Broadband Usage growing even as Gaps Persist

Associated Press

The U.S. still faces a significant gap in residential broadband use that breaks down along incomes, education levels and other socio-economic factors, even as subscriptions among American households overall grew sevenfold between 2001 and 2009.

What's more, even when controlling for key socio-economic characteristics, the U.S. continues to confront a racial gap in residential broadband use, with non-Hispanic white Americans and Asian-Americans more likely to go online using a high-speed connection than African-Americans and Hispanics.

Those are some of the key conclusions of a new analysis of Census data being released Monday by the Commerce Department. It found that the percentage of households that connect to the Internet using broadband grew to 63.5 percent in 2009 from 9.2 percent in 2001, reflecting increases across nearly all demographics.

The report - prepared by the Commerce Department's National Telecommunications and Information Administration and the Economics and Statistics Administration - is based on a Census survey of about 54,000 households conducted in October 2009.

The new report provides some of the deepest analysis yet of broadband usage trends in the United States. And it is likely to help guide Congress and the Federal Communications Commission as they develop policies to ensure that all Americans have access to affordable high-speed Internet service.

The analysis, said Lawrence Strickling, head of the NTIA, shows that "there is no single solution" to make this happen.

Among the major findings:

- 94.1 percent of households with income exceeding $100,000 subscribed to broadband in 2009, compared with 35.8 percent of households with income of less than $25,000.

- 84.5 percent of households with at least one college degree subscribed to broadband last year, compared with 28.8 percent of households without a high school degree.

- 77.3 percent of Asian-American households and 68 percent of non-Hispanic white households subscribed to broadband last year, compared with 49.4 percent of African-American households and 47.9 percent of Hispanic households.

- 65.9 percent of urban households subscribed to broadband in 2009, compared with 51 percent of rural households.

Closing such gaps is a top priority for the FCC, which released a sweeping national broadband plan filled with policy proposals in March. The agency's top recommendations include tapping the federal program that subsidizes telephone service for poor and rural Americans to pay for broadband, and unleashing more airwaves for wireless connections. Wireless broadband is seen as a particularly attractive option for bringing high-speed connections to rural areas that may be too sparsely populated to justify costly landline networks.

At the same time, the NTIA and the Rural Utilities Service, part of the Agriculture Department, have been handing out roughly $7 billion in stimulus money to pay for new broadband networks and programs to get more Americans online.

Strickling stressed that one key challenge for policymakers lies in convincing Americans who are not online of the benefits of broadband.

The Census data found that 38 percent of Americans who don't have broadband at home say they don't subscribe because they don't need it, while 26 percent say it's too expensive and only 4 percent say it's not available where they live.

A survey conducted by the FCC last year reached many of the same conclusions. It found that 35 percent of Americans do not use broadband at home, including 22 percent of adults who do not use the Internet at all. Of that 35 percent, 36 percent say it is too expensive, while 19 percent do not see the Internet as relevant to their lives. Another 22 percent lack what the FCC calls "digital literacy" skills.

To try to change such attitudes, the stimulus program includes $250 million for projects to teach digital literacy skills and encourage broadband adoption, plus another $200 million for public computer centers.

One surprising finding of the new Commerce Department report is that African-Americans and Hispanics lag behind in broadband adoption even when controlling for factors such as income and education. The data show a gap of 10 percentage points in broadband use between whites and blacks and a gap of 14 percentage points between whites and Hispanics even after controlling for socio-economic factors.

Although the data do not provide an explanation for these numbers, Rebecca Blank, under secretary for Economic Affairs, believes it could reflect limited exposure to the Internet among certain racial groups.

"Internet usage relies on networks," she said. "If the people around you don't use the Internet, you will be less likely to use the Internet, too."

Google, Verizon Propose new Web Rules

The Wall Street Journal

The Two Say Proposal Eases 'Net Neutrality' Debate; Critics Say It Could Create Private Networks

Cellular Internet access is becoming an increasingly important profit center for telecommunications companies as more consumers adopt mobile Web tools such as smart phones like the iPhone and phones based on Google's Android software.

Some consumer advocates slammed the proposal, saying it could result in the creation of private, closed broadband networks akin to cable TV systems, as opposed to today's open Internet in which anyone can create a website or online service.

Google and Verizon called their statement of principles a legislative proposal. More precisely, it is a high-profile effort to influence a debate in Washington over the future rules of the road for the Internet—a debate that Congress has yet to begin in earnest.

The Google-Verizon statement is also aimed at the FCC, which has proposed applying to broadband services the rules originally designed to ensure the free flow of calls over telephone lines.

Last week, the FCC abruptly called off closed-door talks with industry lobbyists that were aimed at reaching a compromise on net neutrality. News of the impending Verizon-Google agreement was cited as a reason for abandoning the talks, said people familiar with the negotiations.

In 2002, the FCC deregulated Internet lines to encourage more investment. Earlier this year, the agency proposed reversing that decision after a federal appeals court said the FCC overstepped in 2008 when it sanctioned Comcast Corp. for deliberately slowing some customers' traffic.

FCC officials are trying to find a way for the agency to act as an Internet traffic cop without the need to take the controversial step of re-regulating Internet lines. The agency proposed doing that earlier this year; however, phone and cable-TV companies have protested the idea.

A spokeswoman for FCC Chairman Julius Genachowski declined to comment Monday on the Google-Verizon proposal.

Democratic FCC Commissioner Michael Copps said its past time for the FCC to act on net neutrality. "Some will claim this announcement moves the discussion forward. That's one of its many problems," he said in a statement.

AT&T Inc., a big broadband and cellular rival to Verizon, said in a statement that it would examine the proposal and that it is "committed to achieving a consensus solution to the net neutrality issue, either with the FCC or with the Congress."

The Verizon-Google agreement would provide a loose framework for protecting Internet traffic that the companies said would "provide certainty that allows both Web startups to bring their novel ideas to users, and broadband providers to invest in their network."

The proposal would allow broadband companies to charge companies or consumers more for "additional, differentiated online services," such as 3D movie streaming or gaming. That traffic would run in priority lanes alongside the traditional Internet.

