BUSH STILL UNDECIDED ON BROADBAND POLICY, POWELL WILLING TO LEAD

It’s still undetermined whether Bush Administration will create national broadband policy, Mehlman acknowledged in response to question at council meeting: “We are doing a lot of stuff on broadband. Whether to have a national policy is being discussed vociferously.” He said developing broadband policy had gotten some support, but President Bush hadn’t signed on yet: “It’s not for a lack of interest. There is still a lot to be hashed out.”

FCC, as “expert agency,” has major role in sorting out competing broadband demands, Mehlman said: “We put the best people we can think of at the FCC.” Tauzin-Dingell bill almost certainly won’t clear Congress because of Sen. Hollings’ (D-S.C.) heated opposition, Mehlman agreed: “It’s just a full employment act for lobbyists.” As result, he said, “the game is at the FCC.”

Mehlman said his “biggest fear” was impact of economic depression on telecom sector: “They may have fallen and can’t get up.” If that were true, he said, it could “drag the whole economy down.” Mehlman cited telecom sector’s debt overhang, reluctance to invest in new fiber networks, “Enron- itis,” RBOCs’ reduced incentives to invest in broadband data since there’s less competition from financially ailing CLECs and perceived overcapacity in medium-haul and long-haul fiber markets, though not in fiber to home.

Instead of focusing on fiber to home, Mehlman said broadband firms should work on delivering fiber to small businesses, which can be big consumers. Current broadband data take rate of 10-12% is “not such a problem that the government needs to step in,” he said, but govt. can encourage investment through such things as R&D tax credit, accelerated depreciation and Internet tax moratorium. Other govt. roles should include “leading by example,” partnering with industry to provide network security and educating and informing, he said.

Bush Administration still believes private sector is best able to solve digital rights management (DRM) issues, which some believe are limiting broadband demand, Mehlman said. He said Hollings’ plan for National Institute for Standards & Technology to set DRM standards might not work because “that’s not the way NIST normally operates.” He acknowledged that DRM issue was “nasty,” but said “we're still hopeful… I don’t think the Administration will step in yet. I personally believe technology will find a way.”

Asked whether industry-owned content distribution firms such as Movielink might raise antitrust concerns, Mehlman said he usually deferred antitrust questions, but added: “The combination of distribution and content can create great opportunities for business and mischief.”

Powell said at FCC’s International Symposium that every industry Commission regulated was affected by technology change and broadband policy. “It requires the FCC to lead, which is not the normal role for a regulatory agency,” he said. Powell also revealed strong supply-side view on broadband deployment: “You need to get it built first” because “you won’t know what you're talking about until you have the infrastructure.” He said FCC had developed several “guiding principles” in its approach to broadband policy. Among them: (1) Broadband has to be “ubiquitous,” which “takes time.” (2) Broadband is defined to include “any platform, not merely cable modem or DSL… We work to empower any technology.” (3) Broadband regulatory environment must support investment, preserving “a climate for innovation.” (4) Regulatory policies should be “harmonized across platforms.”

Symposium was first of what agency promised would be several public events in which international regulators are invited to talk with FCC officials about their approaches to common problems. Among international officials featured at this one was Michael Binder, asst. deputy minister of Industry Canada. Binder told audience that Canada shared U.S. view that broadband deployment was essential for economic development. He said his country’s biggest challenge was getting broadband infrastructure into remote areas, which account for some 80% of Canada’s populated land. Industry is more than willing to provide service in remaining 20%, urban areas that house 80% of population, he said. Dot- com bubble may have burst but it’s clear that consumers want Internet services, Binder said, and are voting with their actions and dollars. For example, 30% of Canada’s citizens are filing income taxes electronically, Binder said.

Canadian govt. has committed to providing hundreds of millions of dollars to offer infrastructure to communities, he said. “If you believe you need to provide water and sewage lines to remote areas, it doesn’t make sense not to provide the economic infrastructure [of broadband],” Binder said. Challenge is building “the transport link” across Canada’s wide distances to connect remote communities. It’s not government’s role to provide service to homes, Binder said: “That’s a private endeavor.” Some rural communities already are wiring themselves, which means “they can talk to themselves” but no one else, he said. He said Canada now was looking at satellite-delivered broadband technology to meet needs of remote areas. “It’s the same public policy issue that led to building highways and railways,” Binder said. Powell said some involved in policy debate agree with Binder that broadband “is like water or sewage” (comment that created ripples of laughter) but others, he said, viewed broadband as primarily an entertainment medium. If viewed as utility, “killer app” is obvious, Powell said, but not so if it’s viewed as entertainment. “It’s tough,” Binder agreed. “Those who develop applications say it’s a Catch-22, that if you don’t give them infrastructure you can’t develop applications.” Two policymakers also agreed it made sense to concentrate first on “institutions,” for example schools and libraries, which both countries have done through govt. funding.