Tag Archives: Chairman Tom Wheeler

Is the FCC an Independent Agency?

FCC Chairman Brendan Carr recently told Congress that he doesn’t believe that the FCC is an independent agency. The FCC went so far as to remove the term independent from its website. The bottom line of Chairman Carr’s opinion is that he believes the FCC should take direction from the White House.

It’s an interesting position that contradicts the long-standing intentions that the FCC, and many other federal agencies are independent, meaning that they don’t take directions directly from the Administration, but are required to follow whatever enabling laws and rules established by Congress. There are a number of independent agencies other than the FCC, including the EPA, SEC, Federal Reserve, NASA, CIA, FTC, SSA, and NTSB.

There are several key characteristics of independent agencies. First, they are not part of, and don’t report to any of the fifteen cabinet departments like State or Treasury. Independent agencies were generally established by Congress to be somewhat shielded from political pressure. For example, it’s not easy for the President to fire the head of an independent agency. The agencies are often structured with a multi-member Board or Commission, which typically includes rules that require representation from both parties. Some agencies like the SEC and the FCC are accorded rule-making power within a specified range of issues.

The FCC was created by Congress with the passage of the Communications Act of 1934. The agency has been directed by Congress to regulate radio, television, wire, satellite, cable, and the Internet. The Act did not include language that specified the FCC was independent. The independent status is inferred from the structural provisions in the Act that define how the agency operates. The relevant language appears in Section 4(a) of the Act (codified as 47 U.S.C. § 154(a)), which establishes the structure of the Commission. The Act created a commission of five (originally seven) members who are appointed by the President and confirmed by the Senate. The Commission must be bilateral, and no more than three members can be from the same political party. Commissioners serve for fixed, five-year terms. The FCC is required to follow laws passed by Congress aimed specifically at the agency.

The Supreme Court has explored issues related to independent agencies over the years. Supreme Court rulings, like Humphrey’s Executor v. United States (1935), defined a key element of an independent agency to be a lack of explicit legislative language giving a President the power to remove commissioners at will (i.e., for any reason). Instead, the ability to remove commissioners is widely understood to be limited to specific reasons like “inefficiency, neglect of duty, or malfeasance in office.” This structure of independent agencies is done deliberately to insulate agencies from direct presidential control and ensure decisions are based on the public interest rather than political pressure.

Chairman Carr’s statements are a direct challenge to Congress. Historically, independent agencies like the FCC are given general marching orders from Congress through legislation, but even then, the agency is free to interpret specifically how to enact laws. Chairman Carr says that he feels empowered to take direction directly from the White House, and it seems likely this will eventually trigger a showdown. At some point, Congress will have to assert its authority or cede its power to the Administration.

The FCC has never been free from politics, because almost nothing in Washington D.C. can be. The FCC Chairman has traditionally been from the same party as the White House and is typically sympathetic to policies of the administration. But there has always been an uproar if an FCC Chairman has been accused of directly taking direction from the administration. An example of this happened when Republicans accused Chairman Tom Wheeler of too closely following the White House direction on the issue of net neutrality.

The long-term repercussions of a political FCC are not good for the industry. While ISPs, carriers, and programmers all have a wish list of regulations they don’t like, there has always been a huge benefit for regulated companies to have regulatory certainty, which means that rules don’t change drastically with every change of administration. Regulated companies might complain loudly about being overregulated, but they benefit financially from knowing the rules, since this allows them to develop long-term strategies. Every large ISP will quietly admit that regulatory certainty is far better for them than rules that change with each Administration.

Will We Ever End Legacy Telephone Networks?

Anybody not involved in the telephone business will probably be surprised to find that the old TDM telephone networks are still very much alive and in place. The old technologies were supposed to be phased out and replaced by digital technologies. The FCC started talking about this before 2010. In 2013, Tom Wheeler, the FCC Chairman at the time, announced an effort to force the needed changes, which was dubbed the IP Transition. The goal of the transition was to upgrade and replace the public switched telephone network that was used by every telco, CLEC, and cable company for exchanging voice traffic.

The FCC made good on the promise and released an order in 2015 that described the process for telcos to retire copper networks, and that also discontinued the requirement that big telcos offer wholesale TDM services. In 2016 the FCC released that full IP Transition Plan that was aimed at replacing the TDM voice infrastructure with an all-IP network.

