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Abstract:
Recent double digit billion dollar mergers of telecommunications firms consolidate both market share and market leadership by incumbent operators such as Verizon. These companies seek to exploit technological and market convergence by offering a triple play package of wired and wireless telephone service, video and Internet access. As well they need to develop new profit centers to compensate for declining revenues and market shares in traditional services such as wireline telephony.

While incumbent telecommunications operators have pursued new market opportunities, these ventures have not abandoned core management philosophies, operating assumptions and business strategies. Longstanding strategies for recovering investments, using a telecommunications template greatly contrast with the means by which information processing and content providers achieve profitability. Internet ventures have come up with many different business models including ones that offer free, subsidized or deliberately underpriced access as well as regularly increasing value propositions to consumers, e.g., more options for the same price. Incumbent telecommunications firms rarely deviate from a rigid cost recovery structure that identifies cost causers.

Internet and telecommunications business models rarely jibe, even though convergence and business transactions puts incumbent telecommunications firms in market leadership positions. Having such dominant market share now makes it likely that incumbent telecommunications firms will attempt to imprint their business models and their mindsets on Internet markets. Recently senior managers of several incumbent carriers have expressed displeasure with the apparent inability of their companies to recover the sizable investment in broadband Internet access. With an eye toward recouping these investments, the companies have announced plans to replace, or offer alternatives to unmetered All You Can Eat Internet access and to oppose any initiative that restrains their pricing and operational flexibility.

The incumbent telecommunications companies characterize their new Internet pricing plans as offering "greater choice" to consumers. Different pricing points based on throughput caps makes sense to a "Bellhead" corporate officer who thinks he or she can identify cost causers and capture rents that otherwise would accrue to content providers. However, the Internet seamlessly blends content and conduit, making it difficult to identify the cost causer.

This article will examine Bellhead business models incorporating metering and other traditional cost recovery strategies with an eye toward determining what constitutes reasonable price discrimination and what represents an unfair trade practice or an anticompetitive strategy. The article will consider whether and how Bellhead management strategies will jeopardize the serendipity and positive networking externalities that have accrued when users can freely "surf the web" and content providers can bundle user sought content with advertising. Different pricing points based on throughput caps makes sense to Bellhead corporate officers who think they can capture rents that otherwise would accrue to content providers.

The article also will examine the clash of Bellhead and Nethead cultures with an eye toward identifying the stakes involved when Internet access pricing and interconnection primarily follows a telecommunications infrastructure cost recovery scheme in lieu of different commercial relationships favored by most Internet ventures. The article concludes that most Bellhead cost recovery models are lawful even though they will reduce for most consumers the real or perceived value proposition offered by an unmetered monthly Internet access subscription.

Internet, network neutrality, network bias, tiered Internet

Abstract:
What Internet Service Providers ("ISPs") can and cannot do to diversify services lies at the core of the debate over network neutrality. In prior generations ISPs had little incentive or technological capability to deviate from plain vanilla best efforts routing for content providers and from standard "all you can eat" subscription terms for consumer access to the World Wide Web. The next generation Internet has the technological capability and ISPs have the commercial motivation to offer "better than best efforts" routing and premium services for both content providers and consumers seeking higher quality of service and more reliable traffic delivery.

However the potential exists for carriers operating the major networks used to switch and route bitstreams to go beyond satisfying diverse requirements of content provider and endusers. Network neutrality advocates worry that major ISPs have both the wherewithal and incentive to bifurcate the Internet into one medium increasingly prone to congestion and declining reliability and one offering superior performance and potential competitive advantages to users able and willing to pay, or affiliated with an ISP operating a major bitstream transmission network such as AT&T, Verizon and Comcast. Opponents refuse to see a current or prospective problem and worry that network neutrality requirements legitimizes common carrier regulation of the Internet, a regulatory regime heretofore limited to telecommunications services operating in a less than fully competitive environment.

