State of the Union Keeps Broadband On Front Burner

Obama is the tech president.  He’s the guy that finally got a Blackberry into the White House after all.  And gadget nerds and tech geeks will always remain true to their hearts even if they do become president.  So that being said it is no surprise that Obama made sure that America’s broadband strategy, or lack there of, was given a shout out.  SiliconAngle picked up my post from Digital Society on the issue today.  You can read about my thoughts on the Presidents comments at either of those sites.

-nick

More Gateway Neutrality

News outlets are reporting today that recipients of grant monies from the Broadband Expansion portion of the Stimulus Act will be forced to implement Net Neutrality regulation into networks built on these grants as ruled today by the Obama Administration.

I first divulged this in an article on OpenMarket.org back in January.? And to quote myself, I had stated that,

The issue here is that it doesn?t matter if the FCC or the Fed can regulate net neutrality on the grand scale right now, the recipient of these grant funds will be legally bound to adhere to the FCC policy statement implementing net neutrality and establishing open networks.? After that, the fix is in.? One or more publicly funded networks would exist running under regulated and enforced net neutrality principles.? A few years later, legislation will be introduced again to mandate net neutrality in all U.S. networks.?? Backers of the legislation will refer to the networks built under the stimulus plan pointing out how flawlessly they are running, and how neutrality principles have provided for that condition because the FCC can watch dog the network.

Furthermore, I reported in March that companies like Verizon and AT&T were potentially not going to apply for grants for this very reason,

This reluctance to accept government funding shows that major ISPs realize that acceptance of stimulus funds puts them squarely under the FCC Network Neutrality principles.?? These principles could bleed into the other networks?such as Verizon?s FiOS TV or AT&T?s U-Verse?that these large Internet players own. ? Meaning this policy would be the camel?s nose under the tent.

Adding that,

Molly Peterson of Bloomberg News confirms that big ISPs realize the danger associated with accepting recovery funds:

AT&T, Verizon and Comcast Corp., the largest U.S. cable provider, say the rules are unwarranted and would hinder their ability to manage congestion on networks they have spent billions to build.

So while this was bound to happen, I guess one could say that it’s a sure thing now.? With only $7.2 Billion available for broadband expansion and those monies being distributed in amounts that will be paltry in comparison to what telecoms generally spend in network expansion, there is a real possibility here that avoiding government funding will actually benefit their bottom line rather than helping improve them.? These gateway stimulus fund drugs will inevitably find their way into regulating their own private networks if these companies are not weary.

-nick

Verizon, AT&T See the Regulation Writing On The Wall

As published on openmarket.org.

AT&T and Verizon are indicating that there is a chance that they will not seek funds from the broadband stimulus portion of the American Recovery Act.

Verizon Executive VP Thomas Tauke has stated that, ?We don?t have any plans to apply; we also have not made a decision not to apply.?

Similarly, AT&T Senior Executive VP told reporters that, ?We do not have our hand out seeking government funds.?? But, ?[AT&T is] open to considering things that might help the economy and might help our customers at the same time.?

This reluctance to accept government funding shows that major ISPs realize that acceptance of stimulus funds puts them squarely under the FCC Network Neutrality principles.?? These principles could bleed into the other networks?such as Verizon?s FiOS TV or AT&T?s U-Verse?that these large Internet players own. ? Meaning this policy would be the camel?s nose under the tent.? I ?ve previously referred to this potential phenomenon as ?Gateway Neutrality.?

Molly Peterson of Bloomberg News confirms that big ISPs realize the danger associated with accepting recovery funds:

AT&T, Verizon and Comcast Corp., the largest U.S. cable provider, say the rules are unwarranted and would hinder their ability to manage congestion on networks they have spent billions to build.

So, it could be that networks built with stimulus funds would have sub par service when compared to networks built without the funds.? This forces one to wonder what the point of the multi-billion-dollar subsidy is in the first place.

Additionally, were ISPs forced to merge networks that ran under different principles?those that are neutral like Internet service and those that are very non-neutral like television or phone service?very costly problems could emerge.? Trying to slam together TV, Internet, and phone service into one neutral IP-based service could even prove to be financially impossible.

At OpenMarket we often say that government should never be in the business of picking winners.? It appears the winners at broadband build-out will be those who avoid picking government.

Congress Double Dealing On Net Neutrality Issue

At this point in all the stimulus bill talk, if I made the statement that there is something in the package that appears to be two-faced and underhanded you would probably just tell me to get in line, you have already heard it.? Well surprise!? There’s something two-faced and underhanded in the stimulus, and I’m jumping in line.

