FCC Engages in More Empty Broadband Showmanship

[Source: Broadband DSLReports.com, by Karl Bode, October 13, 2011]

'Connect to Compete' Plan Completely Ignores Competition

The FCC recently announced Connect to Compete, a national private and nonprofit sector partnership created to "increase broadband adoption and digital literacy training in disadvantaged communities throughout the United States." According to the FCC, the plan involves partnering with large carriers and think tanks to help bring the 100 million people without broadband service (some voluntarily) up to speed. What it appears to really entail is a mish-mash of existing FCC policies, several of which appear hollow upon closer inspection.

The primary thrust of the project involves the agency's plan for USF reform, the specifics of which have yet to be fully disclosed but are believed to be largely pulled from AT&T and Verizon lobbyist recommendations. The FCC's "Connect to Compete" website insists this reform could net "$1 billion or more per year in benefits for wireless consumers alone." However, unmentioned is the fact the plan will likely drive up prices for consumer broadband bills by raising the cap on USF fees charged by carriers above $6.50 per month.

What would consumers get for this money? Digging into the telco's USF plan, there's absolutely nothing there that suggests serious broadband expansion beyond what they'd already planned with upcoming LTE efforts. There's also absolutely nothing to suggest the FCC has a handle on auditing the USF and e-Rate program. Twenty-five billion dollars has been poured into large and small telco coffers over the years (in addition to billions in additional subsidies), and yet somehow our libraries still lack adequate bandwidth.

Readers should be able to conclude where most of this money actually went. Ignored by the FCC and the press is the fact that all the state and federal subsidies doled out to phone companies by now could have easily wired every U.S. home with fiber several times over. AT&T and Verizon should not be getting another penny in government subsidies, yet the FCC's USF reform will almost certainly involve additional handouts you'll be paying for in the form of higher broadband bills.

The other wing of the FCC's plan is focused on nudging corporations to cooperate in "digital literacy" efforts. Unfortunately, most of these programs, like the cable industry's "Adoption Plus" program, are little more than glorified advertisements for cable or other services. Other new efforts nudged forward by the FCC involve having Best Buy and Microsoft agree to offer basic computer training on basic email, Internet and word processing use - coordinated with the help of groups like Goodwill, the Boys & Girls Clubs, 4-H and the National Urban League.

While noble, again, these efforts don't do anything to really address the industry's biggest problem: broadband coverage, quality and cost issues created by a lack of real market competition, and the regulatory capture enjoyed by giants AT&T, Verizon and Comcast. Of the 100 million without broadband you can safely assume that a large chunk are older folks who simply don't want it - something the FCC's programs won't touch. Eighteen million can't get broadband, and millions more simply can't afford it.

Limited competition means limited incentive for price reductions, service improvements and footprint expansion. Already on unsure footing trying to impose what are really fairly timid network neutrality rules largely crafted by Google and Verizon, the FCC has made it very clear they have no intention of tackling competition. As we've noted previously, the agency's broadband plan is along this same vein: safe but largely empty policies driven by politics - frequently promising jobs, but ultimately retaining the status quo while ignoring a lack of industry competition.

Improving competition would involve standing up to large, politically influential companies like AT&T and making strong decisions to support truly disruptive policies like embracing open-access networks, allowing real free market competition to blossom within that framework. That's something neither campaign-cash-soaked political party has the intestinal fortitude to support. Instead, the FCC hopes the United States' lower broadband adoption rates (68% versus the 90% range for many Asian countries) can be easily fixed by a few classes, some new subsidies for the phone companies and a heavy dose of showmanship.