This paper will examine the network neutrality debate with an eye toward refuting and dismissing the many false and misleading claims and concentrating on the real problems occasioned by the Internet's third evolution. The paper accepts as necessary and proper many types of price and quality of service discrimination. However the paper identifies other types of hidden and harmful discrimination. The paper concludes with an identification of best practices in "good" discrimination that should satisfy most network neutrality goals without creating disincentives that might dissuade ISPs from building the infrastructure needed for Internet 3.0 services.

network neutrality, Internet, next generation networks, new media

Abstract:
Critics across the political and social spectrum have criticized the state of United States broadband network development and refer to the great success achieved by nations such as Canada, Japan and Korea. The International Telecommunication Union reports that in 2002 the five top nations for broadband network market penetration were: Korea, Hong Kong, Canada, Taiwan and Denmark. The ITU ranks the United States eleventh in broadband penetration. The Organization for Economic Cooperation and Development reports that in middle 2003 the top market penetration for member nations occurred in: Korea, Canada, Iceland, Denmark and Belgium with the United States ranked tenth.

Aside from the obvious geographical and demographic advantages accruing to small nations with large urban populations, broadband development has become a national priority for many nations. Both developed and developing nations have stimulated capital expenditures for infrastructure in ways United States public and private sector stakeholders have yet to embrace. Such investments have accrued ample dividends including the lowest broadband access costs in the world. For example, the ITU reports that in 2002 Japanese consumers paid $0.09 per 100 kilobits per second of broadband access compared to $3.53 in the United States.

Economic policies do not completely explain why some nations offer faster, better cheaper and more convenient broadband services while other nations do not. This paper will examine the success stories in broadband network development with an eye toward determining the optimal mix of legislative, regulatory and investment initiatives. The paper will track development in Canada, Japan and Korea as these nations have achieved success despite significantly different geographical, political and marketplace conditions.

ICT, broadband, development, Internet

Abstract:
A sizable gap exists between the vision of what telecommunications and information processing networks can provide and what they currently deliver. Some people already have accrued benefits from a wired community and many embrace much touted concepts of "personal empowerment" and "frictionless commerce." However, a greater number of people remain skeptical, and many consider the costs of becoming part of a wired community greater than the perceived benefits. The full payoff to individuals and communities can occur if and only if both the services offered and usage reach a critical mass. This White Paper examines the role of federal, state and local governments in stimulating the supply and use of on-line networks. Operating within current budget levels, governments can serve as an essential catalyst by operating as an "anchor tenant" on various networks, particularly ones serving specific localities. As well, governments should look to using networking as a more effective vehicle for delivering education, social services, job placement, licensing, etc. Just about any service government provides in a direct, physical manner, e.g., walk-in permit applications at a central location, can be mediated via electronic networks and offer faster, better, smarter, cheaper and more convenient service.

Much of the public policy debate about access to the vast opportunities in on-line networking has focused on affordability, and the comparative disadvantages stemming from differences in income, education and location. While these factors certainly matter, the White Paper considers the impact of other important factors, including computer literacy, perceptions of value in networking and the extent to which governments have used funding to promote the on-line availability of the services they offer. A longstanding multi-billion dollar universal service funding regime has developed primarily to provide financial subsidies to make telecommunications services affordable to rural, elderly and poor citizens. But an equally important tactic involves the development of strategies to encourage an interest in, and the ability to access on-line services. In this pursuit, governments do not have to spend more money. Instead they have to consider more timely and effective ways for delivering existing services and to explore what new services on-line networks can provide.
Governments can stimulate consumer demand for advanced telecommunications and information networks by becoming sponsors, early adopters and facilitators of services that enhance one's quality of life. For some, governments can achieve these objectives simply by eliminating some of the inconvenience triggered by necessary, but routine and frequent transactions with citizens. On-line access to a user-friendly, municipal government World Wide Web page on the Internet offers the convenience of 24 hours a day, seven days a week access, with no lines, transportation problems and other irritations. For other citizens, access coupled with desired content and services can make a difference in one's life and sense of place in the community. For these citizens, governments can team with other community institutions, such as public broadcasters, newspapers, museums, clinics, employment agencies, libraries, schools, airport authorities, tourism and community development groups, etc. to amalgamate desirable content and to make that content more accessible.

The White Paper endorses a strategy where governments trigger demand for advanced services and widespread deployment of community networks by offering expanded and enhanced services. These "must have" applications provide the inducement for citizens to make sizeable investments of time, money and effort. As well these services stimulate the development of advanced, broadband networks that improve the quality and speed of access. The pull of attractive services, and stimulated consumer demand can achieve more than simply pushing the promises offered by new technologies.