But somewhere along the line, AT&T and Verizon highjacked the IP Transition. AT&T announced a few trials to eliminate the TDM network, but then the transition process stopped and was never discussed again. Industry insiders speculated that all the big telcos really wanted from the IP Transition was the ability to retire copper telephone networks, and once they won that issue they lost interest in the costly process of replacing or upgrading legacy systems. The FCC didn’t help when it poured billions of dollars into upgrading the old copper networks of the big telcos through the CAF II subsidy program.

The problem is that all of the problems that were identified with old TDM technology in 2013 are still around today. Any telephone company or CLEC that wants to exchange traffic with the big telephone companies must still do so using TDM technology (technology based on T1s). Telephone features like caller ID still rely on the SS7 network, which is a separate network used to exchange data associated with a telephone call.

Small carriers have been begging for years for the big telcos like AT&T, Verizon, and CenturyLink to allow digital SIP connections instead of TDM connections – but the big companies are deaf to these pleas. There are big parts of the national telephone networks that have been upgraded – for example, large cellular companies have digital SIP connections to the big telcos. It’s interesting how something that benefits AT&T and Verizon was upgraded, just not the connections used by everybody else.

It’s getting more costly every year for traditional carriers to keep using the TDM networks. The prices being charged for T1s have steadily climbed since the 2015 order that eliminated mandatory wholesale T1 prices. The cost of ancillary services needed to support voice, like the SS7 network, is climbing even faster. A handful of large companies that provide most of the SS7 services have squeezed smaller providers out of the market. The cost to access to the databases that include things like the name of calling parties needed for Caller ID has skyrocketed.

Meanwhile, smaller telcos have done everything suggested by the original IP Transition order. Most of them have replaced, or are in the process of replacing copper networks with fiber. These companies have modernized everything except for the legacy connections that are still the only option for completing local calls with neighboring carriers.

What is probably most amazing (or maybe not amazing at all) is how the FCC ordered the IP Transition and then just let the biggest telcos walk away from the process with no repercussions. This is partly due to the big telcos that just stopped working on the issue, but also on the Ajit Pai FCC that entered the picture in 2017 with the agenda of not regulating big companies. It’s time for the FCC to pick this back up and finally make this happen.

My consulting firm is still highly attuned to these issues. Anybody having a problem with TDM trunking, or access to SS7 or SS7 databases should contact me. I will be the first to tell you that I never expected to be still talking about these issues in 2024.

Ten Years

Today is the tenth anniversary of writing this blog every day. That equates to 2,527 blogs, and that got me thinking about why I write this blog. It also got me thinking about the things I have gotten right and wrong over the years in my daily musings about the broadband industry.

I give full credit for this blog to my wife Julie. Ten years ago, I told her that I was having trouble keeping up with the rapid changes in the industry. Julie suggested that I start writing a daily blog as a way to force myself to read and think about the industry. Writing a blog every day was incredibly difficult at first. I struggled to find topics, and I struggled to condense my thoughts into 700-word essays. But I stuck with it until writing became a habit. I now can’t imagine not writing a blog, and I usually have a longer list of potential topics than there are days to write about them.

Before writing this blog, I went back and read some of my blogs over the years to see what I got right and wrong. One thing about having a public blog is that you can’t escape what you’ve said in the past – it’s all still out there to read.

One of the first things I got wrong happened in the first year of writing the blog. I was highly skeptical of Tom Wheeler being named Chairman of the FCC. Mr. Wheeler had an interesting career as CEO of several high-tech companies but had also served as the President of the National Cable Television Association (NCTA) and the Cellular Telecommunications & Internet Association (CTIA). I assumed that his experience in lobbying for the biggest companies in the industry meant that he was going to bring a bias to the FCC strongly in favor of big companies over everybody else. I couldn’t have been more wrong. Tom Wheeler ended up being one of the most even-handed heads of the FCC during my career. He sometimes sided with large corporations, but he also was a champion of consumers and municipal broadband – something that I think surprised everybody in the industry. He was what you want to see in an FCC Chairman – somebody who independently supported what he thought was right instead of what was wanted by corporate lobbyists.

Another thing I got wrong was something I wrote near the end of 2019. By that time, I had heard for years from rural communities that despaired that they had no broadband and were being left behind. I wrote that I sadly didn’t see any real hope on the horizon and that rural communities were on their own to get creative and find a way to fund broadband – even though I knew that the financial lift was beyond most communities. There was no way to know that we were only a few months away from a pandemic that would change everything. We sent students and workers home to somehow cope with school and work without broadband, and the cry for better broadband could no longer be ignored. We’re now awash in broadband grant funding. It’s going to take a few years to see if the grant funding is enough to serve everybody, but broadband solutions are on the way for most rural communities that were unimaginable in 2019.