Google Chief Executive Eric Schmidt said Google wouldn't pay Verizon or other Internet service providers to offer such premium services for Google's products, including its YouTube video service. "We like the public Internet and we intend to use it," Mr. Schmidt said.

The proposal wouldn't change what consumers get from either company. But consumer advocates blasted the plan. They worry that over time broadband providers would allocate a bigger chunk of their capacity to the priority lanes at the expense of the traditional Internet.

Along with Internet companies, including Amazon.com Inc. and Facebook Inc., public advocates have argued rules are needed to prevent broadband providers from favoring their own services or extracting money from companies for speedy delivery of Web traffic.

"It is conceivable under the agreement that a network provider could devote 90% of its broadband capacity to these priority services and 10% to the [regular] Internet," said Gigi Sohn, president of Public Knowledge, a digital advocacy group.

Joel Kelsey, an adviser to media watchdog Free Press, said that "Google and Verizon can try all they want to disguise this deal as a reasonable path forward, but the simple fact is this framework…would transform the free and open Internet into a closed platform like cable."

Phone and cable companies say they need leeway in managing their Internet networks so bandwidth hogs such as video services don't take up too much capacity. They also say they need some pricing flexibility to offer new Internet services to help them recoup the billions of dollars they spend to build out broadband networks.

Richard Bennett, a senior research fellow at the think tank Information Technology and Innovation Foundation, whose funding comes mainly from phone and cable companies, called the Google/Verizon proposal a "good starting point for Congress."

To believe that some Internet applications shouldn't receive priority treatment is "naïve," Mr. Bennett said. "It's like they are saying all cars have to cost the same—that you should be able to buy a Ferrari for the price of a Geo Metro."

Wireless Broadband Network set to Launch Next Year

Associated Press

 

U.S. consumers and businesses may get more options in wireless service starting next year, with the launch of a new wireless broadband network that aims to provide competition to the incumbent phone companies.

Private-equity firm Harbinger Capital Partners on Tuesday revealed details of the launch of its wireless network, LightSquared, which should cover 92 percent of the population by 2015.

But there are financial and regulatory hurdles to overcome. And in another wrinkle, LightSquared won't initially be offering conventional cell phone service, just data. It's possible to send phone calls over data connections, but that technology is not fully mature or standardized.

Still, LightSquared represents a rare new entrant in the wireless market. Only two other companies, Verizon Wireless and AT&T Inc., have firm plans to build nationwide networks using the same, fourth-generation network technology that LightSquared will use. Sprint Nextel Corp., through its Clearwire Corp. subsidiary, is building a third one with a different 4G technology that's likely to get less support from equipment makers.

Consumers won't buy service directly from LightSquared. Instead, it will sell access wholesale to other companies that can resell it to consumers. LightSquared hopes to attract cable TV providers, phone companies that don't have wireless networks of their own and retailers that want to provide wireless service under their own brand.

Dan Hays, who focuses on telecommunications with consulting firm PRTM, said LightSquared "could provide a renewed opportunity for retailers and major brands such as Wal-Mart, Best Buy, and Office Depot to enter the wireless market as service providers to consumers."

LightSquared plans to start providing service in the second half of 2011 in Las Vegas, Phoenix, Denver and Baltimore.

LightSquared said Nokia Siemens Networks will build, maintain and operate the network under a $7 billion, eight-year contract. Nokia Siemens is a joint venture of Finland's Nokia Corp. and Siemens AG of Germany.

The contract is an important step for Nokia Siemens, which hasn't had much of a presence in the U.S. market for wireless equipment. On Monday, it announced a deal to buy Motorola Inc.'s networks business for $1.2 billion, with a view to increasing its foothold in the U.S.

One reason it's rare for new national wireless carriers to spring up is that it's difficult and expensive to procure the rights to airwaves across the nation. Verizon Wireless paid $9.4 billion for nationwide spectrum rights in a 2008 auction, for example.

LightSquared is in an unusual position in that it owns nationwide wireless spectrum once set aside for satellite phone use. Harbinger bought SkyTerra, a satellite company, earlier this year.

Placing calls over satellites is expensive and impractical compared with using cell towers, so the FCC allows spectrum holders to back up satellite coverage with towers. That gives LightSquared a "back door" to building out a conventional ground-based network of cell towers.

However, under current FCC rules, all devices that use LightSquared's spectrum have to come with the ability to connect to a satellite besides conventional cell towers, according to satellite industry consultant Tim Farrar. That would add to the cost of devices and limit the selection.

LightSquared is banking on the FCC changing its rules to allow devices that only talk to towers. Regardless, it needs to launch a satellite later this year to satisfy the FCC's condition that it be able to provide satellite connectivity.

The launch of the new network would fit into the FCC's goals of creating more competition in the wireless market. FCC Chairman Julius Genachowski said Tuesday that he was pleased to learn of the creation of LightSquared.

Farrar said it's also not clear if Harbinger will be able to raise the billions needed to build out the network, and other expenses.

"It's going to be very interesting to see where this money comes from," Farrar said.

Tom Surface, a spokesman for LightSquared, said the company "will evaluate our funding needs as we develop and grow our business."

LightSquared's CEO is Sanjiv Ahuja, who was CEO of French cell phone company Orange from 2004 through 2007. He then founded a company that started wireless service in Pakistan and Bangladesh.

FCC Set to Reconsider Broadband Regulations

Associated Press

 

Federal regulators are reconsidering the rules that govern high-speed Internet connections - wading into a bitter policy dispute that could be tied up in court for years.

The Federal Communications Commission is scheduled to vote Thursday to begin taking public comments on three different paths for regulating broadband. That includes a proposal by FCC Chairman Julius Genachowski, a Democrat, to define broadband access as a telecommunications service subject to "common carrier" obligations to treat all traffic equally.

Genachowski's proposal is a response to a federal appeals court ruling that has cast doubt on the agency's authority over broadband under its existing regulatory framework.

The plan has the backing of many big Internet companies, which say it would ensure the FCC can prevent phone and cable companies from using their control over broadband connections to determine what subscribers can do online.

