Broadband Deployment Likely to be Key Topic At FCC In 2009
The new Democratic FCC Chairmanship appointment has not been announced, but speculation is rampant that it will be Julius Genachowski. Mr. Genachowski has a very impressive resume, including having been a clerk to two different U.S. Supreme Court Justices and an editor of the Harvard Law Review during the time that Barack Obama was President of the Review. They have been friends ever since, and Mr. Genachowski was the chair of the Obama campaign technology, media and telecommunications policy group. After the election, he served as one of the co-chairs of the Transition Team’s Technology, Innovation and Government Reform Policy Working Group.
Prior to the Obama campaign, Mr. Genachowski worked as a lawyer at the FCC during the Clinton Administration in the office of then-Chairman Reed Hundt. After that he spent several years as General Counsel of Barry Diller’s IAC/Interactive Corp. The Company eventually included Expedia, Hotels.com, Hotwire, Ticketmaster, TripAdvisor, Lending Tree, Match.com, and others. In addition, Mr. Genachowski serves on several telecom-related and internet company Boards, including Ticketmaster and The Motley Fool. He currently is co-founder and Managing Director of Rock Creek Ventures. His resume and his connections to the campaign and transition make him a very likely candidate for the FCC Chairmanship.
The policy statements by the Obama team during the campaign and after have emphasized broadband deployment as a major public policy goal. Similarly, the economic stimulus package now being written in Congress allocates several billion dollars for broadband deployment. Until that legislation is completed and signed, it is unclear what role (if any) the FCC will have in dispensing or overseeing the stimulus money that goes to broadband deployment. Even if no role is assigned to the FCC, however, the agency is certain to seek to take steps to help achieve the goal of greater broadband deployment.
As his last official act before departing, Chairman Martin had the agency issue a comprehensive 75 page report on its four years of achievements under his leadership, including broadband deployment. The FCC data reported that “high speed” lines (200 kbps) increased during 2007 from 82.8 million on January 1, 2007 (yes 2007, that is not a typo) to 121.2 million on December 31, 2007. This represents an increase of 46 percent during calendar 2007, and followed an increase of 62 percent during 2006, from 51.2 million lines to 82.8 million. The report further states that of the 121 million lines, 74 million are residential lines; of the residential lines, cable modem service represents 48 percent and DSL 36 percent. Another 14 percent were satellite, wireless or powerline, while 2 percent were direct fiber connections.
The report also describes the state of “advanced services lines”, defined as those which exceed 200 kbps in both directions. (All advanced services lines were also included in the “high speed line” category as well.) During 2007, these advanced services lines increased from 60 million to 80 million. Of these lines, more than half exceed 2.5 mbps in one direction. Residential users represent 69 million of the 80 million total advanced services lines. The statistics on these residential advanced services lines are very similar to those of the high speed lines. They are 51 percent cable modem, 33 percent ADSL, 14 percent satellite or wireless and 2 percent direct fiber.
Beyond the number of lines, the report concludes that there is broad geographic coverage as well. It states that 82 percent of households that are served by ILECs have high speed DSL available (note: the report uses the “high speed” category here, not advanced services) and 96 percent of cable television subscribers have cable modem available. Using postal zip codes as a basis, the report finds that more than 99 percent of zip codes have at least one high speed connection within them. Coverage by technology shows that 94 percent of zip codes are served by high speed mobile wireless, 87 percent by ADSL, and 66 percent by cable modem. ADSL and/or cable modem connections are available in 91 percent of zip codes, according to the report.
Broadband deployment will be a key topic of FCC policy, but not the only topic. Universal service reform will be intertwined with broadband deployment as pressure builds to expand universal service support to include rural broadband to close the “digital divide.” Of course, any expansion of the USF pay-outs requires that the money be raised somewhere.
And in that vein, the FCC recently received an appeal of a USAC ruling on the applicability of USF assessments to DSL and to private lines such as T-1s. The USAC ruling concluded that (1) DSL services sold before the FCC’s Wireline Broadband Internet Access ruling in 2005 should have been subject to USF, and (2) that private line services, such as T-1s, that have 10 percent or greater interstate usage should be characterized as 100 percent interstate for USF purposes. Both these rulings were made by USAC in finding that Madison River Communications had improperly calculated its USF contributions by omitting these two categories of revenue. Madison River has appealed the USAC ruling and the FCC has asked for public comment on the subject. This will be before the FCC under the Obama Administration.
Similarly, the VoIP access charge cases that have long been languishing before the FCC will likely be decided by the new FCC. Those cases could potentially determine whether billions of dollars in access charges are due to the ILECs from the various VoIP carriers. The cases were brought in federal court, then referred to the FCC, where they have been sitting without decision for over three years and counting. During that time, the potential damages have grown from tens of millions of dollars to hundreds of millions to billions. The bucks on this issue will need to stop soon. The new FCC Chairman will have a lot to think about.
Danny E. Adams currently serves as managing partner of Kelley Drye & Warren’s Tysons Corner office and is a member of the firm’s Executive Committee. He is a member of the bar in Virginia, District of Columbia and Arizona.