Internet, Digital Divide, Telecommunications Development, Technology Diffusion

Abstract:
This paper will provide a straightforward explanation of what constitutes network neutrality and why a debate has arisen about whether governments need to establish rules mandating nondiscrimination. The paper will identify what types of price and quality of service discrimination represent legitimate efforts to diversify Internet-mediated services and to satisfy increasingly diverse requirements of content providers and consumers. The paper concludes that while many concerns about network neutrality overstate the potential for harm, ISPs should offer non-neutral services in a fully transparent manner so that regulators can distinguish between actual and induced network congestion as well as other potential harm to content providers and consumers.

network neutrality, next generation networks, Internet, peering, interconnection

Abstract:
This paper provides a concise summary of mandatory signal carriage obligations of cable television and direct broadcast satellite operators. The paper provides a timely update of recent changes in must carry responsibilities resulting from the onset of digital broadcast television and enactment of the Satellite Home Viewer Extension and Reauthorization Act of 2004.

Cable television, direct broadcast satellite, must carry

Abstract:
Throughout their short, but volatile lives, Internet Service Providers ("ISPs") have avoided having to satisfy traditional telecommunication regulatory requirements. ISPs do not operate as common carriers and do not have to pay access charges and make contributions to universal service funding. Having sponsored development of the Internet, many governments consider regulation anathema, despite the fact that ISPs no longer need incubation and many offer some services functionally equivalent to what regulated telephone companies provide.

A dichotomy in regulatory treatment exists between ISPs and telecommunication carriers. A large difference in corporate cultures supports this dichotomy. Telephone company executives ("Bellheads") may resent regulation, but they accept their fate and work creatively to exploit anomalies and opportunities to secure a regulation-conferred competitive advantage. Most ISP executives ("Netheads") appear to embrace a libertarian attitude, strongly opposing any government involvement.

Despite the clash of cultures, the telecommunications and Internet worlds have merged. Such convergence jeopardizes the ability of Netheads to avoid some degree of regulation, particularly when they offer services functionally equivalent to what their Bellhead counterparts offer.

This paper will assess the regulatory consequences when telecommunication and Internet services converge in the marketplace and in terms of operating technologies. The paper identifies commercial developments in the Internet to support the view that the Internet has become more hierarchical and more like telecommunication networks. The paper concludes that telecommunication carriers will display superior skill in working the regulatory process to their advantage. The paper suggests that Bellheads will outmaneuver Netheads particularly when the revenue siphoning effect of Internet-mediated services offsets the revenues generated from ISP leases of telecommunication transmission capacity.

Abstract:
Recently several states have launched investigations of certain MCI telephone call routings based on competitors' claims that the company eliminated or reduced payments it should have made. The MCI investigations may trigger closer scrutiny of numerous strategies and tactics used by telecommunications carriers to reduce the payments they make to other carriers. Also this scrutiny may call attention to how carriers exploit inconsistent regulatory treatment of functionally the same services.

Regulatory asymmetry occurs when telecommunications service providers offer identical services, but incur different regulatory burdens. More extensive regulatory oversight, higher fees, and subsidy obligations may apply to carriers based on artificial classifications of services based on geography (intrastate versus interstate) and type (telecommunications as a stand alone service versus one where telecommunications is a minor element of an information service). Additionally inconsistent regulatory treatment may occur based on carrier classifications using historical market share and perceptions of their market power. Existing, "legacy" regulatory classifications have established arbitrary dichotomies based on service, which regulatory agency has jurisdiction, what services qualify for promotion through favorable regulatory treatment, and how carriers and regulators decide to allocate costs. Regulatory arbitrage results when stakeholders, such as telecommunications service providers like MCI, exploit differences in legislative and regulatory classifications to accrue financial and competitive advantages achieved by avoiding regulatory burdens, or by foisting payment obligations onto other carriers.

