TELECOM EXPERTS DEBATE WHY BROADBAND SUBSCRIPTION LACKS
Panelists at Broadband Outlook 2002 conference Wed. gave every reason possible for why consumers weren’t subscribing to broadband facilities but came to few conclusions. They looked at lack of adequate broadband facilities, not enough applications and too-high prices -- the usual 3 culprits -- but agreed only that regulators must be careful because their actions could have strong impact on broadband’s future. Conference, primarily sponsored by NTCA, is one of several that have been held recently to debate best way to encourage broadband deployment.
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After FCC officials said they were working on definitions to help clarify debate, Jonathan Taplin, CEO of Internet content provider Intertainer, said he didn’t understand “what’s so complicated” that required definition. Broadband is simply 750 kilobits per second and above, he said. FCC Common Carrier Bureau Chief Dorothy Attwood said it was “not that simple” because Communications Act created sets of regulations depending upon how service was delivered. “When you talk about providers competing across platforms, different regulatory treatment” is required, which in turn complicates way they operate in market, she said. When Taplin repeated that definition of broadband looked simple to him, Attwood said that was part of problem. She said regulatory frameworks weren’t devised from “common sense perspective” but rather reflected historic frameworks and FCC was trying to figure out how to adjust those frameworks to fit new technology.
NTIA Dir. Nancy Victory said govt. was following several guidelines in reviewing broadband issue: (1) Market rather than govt. should drive deployment. (2) Policies should encourage facilities-based competition, though not to exclusion of resale. (3) Policies should strive for regulatory parity among different platforms. (4) Regulators must be mindful of different needs of urban and rural areas. (5) Enforcement is critical once regulatory framework is in place. Victory said NTIA would hold “spectrum summit” soon to look at those issues, which include more than broadband needs. She also shared tidbit of her personal history. She said her father was head of program syndication firm Victory Television which held syndication rights to Hill Street Blues, St. Elsewhere, WKRP in Cincinnati. As youngster, “I was my father’s personal focus group,” often watching TV shows at his request to test her reaction.
“This is a platform that has not yet seen its mass market movement,” said Legg Mason analyst Blair Levin in analysts’ panel. Among Levin’s predictions: (1) Bells will get some deregulation, though “not as fast or extensive” as they would like. (2) More wireless spectrum will become available, “but not the kind that would enable wireless to compete with cable modem service and DSL in the near future.” He said best opportunity for wireless broadband was Dept. of Defense spectrum, which became unavailable after Sept. 11 attack. (3) “Winners” in race to broadband included AOL, which he said “can’t not win” because it was so far ahead in narrowband that leap to broadband was relatively easy. Also cable industry because it had “best technology.” Satellite business is “potential winner” because it’s most economical provider in some areas. (4) Overbuilders will flourish if regulatory barriers such as rights-of-way are eased. (5) “Bells will win some and lose some.” Their problem is “cannibalization” of their services by other technologies, he said. (6) Losers include data LECs because “the niches they provided were not big enough,” he said. “The future belongs to large, vertically integrated” businesses such as cable and DSL.
About 75-80% of consumers have access to cable or DSL, but only 10% of them subscribe, said Robert Pepper, chief of FCC Office of Plans & Policy. However, he said, it took 10 years for VCRs to reach 10% penetration, 4 years for PCs. There are things govt. shouldn’t do, Pepper said: (1) Agree to “give me a monopoly and I'll give you broadband” requests. (2) Favor one technology over others through subsidies. He said FCC was looking at definitions in 2 proceedings: (1) One already under way involving cable access. (2) DSL item asking similar questions that Commission promised to consider in Nov. when it approved SBC’s latest Sec. 271 application.
Dale Hatfield, U. of Colo. prof. and ex-chief of FCC’s Office of Engineering & Technology, said different regulatory solutions would apply, depending on whether broadband problem was seen as caused by inadequate infrastructure or lack of applications. In addition, market isn’t clearly one of monopoly or competition, he said: “We're stuck in this place in the middle. If there is pure monopoly, we know what to do. If there are 7 or 8 competitors, we also know -- get out of the way, maybe with some interconnection rules. There’s not enough competition to get rid of access requirements, but enough competition to be uncomfortable about regulating.” Hatfield expressed strong views about one potential definition, saying it would take “artful writing” to classify broadband as information service. “When a packet is sent unchanged [over Internet] I don’t understand how that is not telecommunications service.” -- Edie Herman
Broadband Notebook…
Retailers can narrow gap between availability and adoption of broadband by helping consumers experience various options, CEA Senior Industry Analyst Sean Wargon said. Issue is not one of deployment but adoption, he said, pointing out that only 9% of households had adopted broadband despite 68% availability. Speaking at broadband seminar in Washington Wed., he said one of reasons for consumer reluctance was “poor value proposition.” Cost is prime consideration, he said, and consumers didn’t want to pay too much to single provider. They also don’t like penalties that result from not taking one service such as cable that comes with package offered by providers, he said. CEA research showed that consumers were largely undecided about type of provider they wanted, Wargon said, and there was room in market for all provider types. To spur adoption, he said, industry must: (1) Stimulate consumer interest. (2) Encourage competition in marketplace. (3) Ensure last-mile option. CEA expects turnaround in 2002 resulting in doubling of broadband users to 20 million, he said. In paper circulated at forum, CEA said ultimate goal should be to have broadband connectivity nationwide at minimum speed of 100 Mbps, which is deployment goal of many countries in Europe and Asia. It also sought tax incentives for broadband deployment, removal of regulations that “inadvertently” discouraged rollout and reservation of spectrum for future rollout of broadband wireless technology.