The FCC’s Broadband Plan: The Devil Will Be in the Details

Politico’s Playbook earlier today released what is described as “a late draft” of the executive summary of the FCC’s Broadband Plan, due to be delivered to Congress Wednesday.

The document is long on generalities and short on specifics, except perhaps with Universal Service Fund reform, for which recommends path to shift from the existing High Cost Fund primarily a vehicle for voice service, to two funds that would aimed at greater broadband deployment.

Overall, the summary offers shout-outs to competition policy and new spectrum rules, and outlines six goals for the next ten years, the first being 100 Mb/s to 100 million homes, which had been expected. Other goals are:

  • The United States should lead the world in mobile innovation, with the fastest and most extensive wireless networks of any nation.
  • Every American should have affordable access to robust broadband service, and the means and skills to subscribe if they so choose.
  • Every American community should have affordable access to at least 1 gigabit per second broadband service to anchor institutions such as schools, hospitals and government buildings.
  • To ensure the safety of the American people, every first responder should have access to a nationwide, wireless, interoperable broadband public safety network.
  • To ensure that America leads in the clean energy economy, every American should be able to use broadband to track and manage their real-time energy consumption.

These are all laudable, to be sure, but the FCC does not, at least not in the exec summary, spell out how interventionist a role it sees for the U.S. government. For example, while the FCC talks about protecting and encouraging competition, will it recommend the deregulatory model established by the Reagan FCC and carried over through the Bush, Clinton and second Bush administrations, or will it urge the Obama model of directing subsidies to favored companies and technologies with little regard for their realistic market potential? The former led to an explosion of innovation and the competition we see today, both in wireline and wireless. The latter, as we’ve begun to see in Obama’s energy policy, stands to be a little more than a huge transfer of wealth and investment from successful companies and entrepreneurs to rent-seeking corporations with better political connections.

The FCC’s ideas for USF reform, however, should start an interesting policy discussion. The commission proposes two new funds that would ostensibly replace the current High Cost Fund, which stood at $4.5 billion as of 2008. The first, a Connect America Fund (CAF), would support the provision of affordable broadband and voice with at least 4 Mb/s actual download speeds (how this jives with the 100 Mb/s goal needs to be reconciled) and shift up to $16 billion over the next decade from the existing USF. The plans also invites Congress to accelerate the deployment of broadband to unserved areas and “otherwise smooth the transition of the new fund” by making available public funds of several billion dollars over several years. Ugh!

Second, the plan calls for mobility fund to provide targeted funding to ensure no states are lagging significantly behind the national average for 3G wireless coverage. My only question is why this needs to be separate from the Connect America Fund. It only fosters the legacy idea that there is an inseparable difference between wireline and wireless access.

There is one apparent contradiction that seems typical of any government plan. The FCC aims to design the both new funds “in a tax-efficient manner to minimize the size of the broadband availability gap and thereby reduce contributions borne by consumers.” Yet in the very next point it says it seeks “to broaden the USF contribution base to ensure USF remains sustainable over time.” So while it suggests that consumer payments go down, it aims to increase the pool of companies it will tap for USF contributions (meaning, in the end, consumer will pay more). Seeing that wireless and VoIP companies already pay into the USF fund, it will be interesting to see where the FCC looks for its broader base. Reader speculation is welcome.