at ¶14.

[29]   Id.

[30]   Id. at ¶15.

[31]   First Section 706 Report, 14 FCC Rcd 2398, 2406 (footnote omitted).

[32]   See “Removing Roadblocks to Broadband Deployment”, Speech by Nancy J. Victory, Assistant Secretary for Communications and Information, U. S. Department of Commerce, before the Competition Policy Institute, December 6, 2001.

[33]   Implementation of Section 25 of the Cable Television Consumer Protection and Competition Act of 1992; Direct Broadcast Satellite Public Interest Obligations, 13 FCC Rcd 23254, 23276-79 ¶¶ 56-61 (1998).

[34]   Id. at 23278 ¶ 59.

[35]   Compare 47 U.S.C. § 251(b) with id., §251(c) and id., §271.

[36]   Philadelphia Television Broadcasting Co. v. FCC, 359 F.2d 282 (D.C. Cir. 1966).  (“It is the FCC’s position that regulating CATV systems as adjuncts of the nation’s broadcasting system is a more appropriate avenue for Commission action than the wide range of regulation implicit in the common carrier treatment urged by petitioners.  This seems to us a rational and hence permissible choice by the agency.”)