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Message to PUCs: Forward or Backward?

While many from the FCC are headed to Vegas to see the latest, coolest devices displayed at the Consumer Electronic Show, I am heading to wintery New York for a conference of State PUC officials.  I’m going to talk about the national broadband plan and universal service fund (USF) and intercarrier compensation (ICC) reform.  Oddly, I think I will have more fun.  I guess there is no accounting for taste.

Most of what I will say relates to what we analyzed through the planning process: that USF and ICC are the two largest revenue streams controlled by the FCC affecting the broadband ecosystem, that the logic and financial underpinnings of both are rapidly breaking down, and that neither is designed to fill the critical gaps in that ecosystem.  To make matters worse, the most prevalent idea in broadband policy–that the primary metric by which a nation’s broadband policy should be judged is the speed of the wireline network to the most rural of residents—is both profoundly wrong and badly affects the way many think about USF and ICC.  That idea, applied as many propose, would lead us backwards, slowing down utilization of broadband networks to drive economic growth, social justice and improvements in the delivery of public services.

In addition to laying out the plan’s approach to reform the status quo, I also will discuss two things that have occurred since the plan.  One is the state reaction to the FCC’s Kansas/Nebraska petition.  The FCC recently opened the door to more state regulation of Voice over Internet Protocol providers.  One can have reasonable disagreements about the appropriate role of the state and federal government over these matters but I would just note that of all the many problems we looked at in the broadband ecosystem, none appeared at their root to stem from too little state regulation.  There is a concern among some that states may use the decision in ways that the FCC assumed would not happened and that such actions, if they occur, will raise the cost of innovation, hurt consumers, and generally move us backwards.

A happier message relates to a condition in the Comcast/NBC-Universal Service deal.  One of the problems with government action is that too often, government does not have the freedom to experiment, which means that policies are often adopted without a good understanding of how it will work and what are the secondary affects.  The broadband team saw this particularly in the case of broadband adoption, an important problem in light of the growing cost of digital exclusion to both individual citizens and society.  We know we will need a program similar to the lifeline-link-up programs that help drive up telephone adoption for low income persons, but broadband adoption raises many issues not relevant in the context of voice services.

The plan proposes that the FCC do some pilot projects to determine the best way to increase adoption.  We also believed that our country’s first priority in addressing adoption should be to make sure every school child has access, as increasingly, the educational experience requires home access to broadband.  Various proposals came from cable and telco providers and while they required actions beyond the jurisdiction of the FCC, they helped increase the understanding of what would be required to bring broadband to the homes of unserved school kids.

As various government entities look at these proposals, Comcast has stepped up in the context of the merger and offered a plan that we should all hope moves the ball forward on this issue.  They built on the proposals developed during the plan and offered a cut-rate plan and other inducements targeted at that particular need.  It is a smart proposal and both Comcast and the FCC officials who worked on it deserve praise for the effort.

Whether the program succeeds or fails, it will help the FCC and others gain a greater understanding of how to address one of the most critical problems we face as a country.  In the 21st Century economy, being digitally illiterate will be, from a job perspective, the equivalent of being illiterate.  The Comcast proposal does not solve every problem but it is an important step in the right direction.  The States, and the Feds, should follow it closely and building off of it, design programs that do provide a comprehensive path forward toward universal adoption.

I’ll close with one of my favorite Peter Drucker quotes: “The danger in times of turbulence is not the turbulence.  It is to act with yesterday’s logic.”  When it comes to USF, ICC and the Kansas-Nebraska petition, my fear is we are acting with yesterday’s logic.  The Comcast proposal is a more hopeful response to today’s turbulence.

 

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