Because every American
should have access
to broadband Internet.

The Internet Innovation Alliance is a broad-based coalition of business and non-profit organizations that aim to ensure every American, regardless of race, income or geography, has access to the critical tool that is broadband Internet. The IIA seeks to promote public policies that support equal opportunity for universal broadband availability and adoption so that everyone, everywhere can seize the benefits of the Internet - from education to health care, employment to community building, civic engagement and beyond.

Thursday, September 22

Boucher on Business Data Services

By IIA

Earlier today, Morning Consult published an op-ed from our own Rick Boucher on the FCC’s ongoing business data services proceedings. An excerpt:

Simple economics suggests that the way to promote the most rapid deployment of the fastest business data services to the enterprises that need them is to rely on competition and the market forces that drive innovation and investment. The FCC, however, seems to start from the position that only regulation can ensure that adequate services are provided to businesses. And so the agency is seeking to set prices at a level that, while convenient for some competitors, doesn’t allow for a sufficient return on investment to stimulate broadband deployment. How this approach will spur investment and deployment is anyone’s guess; the FCC doesn’t have an answer.

Now a group of seven prominent economists has just made clear their opposition to the conclusions the agency is drawing from its plethora of regressions. In short, the economists argue that, because the FCC starts from the wrong place – the mistake that correlation implies causation – the agency, therefore, ends up at the wrong place – the idea that there is not only market power in the Ethernet market but market power that justifies price regulation. As they write, “[a]s commenters across the spectrum rightly acknowledge, the rationale for ex ante rate regulation hinges entirely on protecting customers from a dominant provider’s abuse of market power; in turn, there is no plausible argument for regulating BDS providers that lack market power.”

Check out Boucher’s full op-ed over at Morning Consult.

Monday, September 19

Economists on BDS Competition

By IIA

As the FCC continues its murky — and occasionally confounding — Business Data Services (BDS) process, seven economists have penned a letter to the Commission arguing that any imposed rate regulation on what is a truly competitive market would be a mistake and counterproductive. From said letter:

As commenters across the spectrum rightly acknowledge, the rationale for ex ante rate regulation hinges entirely on protecting customers from a dominant provider’s abuse of market power; in turn, there is no plausible argument for regulation BDS providers that lack market power. No party has suggested — let alone demonstrated — that competitive BDS providers exercise significant market power. Moreover, some of the undersigned economists have examined marketplace data regarding the current state of BDS competition and have found that such data do not support claims that incumbent LECs exercise market power broadly in the provision of BDS.

Translation: The BDS market is competitive and there is no need for across the board price regulation. Again, from the letter:

To the degree there are some BDS markets with persistent monopoly power, we agree that it could be economically justified and welfare enhancing to reduce monopoly rents in such markets to a best approximation of competitive levels, to the extent such a goal can be achieved without imposing large costs on providers and disincentivizing investment. The Commission should limit any such regulation to markets characterized by monopoly power that are unlikely to become effectively competitive in the near future. To that end, the Commission should regulate BDS rates for legacy services only in geographic BDS markets where only a single facilities-based provider is present or nearby.

Translation: If regulation is necessary, it should be implemented using a scalpel, not a hacksaw.

To read the full letter from the economists to the FCC, click here.

Monday, September 12

The Infrastructure of Virtual Reality

By Brad

image

Over at tech site Recode, our Co-Chairman Jamal Simmons and former Co-Chairman Larry Irving have penned an op-ed on virtual reality and the need for regulators to encourage private investment in the infrastructure that supports it. An excerpt:

The future of virtual reality is bright. Investors are bullish, users are excited to consume novel entertainment and educational applications, and engineers are developing new products. While innovators create exciting hardware and content, a VR future is only possible if policymakers make the right decisions today. Virtual reality will require new and upgraded broadband networks, both wired and wireless, that will be capable of satisfying future bandwidth needs of the technology, which consumes massive amounts of data.

Policymakers need to make more spectrum available, too. People are using their iPhones and Android phones for the early versions of VR, but today’s tools will not be adequate for a fully immersive, high-definition virtual reality future. Whether it is 4K, 5K, high-definition or ultra-high definition, each next-generation technology will require retrofitting our infrastructure. It’s time to rethink, rebuild and reinvest.

Check out at the full op-ed over at Recode.