"There is a real urgency to this because right now there are no rules of the road to protect consumers from even the most egregious discriminatory behavior by telephone and cable companies," said Markham Erickson, executive director of the Open Internet Coalition. The group's members include Google Inc., eBay Inc., Amazon.com Inc. and online calling service Skype Ltd.

But Genachowski's plan faces stiff resistance from the broadband providers themselves, including AT&T Inc. and Verizon Communications Inc. They say it opens the door to onerous and outdated regulations that would discourage them from upgrading their networks.

"This FCC proposal could call into question the business assumptions underlying multibillion-dollar broadband investments," said Howard Waltzman, a former Republican staffer on the House Commerce Committee who is now representing telephone companies as a partner with Mayer Brown LLP.

Many Republicans and even some Democrats on Capitol Hill - as well as the two Republicans on the five-member FCC - oppose Genachowski's plan. At least one House Republican, Rep. John Culberson of Texas, has proposed blocking funding for the FCC if it pursues the plan.

The FCC currently defines broadband as a lightly regulated information service. But in April, the U.S. Court of Appeals for the District of Columbia ruled that this approach does not give the commission the authority it needs to adopt so-called "network neutrality" mandates, which would bar broadband providers from favoring or discriminating against traffic traveling over their networks.

Supporters of network neutrality say such rules are necessary to prevent phone and cable companies from blocking or degrading online calling services, Internet video and other applications that compete with their core businesses.

Indeed, the recent appeals court decision grew out of a challenge by Comcast Corp. to a 2008 FCC order directing the cable company to stop blocking subscribers from accessing an online file-sharing service. Comcast and other broadband providers insist they need flexibility to manage their networks and ensure that certain applications don't hog too much bandwidth.

The court ruling also undermines the FCC's ability to act on several key recommendations in its national broadband plan - another top priority for Genachowski - including a proposal to expand high-speed Internet access by tapping the federal program that subsidizes phone service in poor and rural areas.

Genachowski says his new regulatory framework would allow the FCC to move ahead on both fronts by placing broadband connections firmly within the agency's jurisdiction as a telecommunications service. At the same time, he has pledged to impose only narrow telecom rules on broadband providers, avoiding burdensome mandates such as rate regulations and network-sharing obligations. He has also stressed that his approach would not impose regulations on Internet content and services.

In outlining his proposal last month, Genachowski called it a "third way" that respects "investment and innovation" and protects consumers and Internet competition.

Thursday's vote will launch a proceeding to examine:

-Genachowski's proposal;

-the implications of leaving the existing regulatory frawework in place;

-and the implications of imposing the full array of traditional telecommunications regulations on broadband providers.

If the FCC ultimately adopts Genachowski's plan, it will almost certainly draw legal challenges from phone and cable companies that fear any shift away from the current deregulatory approach adopted under the Bush administration. That approach was upheld by the Supreme Court in 2005 and a battle over any attempt to overturn it could go all the way back to the high court.

FCC's Third Way for Broadband Access is a Boon for Net Neutrality, Google

eWeek

 

 

Federal Communications Commission Chairman Julius Genachowski May 6 laid down new rules for applying narrow regulations to broadband providers, which should please Internet companies such as Google as much as it dismays Internet access providers such as Comcast and Cablevision.

Under the "third way broadband framework," Genachowski said the FCC will recognize the transmission component of broadband access service as a telecommunications service and apply only the six sections of Title II that were believed to be within the FCC's purview for broadband.

The FCC will also put in place rules to guard against regulatory overreach. Genachowski also said the approach will forbid the FCC from regulating rates charged by telephone and cable companies for Internet service.

The commission also may not regulate the Internet, he said.

"It will treat only the transmission component of broadband access service as a telecommunications service while preserving the longstanding consensus that the FCC should not regulate the Internet, including Web-based services and applications, e-commerce sites, and online content," Genachowski said.

Genachowski's "third way" is geared to boost network neutrality rules that order Internet service providers to treat all traffic equally, and not give preferential treatment to some Websites over others. Net neutrality has become something of a crusade for companies such as Google and Amazon, which depend on the Internet to deliver Web services and goods.

The third way is also a measured response to the U.S. Court of Appeals for the District of Columbia Circuit, which ruled April 6 that the FCC did not have the authority to order Comcast to stop throttling BitTorrent traffic and that Comcast could regulate Internet traffic over its own system.

The FCC in 2008 had complained that Comcast and other Internet providers must treat content that traverses their pipes equally. Comcast took the FCC to the court and won, with the court claiming the FCC had overstepped its boundaries.

As such, the FCC's third way, perceived as a rally against the court's decision, must have a strong legal footing. FCC General Counsel Austin Schlick believes it is rooted in the idea that the computing component and the broadband transmission component of Internet access service are separate entities subject to different regulation.

Genachowski's third way is also a move to prop up the National Broadband Plan, which was dealt a hard blow by Comcast's victory. The FCC said the Comcast ruling impedes plans to accelerate broadband access and adoption in rural America and connecting low-income Americans, among other recommendations.  

The third way is designed to turn the tables on Comcast. Genachowski's proposal must be approved by three or more of the FCC's five commissioners before it can come to fruition.

Reaction to Genachowski's third way plan was swift and cleanly divided.

Conservatives disdain the proposal, fearing government regulation over Comcast, AT&T, Time Warner and other access providers would stifle investment and innovation. Democrats lent their support to Genachowski's plan, characterizing it as a victory for network neutrality and consumers.

Google, whose interests lie in making sure its Web applications are accessed freely on the Internet, pointed eWEEK to this letter from the Open Internet Coalition, whose members include Google, Amazon, eBay and others.

OIC Executive Director Markham Erickson also noted:

"After Comcast v. FCC, consumers were essentially stranded on the information highway without protection from the FCC. This step by the FCC ensures that consumer choice and innovation on the broadband Internet will receive the protections this essential communications infrastructure for the 21st century requires."

Comcast told Bloomberg it is "disappointed" by Genachowski's action. Cablevision COO Tom Rutledge said on the company's first-quarter conference call today that regulating network providers under rules written in the early 20th century is a bad decision.

