Monthly Archives: October 2017

Broadband Regulation is in Limbo

We have reached a point in the industry where it’s unclear who regulates broadband. I think a good argument can be made that nobody is regulating broadband issues related to the big ISPs.

Perhaps the best evidence of this is a case that is now in Ninth Circuit Court of Appeals in San Francisco. This case involves a 2014 complaint against AT&T by the Federal Trade Commission based on the way that AT&T throttled unlimited wireless data customers. The issue got a lot of press at the time when AT&T started restricting data usage in 2011 for customers when they hit some arbitrary (and unpublished) data threshold in a month. Customers got shuttled back to 3G and even 2G data speeds and basically lost the ability to use their data plans. The press and the FTC saw this as an attempt by AT&T to drive customers off their grandfathered unlimited data plans (which were clearly not unlimited).

AT&T had argued at the FTC that they needed to throttle customers who use too much data as a way to manage and protect the integrity of their networks. The FTC didn’t buy this argument ruled against AT&T. As they almost always do the company appealed the decision. The District Court in California affirmed the lower court ruling and AT&T appealed again, which is the current case in front of the Ninth Circuit. AT&T is making some interesting claims in the case and is arguing that the Federal Trade Commission rules don’t allow the FTC to regulate common carriers.

There are FTC rules called the ‘common carrier exemption’ that were established in Part 5 of the original FTC Act that created the agency. These exemptions are in place to recognize that telecom common carriers are regulated instead by the FCC. There are similar carve-outs in the FTC rules for other industries that are regulated in part by other federal agencies.

The common carrier exemption doesn’t relieve AT&T and other telecom carriers from all FTC regulation – it just means that the FTC can’t intercede in areas where the FCC has clear jurisdiction. But any practices of telecom carriers that are not specifically regulated by the FCC then fall under FTC regulations since the agency is tasked in general with regulating all large corporations.

AT&T is making an interesting argument in this appeals case. They argue since they are now deemed to be a common carrier for their data business under the Title II rules implemented in the net neutrality order that they should be free of all FTC oversight.

But there is an interesting twist to this case because the current FCC filed an amicus brief in the appeal saying that they think that the FTC has jurisdiction over some aspects of the broadband business such as privacy and data security issues. It is this FCC position that creates uncertainty about who actually regulates broadband.

We know this current FCC wants to reverse the net neutrality order, and so they are unwilling right now to tackle any major issues that arise from those rules. In this particular case AT&T’s throttling of customers occurred before the net neutrality decision and at that time the FCC would not have been regulating cellular broadband practices.

But now that the FCC is considered to be a common carrier it’s pretty clear that the topic is something that the FCC has jurisdiction of today. But we have an FCC that is extremely reluctant to take on this issue because it would give legitimacy to the net neutrality rules they want to eliminate.

The FCC’s position in this case leads me to the conclusion that, for all practical purposes, companies like AT&T aren’t regulated at all for broadband issues. The prior FCC made broadband a common carrier service and gave themselves the obligation to regulate broadband and to tackle issues like the one in this case. But the new FCC doesn’t want to assert that authority and even goes so far as to argue that many broadband related issues ought to be regulated by the FTC.

This particular case gets a little further muddled by the timing since AT&T’s practices predate Title II regulation – but the issue at the heart of the case is who regulates the big ISPs. The answer seems to be nobody. The FCC won’t tackle the issue and AT&T may be right that the FTC is now prohibited from doing so. This has to be a huge challenge for a court because they are now being asked who is responsible for regulating the case in front of them. That opens up all sorts of possible problems. For example, what happens if the court rules that the FCC must decide this particular case but the agency refuses to do so? And of course, while this wrangling between agencies and the courts is being settled it seems that nobody is regulating AT&T and other broadband providers.

The Next Big Broadband Application

Ever since Google Fiber and a few municipalities began building gigabit fiber networks people have been asking how we are going to use all of that extra broadband capability. I remember a few years ago there were several industry contests and challenges to try to find the gigabit killer app.

But nobody has found one yet and probably won’t for a while. After all, a gigabit connection is 40 times faster than the FCC’s current definition of broadband. I don’t think Google Fiber or anybody thought that our broadband needs would grow fast enough to quickly fill such a big data pipe. But year after year we all keep using more data, and since the household need for broadband keeps doubling every three years it won’t take too many doublings for some homes to start filling up larger data connections.

But there is one interesting broadband application that might be the next big bandwidth hog. Tim Cook, the CEO of Apple, was recently on Good Morning America and he said that he thinks that augmented reality is going to be a far more significant application in the future than virtual reality and that once perfected that it’s going to be something everybody is going to want.

By now many of you have tried virtual reality. You don a helmet of some kind and are then transported into some imaginary world. The images are in surround-3D and the phenomenon is amazing. And this is largely a gaming application and a solitary one at that.

But augmented reality brings virtual images out into the real world. Movie directors have grasped the idea and one can hardly watch a futuristic show or movie without seeing a board room full of virtual people who are attending a meeting from other locations.

And that is the big promise of virtual reality. It will allow telepresence – the ability for people to sit in their home or office and meet and talk with others as if they are in the same room. This application is of great interest to me because I often travel to hold a few hour meetings and the idea of doing that from my house would add huge efficiency to my business life. Augmented reality could spell the end of the harried business traveler.

But the technology has far more promise than that. With augmented reality people can share any other images. You can share a sales presentation or share videos from your latest vacation with grandma. This ability to share images between people could drastically change education, and some predict that over a few decades that augmented reality would begin to obsolete the need for classrooms full of in-person students. This technology would fully enable telemedicine. Augmented reality will enhance aging in the home since shut-ins could still have a full social life.

And of course, the application that intrigues everybody is using augmented reality for entertainment. Taken to the extreme, augmented reality is the Star Trek holodeck. There are already first-generation units that can create a virtual landscape in your living room. It might take a while until the technology gets as crystal clear and convincing as the TV holodeck, but even having some percentage of that capability opens up huge possibilities for gaming and entertainment.

As the quality of augmented reality improves, the technology is going to require big bandwidth connections with a low latency. Rather than just transmitting a 2D video file, augmented reality will be transmitting 3D images in real time. Homes and offices that want to use the technology are going to want broadband connections far faster than the current 25/3 Mbps definition of broadband. Augmented reality might also be the first technology that really pushes the demand for faster upload speeds since they are as necessary as download speeds in enabling a 2-way augmented reality connection.

This is not a distant future technology and a number of companies are working on devices that will bring the first-generation of the technology into homes in the next few years. And if we’ve learned anything about technology, once a popular technology is shown to work, demand in the marketplace there will be numerous companies vying to improve the technology.

If augmented reality was here today the biggest hurdle to using it would be the broadband connections most of us have today. I am certainly luckier than people in rural areas and I have a 60/5 Mbps connection with a cable modem from Charter. But the connection has a lot of jitter and the latency swings wildly. My upload stream is not going to be fast enough to support 2-way augmented reality.

The economic benefits from augmented reality are gigantic. The ability for business people to easily meet virtually would add significant efficiency to the economy. The technology will spawn a huge demand for content. And the demand to use the technology might be the spur that will push ISPs to build faster networks.