Thursday, September 08

A Look at the Current FCC’s Legacy of Confusion

By Brad

With the election looming and the current makeup of the FCC likely nearing its end, Fred Campbell has penned a thorough look at what he describes as the FCC’s “legacy of confusion about competition.” An excerpt:

The Wheeler FCC’s repudiation of economic rigor and legal precedents is an anomaly that should end with this fall’s election. Unfortunately, Wheeler is determined to dictate the economic and engineering of several market segments before his time expires. In the few months he has remaining, Wheeler wants to:

• Dilute copyright protections for digital content, dictate retail pricing, and weaken privacy protections for consumers in the video marketplace (despite an FCC finding from just last year that this market is effectively competitive), all of which threaten to bring television’s second golden age to an end;

• Impose ineffective data regulations just on broadband Internet access providers (while leaving other big data companies untouched) that would give internet edge competitors government-sanctioned competitive advantages in the internet advertising and big data markets at the expense of consumers; and

• Impose new price regulations on business data services to reduce the investment costs of favored companies (like Sprint) at the expense of their competitors.

These last-minute proposals are inconsistent with our fundamental economic policy of promoting competition and private investment, and none of them are premised on the sound, data-driven analyses Wheeler promised.

Check out Campbell’s full piece over at Forbes.

Wednesday, August 31

Title II Back in Court

By Brad

Speaking of the FCC and Title II (see our infographic), the Commission’s reclassification of broadband still faces challenges in court.

The FCC’s regulation has been challenged by providers and others, asking for a full federal appeals court review of the previous panel decision. As BNA reported, the FCC has already asked for the deadline to respond to be extended to October 3.

Tags: title ii, fcc, court

Friday, August 26

40 Years of Smart Policy & the FCC’s About-Face

By IIA

Tomorrow is the 40-year anniversary of the Internet Age. On August 27, 1976, scientists from SRI International successfully sent an electronic message from a computer set up at a picnic table at a Portola Valley, California biker bar, to SRI and on through the ARPANET network to Boston.

While the U.S. has seen nearly 40 years of pro-growth internet policy, the Federal Communications Commission in 2015, unfortunately, went from promoting internet investment and innovation through an open, multi-stakeholder platform to making the internet a government utility weighed down by Title II regulation. Check out the infographic below to see the FCC’s abrupt about-face.


DOWNLOAD A COPY OF THIS INFOGRAPHIC

Wednesday, August 17

ICYMI: IIA’s BDS Reply Comments

By Brad

We recently submitted Reply Comments to the FCC’s proposed Business Data Services (BDS) policy. You can read the full comments here, but here’s some highlights:

PRICE REGULATION OF LEGACY AND ETHERNET BUSINESS DATA SERVICES WILL DETER THE INVESTMENT NECESSARY FOR UBIQUITOUS HIGH-SPEED BROADBAND DEPLOYMENT

Only the private sector can provide investment necessary for BDS deployment. As the FCC previously recognized, $350 billion of investment is needed to meet the Nation’s high-speed broadband needs. Investment capital at that level can come only from the private sector, not from government. Similarly, private investors will invest only where they can reasonably envision a positive return on their investment. Thus, to meet the growing demand for ubiquitous nationwide high-speed broadband deployment – including the BDS market – government should advance only those policies that actively promote and encourage, rather than deter, private investment.

Investment has promoted and will continue to promote real competition in the BDS market. IIA’s studies affirm how the business broadband market has evolved (and continues to evolve) far past the point at which ongoing regulation of this market can be justified. By the end of 2015, wireline competitors, including cable and CLECs, had roughly the same number of business broadband lines as the Incumbent Local Exchange Carriers (ILECs). CLECs seek to continue to rely on incumbents’ networks where they can, rather than employing a business strategy based on true facilities-based investment and competition.

Further Competitive Local Exchange Carrier (CLEC) investment would be easy but continues to lag. Facilities-based competition is accessible for the vast majority of buildings for which there is BDS demand. The FCC’s record highlights how 25% of buildings connected only to ILEC services with demand for BDS services are 17 feet away from the nearest competitive provider’s fiber network, 50% are 88 feet away, and 75% are within 456 feet. If CLEC providers truly wished to serve these buildings, they would have few difficulties building out nearby fiber to them. CLECs have made a business decision to ignore direct facilities-based competition and rely on other carriers’ capital investments to reach customers, rather than to adopt policies that will promote investment and thus benefit the economy as a whole.