FCC Says it has Compromised on Key Broadband Rules

Associated Press

The head of the Federal Communications Commission thinks he has come up with a way to salvage his ambitious national broadband plans without running into legal obstacles that have threatened to derail him.

FCC Chairman Julius Genachowski said Thursday that his agency has crafted a compromise in how it regulates high-speed Internet access: It will apply only narrow rules to broadband companies. The FCC chairman, a Democrat, said this delicate dance will ensure the agency has adequate authority to govern broadband providers without being too "heavy-handed."

But his plan likely will hit legal challenges from the big phone and cable companies and already faces significant opposition from Republicans at the FCC and in Congress.

The FCC has been scrambling to develop a new regulatory framework since a federal appeals court last month cast doubt on its jurisdiction over broadband under existing rules.

The FCC needs that legal authority for the sweeping national broadband plan that it released in March. Among other things, the plan aims to give more Americans access to affordable high-speed Internet connections by revamping the federal program that subsidizes telephone service in poor and rural areas and using it to pay for broadband.

Genachowski also needs this authority for his proposal to adopt "network neutrality" rules prohibiting phone and cable companies from prioritizing or discriminating against Internet traffic traveling over their lines. Internet companies such as Google Inc. and Skype Ltd. say these rules are needed to prevent broadband providers from becoming online gatekeepers and blocking Internet phone calls, streaming video and other services that compete with their core businesses.

Genachowski said his new regulatory framework will let the FCC move ahead with its plans and "support policies that advance our global competitiveness and preserve the Internet as a powerful platform for innovation."

The FCC currently treats broadband as a lightly regulated "information service." It had maintained that this framework gave it ample authority to proceed with its broadband plan and to impose net neutrality rules. But the U.S. Court of Appeals for the District of Columbia rejected this argument.

So now Genachowski is seeking to redefine broadband as a telecommunications service subject to "common carrier" obligations to treat all traffic equally. Similar rules apply to other networks that serve the public, including roads, electrical grids and telephone lines. But Genachowski said he will refrain from imposing more burdensome mandates that also apply to traditional telecom companies. For instance he would avoid requiring the broadband companies to share their networks with competitors.

The proposal is intended to strike a balance that can satisfy both Internet service providers that oppose new regulations and public interest groups that are demanding greater consumer protections. FCC officials stressed that they intend to regulate only Internet connections, not the online services flowing through them.

The FCC will soon seek public comment on Genachowski's proposal. It would have to be approved by at least three of the FCC's five commissioners, and Genachowski is expected to have the support of his two fellow Democrats.

Several public interest groups and big Internet companies, including Google, Skype, eBay Inc. and Amazon.com Inc., praised the proposal. So did Rep. Edward Markey, D-Mass., who sits on the House Energy and Commerce Committee, which oversees the FCC. "With this decision, the FCC will ensure that the agency remains the 'cop on the beat,' protecting consumers and competition on the World Wide Web," Markey said.

But Republicans lined up against the plan.

The two Republican FCC commissioners, Robert McDowell and Meredith Baker, said the proposal would "shatter the boundaries" of the agency's authority and discourage broadband providers from investing in their networks. McDowell and Baker said Genachowski's plan would impose "burdensome rules excavated from the early-Ma Bell-monopoly era onto 21st century networks."

House Republican Leader John Boehner of Ohio called the plan "a government takeover of the Internet."

The battle is likely to land in court if the big phone and cable companies decide to challenge the new framework. The companies already oppose Genachowski's network neutrality proposal, warning that restrictions on what they can do with their networks will discourage them from investing in their lines.

Shares of phone companies Verizon Communications Inc. and AT&T Inc. slipped 2 percent Thursday. Cable stocks tumbled even more - reflecting the fact that cable companies have a larger share of the broadband market and no wireless operations to fall back on. Shares of Comcast Corp., the nation's largest cable company, lost 6 percent, while Cablevision Systems Corp. fell 7 percent and Time Warner Cable dropped 8 percent.

Tom Tauke, Verizon's top Washington official, said Genachowski's new approach to regulation is "legally unsupported" and "could ultimately harm consumers and inhibit the innovation and investment he wants to encourage." AT&T echoed that point.

Comcast said that while it is disappointed with the FCC proposal, it is prepared to work with the agency. But Comcast may be more open to compromise because it needs FCC approval for its plan to take a controlling stake in NBC Universal.

It was Comcast that helped set in motion the events leading to last month's court ruling.

The case centered on the company's behavior in 2007 when it interfered with subscribers using the online file-sharing service BitTorrent, which lets people swap movies and other big files. Comcast said the service was clogging its network, but public interest groups maintained that the company saw the swapping of video files as a threat to its cable business.

The FCC, then led by Republican Kevin Martin, ordered Comcast to stop blocking subscribers from using BitTorrent and based its decision on net neutrality principles it had adopted in 2005.

Comcast challenged the order in court. It argued that the order was illegal because the agency was seeking to enforce principles and not regulations or laws. That is one reason that Genachowski is now pushing the FCC to adopt formal net neutrality rules that would apply across the industry.

Comcast also had argued that the FCC lacked authority to mandate net neutrality because it had deregulated broadband by classifying it as an information service under the Bush administration. Now Genachowski's next move could reverse course on that approach.

FCC Web Rules Create Pushback

The Wall Street Journal

Is FCC chairman in over his head?

The head of the Federal Communications Commission on Thursday outlined a proposal for regulating the Internet that he described as a "third way," or middle ground between "heavy-handed" regulation and a do-nothing approach that could hurt competition and leave consumers unprotected.

FCC Chairman Julius Genachowski is proposing to promote competition and preserve the free flow of Web traffic by applying to broadband Internet service certain provisions of rules designed to regulate traffic on copper-wire telephone networks.

Big phone and cable companies, which provide much of the nation's broadband service, expressed dismay at the FCC chairman's decision to extend his regulatory authority to broadband, predicting it would damp investment and lead to court battles that could last years.

"We are very concerned about the direction this is going," said Grant Seiffert, chief executive of the Telecommunications Industry Association, an industry lobbying group.

Industry executives said privately that they didn't trust the notion that the FCC would take only a limited approach to the new regulations, applying just six sections of Title II of the Communications Act to broadband while not enforcing others.