This article will examine tactics designed to exploit regulatory arbitrage with an eye toward identifying areas where inconsistent regulatory treatment distorts the competitive marketplace without offsetting public interest benefits. The paper concludes that legislatures and regulators should eliminate opportunities to avoid regulatory burdens through routing and service classification tactics unless compelling reasons persist for maintaining regulatory asymmetry.

regulatory arbitrage, regulatory asymmetry, telecommunications policy

Abstract:
Since its inception the Internet has generated positive networking externalities, widespread access and seamless connectivity through a combination of TCP/IP routing technologies and widespread network interoperability. During this promotional period, Internet Service Providers ("ISPs") appeared to have a keen interest in collaboration seemingly without concern for profit maximization and without regard for operator size, traffic volume and flow of traffic. ISPs coordinated traffic primarily at quasi-public network access points and exchanges, in much the same was as two local exchange carriers receive and hand off traffic at "Meet Points" to secure wide area call access.

Growing service demand, congestion at quasi-public interconnection sites and commercialization of the industry have motivated major ISPs and large volume users to pursue more reliable, quasi-private network interconnection. Private peering arrangements promote security, reliability and higher service quality. They add robustness and new, faster and higher capacity routing options. But on the other hand private peering arrangements help create a hierarchy of networks and users while previously generated positive networking externalities arose from a flat, democratic, 'sender keep all "network of networks."'

This paper will examine the evolution of ISP interconnection arrangements with an eye toward determining the consequences resulting from the migration from sender-keep-all, zero cost interconnection arrangements to commercially driven ones modeled closely after conventional telecommunication carrier-to-carrier interconnection agreements. While private peering will enhance quality of service and network reliability, it may trigger the same sort of parity and cost of access concerns raised by competitive local exchange carriers and other market entrants. The paper concludes that Internet interconnection and cost of access have begun to raise the same sort of questions raised by local and interexchange carrier interconnection.

Abstract:
Technological and marketplace convergence in Information, Communications and Entertainment ("ICE") has contributed to the merger of conduit and content. Yet laws, regulations and trade policies assume a separation between the delivery of content and the creation of the content. For example, the traditional common carrier model assumed that the transporter of traffic had nothing to do with the generation of the content carried. In the trade policy arena, limitations of the market access for content, such as movies, might apply even as such trade policies would prohibit such market access restrictions for telecommunications services.

This paper will examine the consequences of convergence with particular attention to the impact on semantic, telecommunications and trade classifications resulting when content and conduit blend together as occurs with Internet services. For example, Internet-mediated "streaming" of visual and audio content has characteristics akin to broadcasting, but also qualifies for a largely unregulated status in view of the fact that the service involves packet switched, value-added data communications. Other innovations, like Internet telephony, possibly fit into more than one classification. Other technological applications erode preexisting rules and policies like the international accounting rate division of long distance toll revenues.

The marketplace attractiveness of some new services results, in part, from trade and regulatory classifications that can accord arbitrage opportunities by blocking market access, or by avoiding costly regulatory burdens. The paper concludes with suggestions on how legislators, regulators and trade policy makers might curb regulatory opportunism by abandoning the strategy of classifying carriers and services based on static technological or market share assumptions.

regulatory asymmetry, arbitrage, Internet telephony, international accounting rates, regulatory opportunism

Abstract:
This paper will examine the network neutrality debate with an eye toward assessing how the Internet will evolve as a major platform for content access and distribution. The paper accepts as necessary and proper many types of price and quality of service discrimination, but also identifies other types of potentially hidden and harmful discrimination. The paper concludes with an identification of best practices in "good" discrimination that should satisfy most network neutrality goals without creating disincentives that might dissuade ISPs from building the infrastructure needed distribution of high bandwidth consuming content such as full motion video.

network neutrality, next generation networks, content platforms

Abstract:
When Internet Service Providers ("ISPs") serve as neutral conduits they qualify for a safe harbor exemption from liability for carrying copyright infringing traffic provided by Section 512 of the Digital Millennium Copyright Act. However ISPs now want to operate non-neutral networks capable of offering "better than best efforts" routing and premium services for both content providers and consumers seeking higher quality of service and more reliable traffic delivery. The ability to inspect specific packet streams also enables ISPs to identify traffic type and routing priority as well as a greater ability to determine copyright compliance.

