Current News Regulation - What is it Good For?

Is 25 Mbps Still Broadband?

FCC_New_LogoYesterday’s blog noted that the CRTC in Canada (their version of the FCC) adopted a new definition of broadband at 50 Mbps download and 10 Mbps upload. They also said that broadband is now a ‘basic telecommunications service’, meaning that everybody in Canada ought to have access to broadband.

It’s not unusual for a government to define broadband. Two years ago at the end of January 2015 the FCC defined US broadband to be connections that are at least 25 Mbps down and 3 Mbps up. That was a huge increase over the older US standard of 4 Mbps down and 1 Mbps up. The Canadian action raises several questions for me. First, what does it mean when a government defines broadband? Second, once broadband has been defined, how often should the definition be reexamined to see if it’s still adequate?

There is no easy answer to the second question. There is almost nothing in our lives that is growing as rapidly as the demand for broadband. Since the early 80s the demand for speeds and total downloads has doubled approximately every three years. According to Cisco that growth curve might be slowing a tad and perhaps will now double every four years. But this means that any definition of broadband is going to become quickly obsolete. I am not surprised to see somebody talking about twice the speed of the US broadband definition even though it’s only been two years since it was set. And this means that if a government is going to define broadband at a specific speed, then they are almost committed to reexamining that speed on a regular basis.

The policy question of why a government should define broadband is a harder question. Certainly there was a wide range of positions on the topic among the five FCC Commissioners at the time the new definition was set. Commissioner Jessica Rosenworcel thought the definition ought to be 100 Mbps download. Her reasoning was that what the FCC was setting was a goal and that striving high might prompt providers to meet the higher standard. At the other end of the spectrum, Commissioner Michael O’Rielly hated the 25/3 Mbps speed. He said that most cable companies already offered faster speeds and he saw no social benefit from defining broadband to be faster than what people without access to cable networks can get.

It’s clear that after the FCC set the 25/3 definition of broadband that even they weren’t quite sure what it meant. Soon after they approved the 25/3 standard they went on to approve the CAF II plan that is handing out $19 billion dollars to large telcos to improve rural broadband to speeds of at least 10/1 Mbps. The FCC did not feel that their own definition of broadband constrained them from funding something slower.

The main way that the FCC uses their definition of broadband is to count the number of homes that are above or below the broadband threshold. To the FCC this is the litmus test by which they measure the state of broadband in the country. Interestingly, there isn’t a lot of difference for this accounting if the speed is set at 25 Mbps or 50 Mbps. Generally the technologies that can offer 25 Mbps can offer even faster speeds. If the official broadband speed is only for this litmus test then there wouldn’t be much difference between using 25 Mbps and 50 Mbps for that test.

The US has not undertaken any material efforts in the last few years to achieve faster broadband speeds. In fact, in can easily be argued that the CAF II program is doing the opposite and makes it harder for somebody to justify building fiber in rural areas. So, at least in the US, the broadband speed definition is not much more than a number. It certainly presents a target to shoot at for those parts of the country that don’t have broadband, but the government has done almost nothing with that definition to promote faster broadband.

Governments of all sizes have programs to build fiber. Portugal is doing this with tax incentives. The State of Minnesota is doing this with matching grants. And numerous cities have put bond money behind local fiber networks. We’ll have to watch to see if the Canadian government puts any more teeth into their attempt to define broadband. The fact that they also deemed broadband to be a basic service that should be available to all might mean that the government will take steps to build more broadband networks. But setting a broadband definition is a far cry from building fiber infrastructure and it will be interesting to see if setting the 50/10 Mbps goal equates to government involvement in building fiber.

Current News Regulation - What is it Good For?

Is there a Right to Broadband?

The CRTC in Canada (their version of the FCC) just took a step that is bound to reopen a discussion of best definition of broadband – they defined broadband to now be 50 Mbps down and 10 Mbps up. But they went even further and said that broadband is now a ‘basic telecommunications service’, meaning that everybody in the country ought to have access to broadband. In today and tomorrow’s blog I will look at the two issues raised by the CRTC – if there should be a right to broadband, and the role of governments in defining broadband.

Has broadband grown to become a ‘right’? I put the word in quotes because even I don’t think that is what the CRTC did. What they did was declare that the government of Canada officially blesses the idea that their citizens ought to have access to broadband. Over time that decree should prompt other parts of the Canadian government to help make that happen.