They also expressed concerns about the legality of the proposal. "We believe that the chairman's stated approach is legally unsupported," said Tom Tauke, executive vice president of Verizon Communications Inc., in a statement.

Broadband policy has evolved into a deeply partisan issue in Washington. Democratic lawmakers applauded Mr. Genachowski's stance Thursday, but Republicans blasted his plan, saying it would cost jobs.

Senate Republicans began recirculating legislation proposed in 2009 by Sen. John McCain (R., Ariz.) that would prohibit the FCC from regulating the Internet. House Minority Leader John Boehner (R., Ohio) called the decision a "government takeover of the Internet" and a "job-killing big government scheme."

An FCC spokeswoman declined to comment.

The FCC's two Republicans also dissented. "This proposal is disappointing and deeply concerns us," said Commissioners Meredith Attwell Baker and Robert McDowell, in a joint statement. They argued that the FCC was overstepping its authority.



Mr. Genachowski doesn't need congressional approval or the votes of his Republican colleagues to adopt the proposal. The other two Democrats on the FCC's five-person board have said they will support his efforts.

Consumer groups applauded some aspects of Mr. Genachowski's plan, but some groups, including Public Knowledge and Consumers Union, expressed concerns that the FCC plan doesn't go far enough to ensure greater competition among Internet-service providers.

Six Sections to Apply:

    * Section 201—Requires Internet providers to interconnect and charge reasonable rates
    * Section 202—Prevents price or service discrimination
    * Section 208—Sets up FCC complaint process
    * Section 222—Protects customer privacy and proprietary commercial information
    * Section 254—Allows use of Universal Service Fund for broadband
    * Section 255—Ensures disability access

Mr. Genachowski said the FCC needed to take action to protect consumers after a federal appeals court last month questioned the agency's authority to enforce rules that require broadband providers to treat all Internet traffic equally, prohibiting them from deliberately slowing or blocking such traffic.

These so-called net neutrality guidelines are strongly supported by the Internet-commerce industry. Broadband providers have said rigid net-neutrality rules aren't desirable because that restricts their freedom to manage their fast-evolving networks.

The appeals court ruled in April that the FCC overstepped its bounds in deciding to sanction Comcast Corp. for deliberately slowing some broadband subscribers' traffic in 2008. The court's ruling essentially threw into question much of the agency's efforts to set rules for broadband providers over the past eight years.

The FCC's proposal seeks to provide "a solid legal foundation for achieving the policy goals that benefit consumers and our economy in the most effective and least intrusive way," Mr. Genachowski said Thursday.

The FCC chairman said he doesn't intend to regulate rates for Internet service or require service providers to share their lines with rivals at government-regulated rates.

The agency would require broadband providers to allow data to travel from the Internet to a subscriber's computer without meddling. However, it isn't planning to regulate material sent over the Internet, like email, online videos or games.

That's an important distinction for Silicon Valley, where a handful of companies including Google Inc., Amazon.com Inc. and Netflix Inc. sent Mr. Genachowski a letter Thursday applauding his "middle ground approach" to regulation.

"This is a great way to move forward," said Paul Misener, vice president of global public policy at Amazon.

The move catches the communications industry, and phone companies in particular, at a difficult time.

Phone companies and cable operators are spending billions of dollars slugging it out to snare broadband and TV subscribers. Wireless service, the growth engine of phone companies for the past decade, has become a mature market.

The FCC proposal adds another layer of uncertainty that industry executives say will cause them to delay investments in land-based and wireless Internet infrastructure. Any such cuts in capital spending could lead to job losses and hurt the Obama administration's plan to extend faster broadband service across the country. Investors are worried about the potential fallout as well.

Under questioning from an analyst on a conference call after its first-quarter earnings release Thursday, Cablevision Systems Corp. Chief Operating Officer Tom Rutledge said a move to reclassify broadband lines under "1930s laws, utility-type regulation" would be disappointing. "We operate in a highly competitive environment," he said.

FCC Chief Julius Genachowski faces Broadband Dilemma
USA Today

Federal Communications Commission Chairman Julius Genachowski will soon have to make a wonky but controversial decision that could have a profound impact on how much consumers pay for broadband, how fast their services will be — and possibly whether millions of people will be able to get it at all.

He can ensure that the FCC has the power to set rules for high-speed Internet service if he asks his fellow regulators to define it, in legal terms, as a highly regulated common carrier service like telephones. Or he can let cable and phone companies call the shots by allowing it to remain a lightly regulated information service.

There's no deadline for a decision. But if Genachowski waits too long, he may have to abandon dozens of policy changes that he has proposed to close the digital divide and protect broadband subscribers.

That would mean Genachowski "will have no legacy," says Josh Silver, executive director of Free Press, an activist group that favors more broadband oversight.

But if he does act, cable and phone companies likely would "launch an all-out attack" on the FCC leading into this year's congressional elections, "with charges of lost jobs, lost investment, lost (broadband) deployment and more Democratic meddling in industry," says analyst Rebecca Arbogast of Stifel Nicolaus, a financial services firm.



Genachowski ran into this dilemma last week when the U.S. Court of Appeals for the District of Columbia overturned a commission decision from 2008 that involved Comcast's management of Internet traffic. Justices said the FCC lacked an explicit mandate to regulate broadband. The agency tied its own hands in 2005 when it defined phone DSL broadband as an information service, similar to a decision it made in 2002 about cable modems.

The court tossed aside the FCC's view that it could infer some power over Internet services from its authority to set rules for cable TV and phone services. The ruling hit just weeks after the FCC unveiled a sweeping proposal, called the National Broadband Plan, designed to make high-speed Internet a staple of everyday life.

Separately, Genachowski and President Obama have said that they want to require Internet providers to treat all Web services equally, a policy known as net neutrality.

Without a change in the law that defines broadband, many of these proposals would have to be scuttled or might end up being "litigated before a skeptical court," Arbogast says.

The FCC won't say whether Genachowski is inclined to reassert regulatory power over broadband by reclassifying it as a common carrier service. But whatever decision he makes will create shock waves.