REGULATION OF BDS IS IN NO WAY NECESSARY FOR 5G DEPLOYMENT AND WILL IN FACT HARM AND SLOW 5G DEPLOYMENT

The rapid deployment of fiber to date has occurred without the heavy hand of regulation, and there is no reason to doubt that it will continue. The robust fiber build-out to the nation’s existing macro cell towers to facilitate the transition to 4G wireless networks is an excellent barometer of how the market responds to business opportunities presented in the wireless backhaul market.

THE NASCENT DEVELOPMENT OF 5G TECHNOLOGY ARGUES AGAINST THE COMMISSION’S JUSTIFICATION FOR BDS REGULATION

The new 5G networks will transmit data at Gigabit speeds and will, by definition, not be able to use TDM-based megabit speeds. Thus, the regulation of legacy networks is irrelevant to future 5G deployment. The Commission simply cannot use the market-driven transition to 5G networks as justification for ex ante regulation, which would seem to steer the direction of 5G evolution rather than letting the technology evolve and markets along with it.

INVESTMENT AND DEPLOYMENT OF BROADBAND NETWORKS AND SERVICES IN RURAL AMERICA WILL SUFFER UNDER THE FCC’S PROPOSED BDS PRICE REGULATION

High-speed broadband is deployed most quickly when investors have incentives to invest in these deployments. A system that imposes price regulation and lowers profit margins for investors will not provide the necessary incentives for rapid deployment of 5G technology (or even 4G technology) to rural America.

Tuesday, August 09

Boucher on Business Data Services in Forbes

By Brad

Over at Forbes, our Honorary Chairman Rick Boucher has an op-ed on how regulating prices for business data services will only increase the digital divide. An excerpt:

It’s well understood that high-speed networks are deployed most quickly when investors can foresee a profitable rate of return on investment. Because of the unique challenges to network deployment in rural America, the need for a predictable rate of return on investment is essential for rural providers. The Commission’s proposal would impose on rural America a system that, by design, is assured to diminish new network investment. With price regulation, rural deployments would bring lower returns. With the incentive to invest removed, few companies would be willing to dedicate the capital needed to modernize rural networks. The deployment gap will widen, and the arrival of competition in the business data market will be delayed. Even if one high-speed network company proved willing to invest in the currently unserved rural market, it would immediately be saddled with de facto monopoly status and subjected to price regulation.

Under these conditions, it’s certain that few companies would make rural investments. The FCC cannot simply overlook the reality of these markets and remain true to its and the Administration’s commitment that all Americans, and all American businesses, including rural hospitals and educational institutions that are the lifeblood of many local communities, deserve and should receive the same broadband services available in metropolitan areas.

Check out Boucher’s full op-ed over at Forbes.

Tags: fcc, rick boucher, bds

Watch the IIA Event at the Republican National Convention

By IIA

The light-touch regulatory framework of the 1996 Telecom Act set the stage for extensive internet network investment and innovation. To examine how this investment and innovation have empowered Americans to shape presidential races, we hosted “From Netscape to Snapchat: Politics in the Age of Broadband” at the Rock and Roll Hall of Fame in Cleveland during the Republican National Convention (RNC). You can watch a video of the event below.

Thursday, August 04

Verizon’s Exit

By Brad

Over at The Street, our own Bruce Mehlman has an op-ed on Verizon’s recent about face when it comes to investment and facilities-based competition, particularly in the business data services market. An excerpt:

Since 2003 — a virtual eternity in the fast-paced world of telecom — Verizon has staunchly advocated for investment, deployment of fiber, and facilities-based competition. Verizon’s once-visionary leadership coined the phrase ‘new wires, new rules/old wires, old rules’ used by the FCC to create pro-fiber investment policies that helped spur the deployment of its modern high-speed broadband network. The “Fi” in FiOS, a central part of Verizon’s corporate strategy and broadband buildouts — stands for fiber, after all.

Yet Verizon now trumpets a deal with the competitive local exchange carrier (CLEC) trade association INCOMPAS that favors price regulation in the BDS market. Why the sudden change? Some might suggest that Verizon’s proposed mergers currently pending before the FCC and other government agencies might be the reason why the company is now simply driving 55 past the speed trap giving a friendly wave to the regulatory cops.

But there’s another likely reason: In a highly regulated environment, it can be tempting to let regulators determine outcomes in markets rather than doing the hard work of competition.

You can read Mehlman’s full piece at The Street.

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