But even the CRTC does not think that every home in the country should be wired with fiber. I’ve traveled north of the arctic circle and there are plenty of remote places there that are not connected to the electric grid. And there are remote homes on top of mountains and deep in the woods where homeowners have purposefully withdrawn from civilization. The CRTC is not guaranteeing broadband to such places.

But the CRTC has made a strong statement to recognize the importance of broadband. This is not without precedent. During the last century the US government made similar statements about the right of Americans to electricity. The government then went on to create programs that would help to realize that right. This meant the formation of the Rural Utility Service to provide funding to create rural electric grids, and it mean the creation of government-sponsored electric generation such as with the Tennessee Valley Authority.

These government programs worked well and the vast majority of US homes were connected to the electric grid within a few decades. The investments made in these programs paid back the US government many times over by bringing numerous communities into the modern world. The electrification of America was probably the most profitable undertaking ever undertaken by the US government.

The action taken by the CRTC will be an empty gesture unless it pushes the Canadian government to take the steps needed to get broadband everywhere. The latest statistics show that nearly 20% of homes there, mostly rural, don’t have access to landline broadband. That’s an even larger percentage of homes than in the US and probably reflects the vast rural stretches in central and northern Canada.

The US government has not made the same kind of firm statement like the one just issued by the CRTC, but we’ve clearly taken official steps to promote broadband. There were billions poured into building middle-mile fiber in rural America with the stimulus grants. And the $19 billion CAF II fund is promoting broadband for areas that have none – although it’s still puzzling to understand the bandaid approach of that program that is pouring money into building infrastructure that doesn’t even meet the FCC’s definition of broadband. But the official goal of CAF II program is that US homes deserve broadband.

The CRTC statement is more pointed because it was paired with a new and higher definition of broadband at 50/10 Mbps. The only technologies that can meet those speeds are cable company HFC networks and fiber – and nobody is building new cable networks. The CRTC has really taken a position that rural Canada ought to have fiber.

It will be interesting to see over the next few years how the rest of the Canadian government responds to this gesture. Without funding this could be nothing more than a lofty goal. But this could also be viewed as a government imperative – much like happened in the US with electricity. And that can drive funding and initiatives that will bring broadband to all of Canada – and is something we here in the US ought to be watching and emulating.

Regulation - What is it Good For? The Industry

Unbundling the Broadband Networks

The Canadian Radio-television and Telecommunications Commission (CRTC) has ordered that large telecom companies, both telcos and cable companies, must unbundle the last mile of their network and make the facilities available to competitors.

With this ruling the CRTC has said that competition and choice is important. This was a surprising ruling because all telecom companies had filed comments stating that forced unbundling would be a disincentive for them to build expensive fiber facilities to homes and businesses.

This ruling was only the first step; the processes and procedures needed to accomplish unbundling still need to be worked out. It’s estimated that perhaps the first unbundled connections will be available to competitors by the end of 2016

This ruling applies to both fiber and coaxial networks and will apply to the larger providers like BCE (Bell Canada Enterprises) as well as to the two biggest cable companies, Rogers Communications and Shaw Communications. But the biggest impact is expected to be on BCE which has invested heavily in fiber to both businesses and residences.

The CRTC said that this was the only path they saw towards competition since the cost of building duplicate fiber networks was expensive and not likely to happen.

We know something about unbundling in this country. The Telecommunications Act of 1996 ordered large US telcos to unbundle their copper networks and make them available to competition. This promoted the explosion of CLECs in the late 90s, but the use of unbundled copper largely died when many of the CLECs formed during that period imploded during the telecom crash in the early 00s.

But the FCC in this country has never required unbundling of fiber. In fact, the 1996 Act removed the unbundling requirement as soon as a telco replaced copper with fiber. The Act did require the unbundling of dark fiber (fiber sold without electronics), but as is typical in this country, the telcos chipped away at that requirement to the point where it became incredibly difficult for a competitor to get access to telco dark fiber.

Our experience in this country is that the large companies will comply with this requirement only reluctantly, and here they put as many roadblocks as they could in the way of competitors. The telcos here required difficult paperwork for every step of the process and dragged their feet as much as possible any time they worked with a competitor. There is a famous rumor in the industry that in the work space at one of the large US telcos that dealt with unbundling there was a large sign reading “Delay, Delay, Delay”. Too bad this was before cellphone cameras because several reputable industry people swear this is true.