Rules are 'badly out of date'

If the FCC changes the way it treats high-speed Internet, then "everybody in the industry would sue," says Scott Cleland, chairman of NetCompetition.org, an Internet forum supported by cable and phone companies.

"It would be like an 8.0 earthquake under the sector," he adds. "Hundreds of billions of dollars have been invested (in broadband) in the belief that there'd be a market rate of return, not a regulated rate."

The FCC's two Republican commissioners have said they'd fight a move to reclassify broadband.

Verizon and AT&T have said that they'd prefer to see Congress clarify the FCC's role and what rules should apply to new players including Google. Laws are "badly out of date," Verizon Executive Vice President Tom Tauke said in a recent speech.

But consumer advocates and others say that Genachowski can't afford to wait. "It would surely take a year or two" to get a major law through Congress, says Andrew Schwartzman of the Media Access Project, a public interest law firm.

And if an FCC decision to reclassify broadband draws a lawsuit, it makes more sense to have "one big court case instead of a dozen small cases," Schwartzman says.

Genachowski's fellow Democrats on the commission also are eager to act. Michael Copps called reclassification the "only way the commission can make lemonade out of (the Appeals Court's) lemon of a decision."

If Genachowski wants to defuse the issue, he could try to engineer a compromise. For example, he could agree to take broadband reclassification off the table as long as providers make legally binding promises to offer consumer protections called for in the National Broadband Plan and to agree to treat all Web services equally. But it will be hard to please everybody as advocates gear up for a fight.

While reclassification isn't a sexy issue, as the Internet becomes the main pipeline for media and communications and phone DSL broadband, the FCC's rules "will shape everything that people use to interact with the world," Silver says.

More than 1,100 Communities seek Google Network

 

WASHINGTON (AP) - More than 1,100 communities have approached Google Inc. in hopes of landing one of the ultra-fast broadband networks that the company plans to build in a handful of spots around the country.

Last month, Google said it will build experimental fiber-optic networks that will deliver Internet connections of 1 gigabit per second to as many as 500,000 Americans. That would be up to 300 times faster than the broadband services reaching most U.S. homes today.

Friday marked the deadline for governments and citizens to express interest. Google said the response has been "tremendous and creative," with communities using everything from YouTube videos to Facebook groups to public rallies to promote themselves. The company will announce winners by the end of the year.

U.S. Officials to Unveil Sweeping Proposal for Broadband
Mercury News

WASHINGTON — Recognizing that high-speed Internet has joined telephone service and electricity as essential tools of modern life, the federal government will unveil an ambitious blueprint this week to extend broadband to virtually all Americans.

Crafted by the Federal Communications Commission over the past year, the national broadband plan is expected to set the federal government's high-tech agenda on a variety of fronts, with far-reaching implications for Silicon Valley. At its core, the plan, which will be released Tuesday, will propose ways to close the long-standing digital divide by bringing broadband into 90 percent of American homes by 2020.

For those with broadband already, the plan will target vastly increased speeds for wired and wireless service, fostering the already-booming market for Web-based video and other high-bandwidth applications. FCC Chairman Julius Genachowski said the plan could spur advancements in telemedicine, education and energy efficiency through a Web-enabled smart grid.

Progress will be dictated largely by the private sector, given the immense costs of broadband infrastructure.

"World-class broadband," Genachowski said in a speech last month, "is our generation's great infrastructure challenge."

The FCC says that about 93 million Americans, almost a third of the population, currently lack high-speed Internet at home — a huge untapped market for high-tech firms that advocates say a national broadband initiative could help them reach.

In the case of Google, for example, universal broadband would mean more Web ad clicks, smoother YouTube video quality, and easier collaboration on Google Docs and other sharing applications, an executive said.

"The more people on the Internet, the better our business model works," said Vint Cerf, a founding father of the Internet who now serves as "chief Internet evangelist" for Google. "And high-speed creates a lot of opportunities for collaboration."

Cisco Systems, meanwhile, stands to sell more routing equipment to direct the Web traffic of millions more users. But the importance of broadband extends far beyond any one company, said Jeffrey Campbell, Cisco's senior director of technology and trade policy.

"This is highly relevant to the valley and the tech industry in general," Campbell said. "If the United States is going to continue leading the world in creating applications for the Internet, we need to make sure people have access and we need world-class speeds."

The country is lagging on both fronts now. Studies show the United States trailing a dozen or more countries in the proportion of people who have broadband and in the speed of service. While some critics question the criteria for those rankings, "few would suggest we are leading the world in broadband, or are even as close as we should be," Genachowski said.

The plan will focus simultaneously on expanding access and increasing speeds. According to several recent surveys, about one-third of households lack broadband connections at home, and they are concentrated in low-income and rural communities. All but about 4 percent of households have access to at least one broadband service. The most oft-cited reasons cited for not signing up are that people don't see the need or can't afford the typical $40 to $45 a month fee.

FCC officials in recent weeks have floated a number of ideas to close the access gap that are expected to be included in the plan:

# Redirecting a roughly $8 billion-a-year government program that subsidizes telephone service for rural and low-income communities toward expanding high-speed Internet in underserved areas.

# Setting aside a slice of the radio spectrum for free or low-cost wireless service.

# Creating a "digital literacy corps," modeled after AmeriCorps, to help people unfamiliar with the Internet (particularly residents of low-income and minority communities and seniors) learn how to use it.

The plan will also set ambitious targets for bolstering current broadband service. Genachowski said it will call for broadband speeds of 100 megabits per second in 100 million homes by 2020. That would be more than 10 times faster than what's considered speedy Internet now.

And it will recommend more than doubling the amount of spectrum devoted to wireless Internet to accommodate the explosion of smartphones and other mobile SEO devices and make wireless Internet a more viable alternative to cable, DSL and similar services in the home.

While Genachowski and other proponents talk about broadband in transformative terms — "akin to the advent of electricity," the FCC chairman said — the plan's impact is likely to be gradual, requiring years of work by the commission and the cooperation of Congress. Progress will be dictated largely by the private sector, given the immense costs of broadband infrastructure.