I also got some things right. From the first time that I heard about the supposed wonders of 5G, I was extremely skeptical because I couldn’t find a business case for the technology. Almost everybody in the country already had a cellphone, and it was hard to imagine that people would be willing to spend more to get the rather obscure benefits promised by 5G. If anything, the trend seemed to be in the opposite direction, with competition driving cellular prices lower. I watched in amazement as the power of large corporate lobbying invented a fervor for 5G out of thin air. The public and politicians were sold on the idea that 5G meant a broadband revolution, and the 5G message was suddenly everywhere. There is still no great business case for 5G and there has been very little actual 5G technology introduced into networks. Yet even today, I keep reading about how 5G will soon change everything.

I also got it right in predicting that broadband demand would continue to grow. Akamai reported in 2013, when this blog started, that the average broadband download speed in the U.S. was 8.6 Mbps. Pew said that 2013 was the year when home broadband connections hit a 70% market penetration. The digital divide was already evident in 2013 when 90% of homes that included a college graduate had broadband compared to only 37% for homes where the adults didn’t have a high school degree. From the beginning of writing my blog, I predicted that home broadband consumption would double every three years – and it has grown even faster. Amazingly, politicians and policymakers still act like broadband demand is static. In 2015, the FCC amazingly handed out $1.5 billion annually for six years of CAF II funding to support the rural DSL provided by the largest telcos. Even today, policymakers are ignoring the broadband growth trends by allowing BEAD grants to be given to technologies as slow as 100/20 Mbps. We embarrassingly still have a national definition of broadband of only 25/3 Mbps at a time when a large majority of folks are able to buy gigabit speeds.

People often ask me how long I’ll keep writing this blog, and my answer is easy. I’ll keep writing for as long as there are interesting topics to talk about – and for as long as it’s fun.

Lowering the Official Speed of Broadband

The FCC’s intention to kill net neutrality is getting all of the headlines, but there is another quieter battle going on at the FCC that has even bigger implications for rural America.

The last FCC under Chairman Tom Wheeler raised the definition of broadband in 2015 to 25/3 Mbps, up from the archaic definition of 4/1. In doing so the FCC set the speed based upon the way that an average household uses broadband. At the time many people argued that the FCC’s way of measuring broadband need was somewhat contrived – and perhaps it was because it’s really a challenge to define how much broadband a home needs. It’s not as easy as just adding up the various web connections as I described in a recent blog.

The FCC is now considering lowering the definition of broadband down to 10/1 Mbps. That would be a dagger to the heart of rural broadband, as I will discuss below.

One only has to look at the big ISPs to see that the FCC is ignoring the realities of the market. The big cable companies have all set minimum broadband speeds above the 25/3 Mbps current FCC broadband definition. Charter’s base broadband product for a new customer is 60 Mbps. Depending upon the market Comcast’s base speeds are 50 Mbps or 75 Mbps. AT&T says they are starting to back out of their DSL business because their fastest U-verse product only has speeds up to 50 Mbps. These big ISPs all get it and they know that customers are only happy with their broadband connection when it works without problems. And providing more speed than 25/3 Mbps is how these companies are satisfying that customer demand.

Unfortunately the FCC’s definition of broadband has huge real life implications. The big urban ISPs won’t change what they are doing, but a lower threshold could kill attempts to improve rural broadband. The FCC has a mandate from Congress to take steps to make sure that everybody in the country has adequate broadband. When the FCC increased the definition to 25/3 Mbps they instantly recognized that 55 million people didn’t have broadband. And that forced them to take steps to fix the problem. Since 2015 there has been a lot of rural broadband construction and upgrades made by cable networks in small town America and the latest estimates I’ve seen say that the number of those without 25/3 Mbps broadband is now down to around 39 million. That’s still a lot of people.

If the current FCC lowers the definition to 10/1 Mbps then many of those 39 million people will instantly be deemed to have broadband after all. That would take the FCC off the hook to try to solve the rural broadband gap. To really show that this is just a political decision, the FCC is also contemplating counting a cellular broadband connection as an acceptable form of broadband. In doing so they will then be able to declare that anybody that can get this new slower speed on a cellphone has an adequate broadband solution.