The idea of unbundling active fiber is an interesting one. Certainly if a competitor could get access to fiber affordably they could offer an alternate suite of products and bring both product and price competition into the network.

The idea of unbundling a cable company’s coaxial network is not as easy to contemplate. Coaxial cables are arranged so that there is not a unique cable for each customer. At the pole each customer is added into the same data and cable TV transmission path as everybody else in their neighborhood. It’s hard to think of a neat technical way to unbundle anything in an HFC network. It might be possible to unbundle the data path, but this is also shared through most of the network. It will be interesting to see how the CRTC deals with the technical issues.

Obviously competitors here will keep an eye on the Canadian experiment to see how it progresses. There has been no cry here for unbundling of fiber networks, but if there was such a ruling I think it would enable a raft of new competitive providers and would bring real competition into the duopoly networks we have in most US markets. Certainly the US suffers from the same duopoly competition that drove Canada to make this ruling.

Regulation - What is it Good For?

How Canada Handles Net Neutrality

Every country that wants an open Internet is wrestling with the same net neutrality issues that we face in the US. Canada has come up with a common sense approach that and some of what they have done could be applied here.

Telecom rules are administered in Canada by the CRTC (Canadian Radio-television and Telecommunications Commission) which has the same role as our FCC. Major telecom laws are formulated by the Canadian parliament just as they are done by our Congress, but the CRTC then has leeway to interpret the rules.

The CRTC regulates net neutrality along with other ISP behavior through its ITMP (Internet Traffic Management Practice) rules. These rules are implemented as follows:

  • Somebody must come to the CRTC with a credible complaint of discrimination by an ISP. The CRTC doesn’t have a standing list of things that ISPs can’t do, but instead investigates and sometimes creates rules based upon actual cases of discrimination.
  • The CRTC has developed definitions of various types of discrimination over the years. For example, they use a different standard to judge technical network issues than they do commercial issues such as how customers are billed. They have developed rules that we would label as net neutrality and any ISP practice that is imposed on users that, in effect, delays or prioritizes traffic from one type of user, source, protocol, application, content, service, or destination is likely to assumed to be discriminatory
  • An ISP gets an opportunity to justify the discrimination. In order to prevail an ISP must show that:
    • The practice is justified and that the solution they have implemented is narrowly designed to address a specific problem and does not cause other negative consequences;
    • The practice is done in such a way as to cause as little discrimination as possible;
    • They must show that any harm caused to customers is as minimal as is reasonably possible;
    • And they must show that there is not some other reasonable technological solution that would achieve the same goals with less or no discrimination.

These rules have just recently been strengthened on December 17 when Parliament passed a bill that adds significant fines to ISPs that are found guilty of discrimination. Fines of up to $10 million can be levied per infraction for first offenses and up to $15 million for subsequent offenses. This adds some teeth to net neutrality and other violations.

To some degree the Canadian telecom environment is a lot like ours. Canada has three large telcos – Bell, Rogers and Telus – that each are the predominant provider in different areas of the country. The country also has smaller competitors, but like us the company doesn’t have vigorous competition in a lot of markets.

Perhaps there is something to learn from the Canadian approach. It certainly is very pragmatic and the same regulatory process is used to judge a huge array of issues. It all stems back to a law passed years ago that said that telecom providers and ISPs can’t discriminate. The CRTC has used that one rule to achieve what would we call net neutrality rules. For example, in 2005 the CRTC faulted Telus which had blocked web access to pro-union websites that were striking against it. Earlier this year they ruled against Bell Canada for charging more for access to products that compete with ones that it owns. The Canadian system builds rules based upon the cases brought to it rather than crafting a big framework of rules up-front.

The Canadian system also treats wireline and wireless the same in terms of the way they treat customers or the way they operate their networks.

The new fines are the part of the Canadian law that I find to be the most attractive. Without significant financial penalties there is not much incentive for the large ISPs to change their behavior. I would venture to say that fines of $10 million and $15 million are probably not high enough for the US Market where a carriers might make hundreds of millions by discriminating. But it’s the right concept.

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