"It's intended to be a major statement about U.S. technology policy, and there really hasn't been a major statement like this in a long time," said Jed Kolko, an economist and broadband expert at the Public Policy Institute of California. "Broadband has expanded to the point that it's expected that people have access, and when they don't, they're at a real disadvantage."

Google Seeks Cities for High-Speed Hookups

Market Watch

Only suitors with big incentives and money need apply

All across America, mayors are jumping into lakes, temporarily changing city names and creating Facebook fan pages, in an effort to woo Google Inc. and its broadband network trial.

From Juneau, Alaska to Sarasota, Fla., cities across the U.S. are vying to be chosen by Google as a test bed for its experimental ultra high-speed broadband network, projected to be 100 times faster than what is available in most U.S. homes.

But some cities might want to think twice before they court Google. They might want to make sure they have some funds in their coffers and incentives that will very likely be required to help turn their cities into 21st century digital hubs.

"By the time this is over I expect this to be a bidding war," said Rob Enderle, principal analyst at the Enderle Group. "If you get a bidding war going, you might find out that the winning city ends up paying for more of this than they expect."

Details so far are slim. Google is now requesting information. Interested communities, local governments and their constituents are submitting responses on why they would be the best host for an ultra high-speed network. Google announced its plans Feb. 10 and cities have until March 26 to submit their pitches. See Google news here.

There are 89 fan pages on Facebook, sponsored by cities such as Huntsville, Ala., with 5,729 fans, to Ventura, Calif., with 1,320 fans and a multi-colored logo that mimics Google's. The mayor of Topeka, Kansas temporarily changed the name of that Great Plains city, population 122,000, to Google, Kansas, with a proclamation that included a mandate not to do any evil. Citizens of Duluth, Minn. saw their mayor jump into a 35-degree Lake Superior at a dual-purpose event for Google Fiber and the Special Olympics.

"We've already received a good number of submissions from communities across the country, and thousands of submissions from people who are excited about ultra high-speed Internet access," said a spokeswoman for Google in Mountain View, Calif. The company is not asking potential partners to share in the cost of the network build out.

But surely, cities which provide the easiest ways to cut through their own bureaucratic red tape, and the most economic incentives, will be favored as likely hosts.

"We would support implementation through access to currently installed fiber and other existing network resources to the extent of our ability, as well as property access, zoning assistance, permitting and regulatory facilitation," said a spokesman for Sarasota's Google fiber initiative. The city, which has a population of about 372,000, can also promise great demand for network bandwidth and potential subscribers. The coastal city also temporarily changed the named of its City Island to Google Island.

Doesn't zoning and permitting usually mean costs, or money going into city coffers? Cities may lose out on some potential revenue in their ardor to win the ultimate prize.

That prize, as Bill Bunten, Topeka's 79-year-old mayor told CNN, would hopefully inspire younger people to stay in the city and encourage new businesses.

"The technology will be an enabler for unknown innovations," said Jeremy Hansen of

Hansen Gress Corp, and an information technology consultant to the city of Juneau. "I'm not trying to guess what those innovations are."

By fueling this frenzy, as cities across the country compete with each other to host the experiment, Google may cleverly get the cities to pick up more of the costs than they expected.

What if Google's trials remain only an experiment? Google has spent a lot of money buying up dark fiber, meaning fiber that is not currently in use, some of it built up during the dot-com boom. But it's not clear that Google wants to be a network service provider.

Google and the host cities may have a hard time trying to find another company to manage their awesome -- but costly -- fiber network that zips video around at speeds of one gigabit per second.

Be careful what you wish for.

FCC Rolls out Plan to bring High-Speed Internet to all Americans

FCC to propose revamping Universal Service Fund

WASHINGTON (AP) - Federal regulators trying to bring high-speed Internet connections to all Americans will propose tapping the government program that now subsidizes telephone service in poor and rural areas.

The Federal Communications Commission will include a proposal to revamp the Universal Service Fund as part of a national broadband plan due to Congress on March 17. Although the proposal itself has been expected for months, Friday's announcement offered the first solid details.

The FCC said it envisions transforming the Universal Service program over the next decade to pay for high-speed Internet access instead of the traditional voice services that it currently finances. The proposal would create a Connect America fund inside the Universal Service program to subsidize broadband, and a Mobility Fund to expand the reach of so-called 3G, or third-generation, wireless networks.

"It's time to migrate this 20th-century program," said Blair Levin, the FCC official overseeing the broadband plan, which was mandated by last year's stimulus bill. "We need to move the current system from the traditional networks to the new networks."

The Universal Service Fund was established to ensure that all Americans have access to a basic telephone line. Today, the program subsidizes phone service for the poor, funds Internet access in schools and libraries and pays for high-speed connections for rural health clinics. But its biggest function is to bring telephone service to remote, sparsely populated corners of the country, where it is uneconomical for the private companies to build networks.

Funding for the $8-billion-a-year program comes from a surcharge that businesses and consumers pay on their long-distance bills. That revenue base is shrinking, placing the Universal Service Fund under mounting pressure even as the FCC seeks to use it to subsidize broadband.

The agency's plan will lay out several options to pay for the proposals it outlined Friday, including one that would require no additional money from Congress and one that would accelerate the construction of broadband networks if Congress approves a one-time injection of $9 billion.

Either way, Levin stressed, the proposal would not increase the annual size of the Universal Service Fund, but rather would take money from subsidies now used for voice services.

The FCC would also seek to save money by subsidizing no more than one broadband provider in an areas. Some critics of the program have complained that wireless companies now overlay landline systems with new networks considered duplicative.

Levin said Connect America would not favor one technology over another, be it cable, DSL or wireless.

The FCC proposal also envisions revamping the multibillion-dollar "intercarrier compensation" system, the Byzantine menu of charges that telecom carriers pay to access each other's networks and connect calls. Any changes to the Universal Service Fund would also require changes to intercarrier compensation because rural phone companies tend to rely heavily on both funding sources.

The FCC's latest proposals will be part of a sweeping national roadmap for bringing universal, affordable broadband connections to all Americans.

Although the plan is due on March 17, the agency has already begun releasing details, including a proposal to make more wireless spectrum available for mobile broadband connections by letting television broadcasters and others voluntarily cede some airwaves.