Yesterday, Public Knowledge sent out an Action Alert concerning an amendment to the broadband portion of the stimulus package focused on allowing network management for child porn and copyrighted material.? (Julian Sanchez also has a nice break down of the particulars at Ars Technica).

AMENDMENT intended to be proposed by Mrs. FEINSTEIN to the amendment (No. 98) proposed by Mr. INOUYE (for himself and Mr. BAUCUS)
Viz: On page 56, between lines 23 and 24, insert the following: (11) In establishing obligations under paragraph (8), the Assistant Secretary shall allow for reasonable network management practices such as deterring unlawful activity, including child pornography and copyright infringement.

Take a step back back to my original concern about net neutrality (as defined by the FCC) being enforced and regulated on any network built with funds from the stimulus plan.? That concern actually is basis for what I perceive to be a larger threat, which is the enforcement of net neutrality to other non-stimulus funded networks down the road.? Essentially proponents would be using stimulus built networks as a gateway to full network wide implementation of net neutrality.

But here, we don’t even need to go that far.? I’m just looking at the enforcement of net neutrality on stimulus built networks.? This, along with this network amendment is guaranteed to happen if the House and Senate compromises that are expected to take place in conference go through.

Now for the double speak.? The Fed is telling everyone that they want net neutrality… Unless…? Well, unless it just doesn’t completely benefit them.? So all packets on government stimulus built networks will be treated equally unless they contain child porn on copyrighted material.? Hmmm.? Well how do we know they are containing that material?? The network managers will have to violate neutrality and inspect packet layers, then additionally if they discover child porn or copyrighted material then they will be free to “manage” that content.? Which if my bullcrap detector is fully functioning, just means they will drop the packets.? This is not to even mention the fact that it also gives network managers the opportunity to drop or block packet transfer for completely legal uses of copyrighted material being that they can’t determine what the use of that material is for by simply examining the packet contents.

So what have we learned here?? Once again when regulators create rules, they only create them to be self serving, and beneficial to those they for whom they are alligned.? This is not net neutrality, this is Internet regulation where convienent.

-nick

p.s. Please don’t send me email about child porn.? This is obviously not a statement condoning that dispicable act.? The point far exceeds that particular subject line.

Update: The final bill was released and the admendment was not added back into the bill during Conference.? I guess one could say “we got lucky” but the result of the actual broadband stimulus and it’s enforcement of network neutrality on grantees is really not that great…

$2 billion Cut from Stimulus…

for broadband promotion in unserved and underserved areas. I believe $7 billion is still going to be in the passed Senate bill. Things are still trickling out after the announcement that the Senate had reached an agreement last night on a stimulus package. More to follow as it becomes known…

Post on openmarket: here

-nick

Senate Broadband Tax Breaks

Aside from the fact that the Senate lacks the necessary votes to pass their version of the stimulus, the bill does actually have a much more in depth plan for broadband expansion into unserved and underserved areas of the country. This is of course as opposed to the House version which was written by someone who went to clown college that went something like:

Step 1: Take $6 billion dollars from the public.

Step 2: ???

Step 3: Rural area broadband expansion!

The Senate version of the stimulus actually raises the amount of money spent on broadband up to $9 billion. I still don’t condone public funding for broadband expansion, but nontheless at least this is a more reasonable number than $2.825 billion if one was giving expansion a serious look.

The most interesting tidbit of broadband stimulus though is that it would give tax credits to the companies that receive grants to build these networks in rural areas. Essentially it boils down to what the bill has termed current generation broadband and next generation broadband. Current generation broadband has been defined as a 5 Mbps up and 1 Mbps down, and next generation broadband as 95 Mbps up and 20 Mbps down.

The bill will provide a tax credit for the sum of a percentage of what the grantee has spent on current generation broadband and next generation broadband. More specifically this is determined by the grantee adding 10% of the expenditures for current generation broadband (this is adjusted to 20% of the expenditures if the network is being introduced to an unserved area) to 20% of the expenditures for next generation broadband. The resulting total is the tax credit that the grantee can apply for.

This is actually a very interesting proposal. Especially being that the Senate version of broadband stimulus does not make grantees enforce the FCC’s net neutrality policy statement. If a stimulus bill were to pass, then what would be best for consumers and free-market capitalism in the long run must be considered. And of the two versions of the stimulus, this is definitely more on the right track. Tax breaks as incentives to extend broadband networks in underserved or unserved areas is going to be a better option than what was proposed in the House version of the bill. The House version basically said, “We are going to give the grantee a little money. They will have to deal with the majority of the expense of build-out and maitenance. Then we are going to tell you how you can run it, and tax the crap out of you for expanding.” This is a doomed to fail strategy.