Of course, when I say this is all just politics there are those that said the same thing when the Wheeler FCC raised the definition to 25/3 Mbps. At that time critics might have been right. In 2015 there were a lot of homes that were happy with speeds less than 25/3 Mbps and that definition might have been a little bit of a stretch for the average home.

But when you take all of the politics out of it, the reality is that the amount of broadband that homes need keeps growing. Any attempt to define broadband will be obsolete within a few years as broadband usage continues on the path of doubling every three years. A home that needed 15 or 20 Mbps download in 2015 might now easily need more than 25/3 Mbps. That’s how the math behind geometric growth is manifested. .

It is disheartening to see the FCC playing these kinds of political games. They only need to go visit any rural kid trying to do homework to understand that 10/1 Mbps broadband on a cellphone is not broadband. The FCC only needs to go talk to somebody in rural America who can’t take a good-paying work-at-home job because they don’t have good broadband. They only need to go and talk to farmers who are losing productivity due to lack of a good broadband connection. And they only need to talk to rural homeowners who can’t find a buyer for their home that doesn’t have broadband.

This is too critical of an economic issue for the country to let the definition of broadband change according to the politics of the administration in office. Rather than political haggling over the official definition of broadband we ought to try something new. For example, we could set a goal that rural America ought to at least have half of the average speeds of broadband available in urban America. Using some kind of metric that people can understand would take the politics out of this. This is a metric that companies like Akamai already quantify and measure. The amount of broadband that homes needs is a constantly growing figure and pinning it down with one number is always going to be inadequate. So maybe it’s time to remove politics from the issue and make it fact based.

New Settop Box Rules

roku-3-2Chairman Tom Wheeler proposed new settop box rules last week for the eight largest cable companies. The proposal reverses much of the Chairman’s last settop box proposal that would have required each cable company to find a way to support a common cable box that customers could buy.

The large cable companies lobbied hard that the first proposal added a lot of costs without much public benefit (and they were right). The new proposal is based partially on recommendations made by the large cable companies.

The core of the new proposal is that the large cable companies will have to offer free apps that would allow customers to receive their cable signal on a variety of devices such as a Roku box, a smart-TV or a SONY Playstation.  Any customer electing to use the app could return their settop boxes and avoid the expensive fees (which have grown to as high as $10 per box).

I’m guessing that the cable companies will make the app option pretty vanilla and it will provide a channel line-up as well as a way to easily tune between channels. The big question will be if the cable companies will give away their more advanced features for free as part of the apps. For example, today many of these companies have cloud-DVR and other advanced services and we’ll have to see if the companies will make customers lease a settop box to get these additional features.

And as I wrote in an article last week, a few of the biggest cable companies like Comcast have put a lot of development into new features for their latest settop boxes. Having a free app alternative might nudge the cable companies to lower settop box prices compared to today to entice people to instead use the box.

The proposed new rules also have a requirement that the cable companies must include other sources of programming in their search guide. For example, if a customer is looking for a movie not available at the cable company, the search might show that the movie is instead available at Hulu or Netflix. Comcast is already doing this today on a limited basis by bringing Netflix into their line-up as another ‘channel’.

This is a very odd requirement that would seem to favor OTT providers the most. It will be curious to see how customers like idea of constantly being offered programming to which they may not be subscribed. I can foresee one consequence of this move in that it might prompt cable companies and OTT providers to work together to create an ‘on-demand’ product for OTT content. That could benefit both companies.

The FCC will be establishing some kind of clearing house for the apps. They learned a lesson with the cable card order many years ago that if the cable companies are left to their own they will make it hard for customers to find the new alternative. The FCC wants to approve apps and somehow bless them, in a process that would need to be worked out.

These new requirements will not apply to smaller cable providers – which is good since it’s hard to imagine them having to do the work needed to create apps for a wide variety of ever-changing devices. But that doesn’t mean that there won’t be consequences for smaller companies.

If it turns out that customers love the free apps there will be pressure on smaller companies to somehow do the same thing. And perhaps these app, once developed will be made available to the smaller cable providers. But it’s likely that the apps are going to be written for two platforms – standard HFC cable networks and satellite TV. That means that there will probably be nobody writing similar apps for fiber or DSL-based cable systems.

One would also think over time that, if successful, these new rules will lower the demand for settop boxes. Over time that might drive up the cost of settop boxes for everybody else. However, to some extent we are already on that path since the biggest cable companies like Comcast and DirecTV have already migrated to custom settop boxes and don’t buy from the normal industry vendors.