Some of the proposals will likely require congressional action, while others might be up to the FCC to implement.

Google May Spend `Hundreds of Millions' on Its Broadband Internet Project‏
Bloomberg

Google Inc. said it may spend as much as “hundreds of millions” of dollars on an experimental broadband service that offers Internet speeds 100 times faster than current networks.

The cost of the test project, announced this month, isn’t known and will depend on demographics, the lay of the land and the number of households that use it, said Richard Whitt, Google’s Washington counsel on telecommunications and media issues. The company hasn’t determined the location or size of the network, which could serve 50,000 to 500,000 customers.

Google, after urging the Federal Communications Commission to expand broadband access, is developing the network to show the potential of high-speed Internet service. It also wants to ensure that networks are open to different software and technologies, rather than the ones picked by service providers.

“This is not a small thing,” Whitt said in an interview. “We’re trying to advance the ball on open networks. We’re hopeful this is one way to do that.”

Google, based in Mountain View, California, plans to build a fiber-optic network with speeds of 1 gigabit per second, or about 20 times faster than some of the fastest connections offered by Verizon Communications Inc. The cheapest connections run at speeds of 1 megabit or less.

Google climbed 37 cents to $526.80 at 4 p.m. New York time. The shares have fallen 15 percent this year.

‘Substantial Amount’

The investment shows that Google is serious about promoting broadband in the U.S., said Scott Kessler, an equity analyst at Standard & Poor’s in New York. He recommends buying Google’s stock, which he doesn’t own himself.

“That is absolutely a pretty substantial amount of money,” Kessler said. “Clearly, the company is pursuing this experiment in a pretty open-minded -- and I would argue pretty noteworthy -- way.”

The company plans to build the fiber-optic lines directly to consumers’ homes, much like Verizon’s $23 billion fiber network. Google’s costs could depend on whether the fiber-optic lines are strung on wires or put in the ground.

“It’s an open test bed,” Whitt said. “We will be providing regular reports back to the FCC and others interested in it. So we’re hoping that the learnings that we can generate from the engineering side and on the business model side can be useful.”

Cost Estimate

Ben Schachter, an analyst at San Francisco-based Broadpoint AmTech Inc., had estimated the cost of the network at $3,000 to $8,000 per home, with a total potential cost of $60 million to $1.6 billion. The midpoint of that projection is about $500 million, based on an estimated 20,000 to 200,000 homes, he said.

Google has asked for responses from communities that want to be part of its broadband effort by March 26. It plans to announce which areas have been chosen later this year.

Google is focused on the test project and isn’t drawing up plans for a nationwide broadband service, said Minnie Ingersoll, a product manager at Google.

“We are not planning to do a national rollout,” Ingersoll said. “There’s plenty of room for multiple companies to innovate in this space. We’re encouraging innovation in all forms.”

Google to Offer Super-Fast Net Service on Trial Basis

LA Times

SAN FRANCISCO — Google on Wednesday introduced a plan to offer ultra-high-speed Internet access to consumers in a test intended to showcase the potential new uses of broadband networks once such speeds become commonplace.

The test could also help advance Google’s policy goals of open, unfettered Internet access, challenging the business model of established telecommunications companies.

In a post on its corporate blog, the company said it planned to build and test a high-speed fiber optic broadband network capable of allowing people to surf the Web at a gigabit a second, or about 100 times the speed of many broadband connections. The trial could be offered in several communities and extend to as many as 500,000 people.

In an interview, Richard S. Whitt, Google’s Washington telecommunications and media counsel, said Google did not see the test as a new business venture as an Internet service provider, but rather as an effort to push the industry into offering faster Internet access at lower cost.

“We are not getting into the I.S.P. or broadband business,” said Mr. Whitt, using the industry shorthand for Internet service provider. “This is a business model nudge and an innovation nudge.”

[Google] said it planned to build and test a high-speed fiber optic broadband network capable of allowing people to surf the Web at a gigabit a second, or about 100 times the speed of many broadband connections

Mr. Whitt said that if the project was successful, Google would benefit because more people would use the Internet, and in turn, the company’s own services.

“All companies who live on the Web ultimately benefit if consumers have more access to the Net than they have today,” Mr. Whitt said.

Google said that over the next six weeks, it would solicit proposals from communities interested in the service, and then announce trial communities later this year. Mr. Whitt said he hoped that the service could be deployed by the end of the year in some areas, though he acknowledged it might take longer.

Mr. Whitt said that Google had urged to Federal Communications Commission earlier this year to encourage similar kinds of test projects. “After we did that, we talked about it and said we could leave this to the government or do it on our own,” Mr. Whitt said. Google decided to put its own money behind the idea, though he declined to say how much Google would invest in the project.

In a statement, Julius Genachowski, the chairman of the F.C.C., welcomed Google’s announcement. “This significant trial will provide an American test bed for the next generation of innovative, high-speed Internet apps, devices and services,” Mr. Genachowski said. “The F.C.C.’s National Broadband Plan will build upon such private-sector initiatives and will include recommendations for facilitating and accelerating greater investment in broadband, creating jobs and increasing America’s global competitiveness.”

Mr. Whitt said that while Google would build the network, it might not offer the Internet service to consumers. Instead, he said the company planned to open its network to other service providers, emulating a business model that was common during the days of dial-up Internet access. That model all but disappeared in the United States with advent of broadband, but remains common in other countries.

“It may be that Google is the I.S.P., but it could be AOL or EarthLink or dozens of companies you could choose from,” Mr. Whitt said. “We are more interested in learning what happens to the network itself.”

Google has a long history of pushing against what it sees as barriers to fast and unfettered Internet access. Since 2006, the company has operated its own wireless network in Mountain View, Calif., where it is based. It later supported a plan to offer similar service in San Francisco, which was derailed because of opposition from some city officials.

In 2008, Google bid more than $4 billion in a government auction for wireless spectrum. Google said it had no desire to win the auction, but wanted to ensure that the airwaves would be subject to so-called openness requirements — meaning that Google services like Web search, Gmail and maps could not be excluded from phones using those frequencies.