The Senate version would encourage rural expansion of broadband. And additionally would reward companies for their risk. Which there is a great deal. These companies do not know for sure they would even have enough customers to maintain the cost of running their business in that area. I believe these companies would ventures into these underserved or unserved areas when they saw a need and additionally it became beneficial to push forward into those areas. Because many companies would be moving forward before that and taking some risk, these tax incentives along with the grant would be a positive marker to that risk.

-nick

…and stimulus for all

Future of American Communications working group revealed their recommendations for broadband entitlements this week.

Take a gander at my post on the issue at openmarket.org: FACT Check the Internets Future.

- nick

$6 Billion For Broadband, Or How I Learned To Stop Worrying And LOL At The Recovery Act

This was posted last week on CEI’s openmarket.org blog. So you may have already read it, as I linked to it over the weekend. But in greed I will also post it here to buff my post count.

Speeding its way across the Internetz today are copies of the American Recovery and Reinvestment Act of 2009. Eager policy analysts, lobbyists, and grassroots organizations all over the country are scouring its 258 pages as we speak. As a tech policy analyst who is very interested to see what was going to happen with the Promised One?s Broadband Stimulus plan, I too dove into the fine reading that my giant PDF copy of the proposed act would provide.

Prior to my study of the bill, as I sent the document to my printer, visions of the sorcelations such a mighty plan might bring wrought both excitement and fears for the future of the Internet. I grabbed the freshly printed document from the copier, my fingertips brushing the pages and sending chills that delivered the grandeur of the most daring broadband project ever conceived on the face of our planet to my mind?s eye. The thought was both intriguing to see how such a plan would be delivered, and brought with it the scourge of the possibility of enforced government regulation, and implementation of mandatory net neutrality policy via acceptance of the funds by the bidding project companies.

I returned to my desk and began reading. I read it. Then I read it again. (The section on broadband is very short, especially for a plan that will, ?get true broadband to every community in America?.)

And that?s when I started to LOL.

$6 Billion. That?s it. $6 Billion to increase broadband penetration to the ?underserved? part of America. Current penetration of broadband in this country is just over 25%, connecting roughly 71 million Americans to high-speed Internet. Most of these individuals live in areas where they have access to readily available sophisticated networks. Obama?s broadband stimulus is for rural areas; areas where many companies have avoided going because the problems getting broadband in those areas are not miniscule and will cost more money to develop than in populated regions where an infrastructure backbone is present.

So let?s put this into perspective. AT&T announced roughly a year and a half ago that it underestimated its U-Verse project that uses fiber-to-the-node and fiber-to-the-point technology. They now estimate it will run them $6.5 Billion. Verizon, who many feel is keeping their true costs for their FiOS service out of the press, announced publicly back in 2006 that they anticipated spending $18 billion to connect 7 million customers nation wide with fiber.

$6 billion to reach a vast and widespread audience with broadband in the distinct regions and rural areas in this country is a laugh. Additionally, the funding is actually broken down even farther. $2.825 billion is focused on rural area business development. Another $2.825 Billion is focused on rural wireless and broadband; $1 billion of which is aimed at wireless deployment, with the remaining $1.825 going toward broadband deployment. The final $350 Million of the $6 Billion will go to the State Broadband Data and Development Grant program established by the Broadband Data Improvement Act in October of 2008.

I cannot believe that this tiny allotment in the grand scheme, after it is spread thin over state projects, grants, and various companies awarded funds for infrastructure projects will even make a recognizable dent in the state of broadband here in the US. And this is not even to mention the sneaky requirement to enforce the FCC?s broadband policy statement by accepting the funds; essentially sneaking in net neutrality policy light into the mix. This, of course, along with the requirement for any network built with these funds to be open access, and how that will affect the nature of other networks is a bigger question. But ultimately, I would argue that based on what we are seeing in the act, that these funds would probably just be better suited going somewhere entirely different?preferably back in the tax payers pocket.

Obama’s Broadband Stimulus

Had another post go up on openmarket.org regarding the American Recovery and Reinvestment Act of 2009, specifically the section on broadband stimulus.

$6 Billion For Broadband, Or How I Learned To Stop Worrying And LOL At The Recovery Act

-nick