With two commissioners departing, several key decisions under appeal and the country in the midst of a massive upgrade to its digital infrastructure, now is the time for Congress to revisit the mission of the Federal Communications Commission.
While the FCC oversees several communications services, broadband Internet access service is arguably the most important for our nation’s future. To understand how the agency has lost its course on broadband policy, consider the FCC’s recent report to Congress on the state of wireless competition.
The good news is that wireless competition is thriving (even though the commission is unwilling to admit it). The bad news is that so long as the FCC compartmentalizes wireless services from the rest of the broadband ecosystem, Internet policy will be misguided.
While the FCC’s wireless bureau counts the number of wireless providers in each census block, another division of the FCC tracks wireline broadband offerings with equal granularity. The two bureaus may as well operate in different continents: That the overlay of wireless on top of wired networks achieves nearly ubiquitous coverage is buried in an appendix in the wireline-centric broadband progress report. By symmetry, the wireless competition report relegates a discussion of “intermodal competition” — that is, competition among different broadband access technologies — to a two-paragraph afterthought near the end of its survey. This disconnect would be innocuous if policymakers were not reading this stuff.
The expansion of the country’s high-speed mobile broadband networks has enabled smartphones and tablets to access video and other media-rich content. According to the FCC’s wireless report, the broadband networks of the four largest wireless providers each cover at least 235 million Americans, and the broadband networks of three others (MetroPCS, Clearwire and Leap) each cover at least 93 million.
The 4G LTE mobile communication standard is the latest technology that enhances the speed and efficiency of wireless networks, making it a viable substitute for cable-modem connections. A June 2012 speed test by PC Magazine registered average 4G LTE download speeds of between 9 megabits per second (Verizon) and 14 Mbps (AT&T). By comparison, average cable-modem download speeds range from 14 Mbps (Insight) to 17 Mbps (Comcast and Charter). Yet the wireless competition report somehow claims that “mobile wireless Internet access service could provide an alternative to wireline service for consumers who are willing to trade speed for mobility,” as if wireless broadband were a vastly inferior service.
The same type of “wireless substitution” that we observed for voice services in the past decade is predicted to repeat itself for broadband. Cisco recently estimated that up to 15 percent of U.S. consumers could cut their broadband wireline cord in favor of a mobile data connection by 2016. And according to a Pew Internet survey, 17 percent of cellphone owners in 2012 did most of their online browsing on their phone, rather than on a computer or other device.
Whether delivered by fiber, wireless or satellite, broadband is a highly disruptive technology. For example, faster connections to the Internet have facilitated the rise of online video services, which threaten the traditional pay-television model. Anyone who has streamed “House of Cards” on Netflix or downloaded “Downton Abbey” from iTunes likely questions why they pay more than $60 a month for a package of 250 channels, most of which they never view.
Upgrades in broadband capabilities will only continue, however, if regulators provide a transparent regulatory environment that affirmatively encourages network owners to invest the capital necessary to build out next-generation digital infrastructure. Innovation does not pay for itself, and government is certainly not in a position to fund our nation’s broadband future with taxpayer dollars.
Policymakers can hasten our digitally connected future and expand economic opportunity for all by removing the regulatory underbrush that diverts capital away from advanced broadband networks and slows down the ability of companies to compete against each other.
Government can also lower barriers to new investment by deploying more spectrum for wireless broadband, and by permitting broadband operators to experiment with new delivery arrangements for websites, subject to a case-by-case review of any valid claims of discrimination.
Today’s communications landscape looks entirely different from yesterday’s, and the future promises untold innovation, faster speeds and greater access to high-speed Internet. To accommodate and nurture this evolution, the country needs a fresh and carefully tailored regulatory paradigm that fosters investment, innovation and competition throughout the broadband ecosystem.
Until Congress gives the FCC a new direction, we will get one report for wireless broadband services, another report for wireline services and confused Internet policies.
Hal J. Singer is managing director at Navigant Economics. He is co-author with Bob Litan of “The Need for Speed: A New Framework for Telecommunications Policy for the 21st Century.”