The debate about Internet neutrality has largely ignored whether ISPs risk losing safe harbors from copyright infringement when they actively manage their networks to offer tiered services. This paper will assess non-neutral network operation in terms of its impact on intellectual property rights, including consumers' fair use opportunities. The paper will assess whether and how ISPs might lose their safe harbor for copyright infringement liability based on new technological means to know about the content they carry. Additionally the paper will consider whether ISPs have an affirmative duty to conduct packet inspection absent a legislative mandate. The paper also will examine litigation over mandatory processing of broadcast television "flags," which specify consumer use options, but which require equipment processing on user premises.

The paper concludes that ISPs regulatory status as information service providers does not provide an absolute exemption from responsibilities to examine the content they carry and to provide reasonable safeguards for protecting copyrights. However such affirmative efforts to operate a non-neutral network may impose greater burdens on ISPs to protect creators' intellectual property rights with the likely reduction of consumers' fair use opportunities.

network neutrality, intellectual property rights, Digital Millennium Copyright Act, digital rights management, safe harbors, fair use

Abstract:
This article examines the consequences in using service definitions as the basis for a vertically driven regulatory regime in telecommunications despite converging markets and technologies. The article examines Internet-mediated telephone service as a case study for showing problems resulting from the Federal Communications Commission'd use of vertical regulatory silos that develop a single regulatory status regardless of whether changed circumstances favor a change in regulation.

Vertical regulation makes it difficult for incumbent stakeholders to change their regulatory classification. Incumbent telephone service providers continue to fit within the basic telecommunications services, common carrier regulatory model even as newcomers manage to provide a competitive alternative that qualifies for little regulation based on the information services classification.

The article proposes the use of a horizontal, layered approach to regulation consistent with what the European Union has endorsed. Adding to what others have written about a layered approach to telecommunications regulation, the article identifies likely difficulties in the implementation of a horizontal regulatory model, and also suggests remedies.

Telecommunications, internet, regulation, regulatory asymmetry

Abstract:
Much of the policy debate and scholarly literature on network neutrality has addressed whether the Federal Communications Commission (“FCC”) has statutory authority to require Internet Service Providers (“ISPs”) to operate in a nondiscriminatory manner. Such analysis largely focuses on questions about jurisdiction, the scope of lawful regulation, and the balance of power between stakeholders, generally adverse to government oversight, and government agencies, apparently willing to overcome the same inclination. The public policy debate primarily considers micro-level issues, without much consideration of broader concerns such as First Amendment values.

While professing to support marketplace resource allocation and a regulation-free Internet, the FCC has selectively imposed compulsory duties on ISPs who qualify for classification as largely unregulated information service providers. Such regulation can tilt the competitive playing field, possibly favoring some First Amendment speakers to the detriment of others. Yet the FCC has summarily dismissed any concerns that the Commission’s regulatory regime inhibits First Amendment protected expression.

For their part, ISPs have evidenced inconsistency in how seriously they value and exercise their First Amendment speaker rights. Such reticence stems, in part, from the fact that ISPs combine the provision of conduits, using telecommunications transmission capacity, with content. While not operating as regulated common carriers, the traditional classification of conduit-only providers, ISPs can avoid tort and copyright liability when they refrain from operating as speakers and editors of content. In other instances, the same enterprise becomes an aggressive advocate for First Amendment speaker rights when selecting content, packaging it into a easily accessible and user friendly “walled garden,” and employing increasingly sophisticated information processing techniques to filter, prioritize and inspect digital packets.

Technological and marketplace convergence creates the ability and incentive for ISPs to operate as publishers, editors, content aggregators, and non-neutral conduit providers. No single First Amendment media model (print, broadcast, cable television and telephone), or legislative definition of service (telecommunications, telecommunications service and information service) cover every ISP activity. Despite the lack of single applicable model and the fact that ISPs provide different services, the FCC continues to apply a single, least regulated classification. The inclination to classify everything that an ISPs does into one category promotes administrative convenience, but ignores the complex nature of ISP services and the potential for to harm individuals, groups and First Amendment values absent government oversight. For example, the information service classification enables ISPs to engage in price and quality of service discrimination that network neutrality advocates worry will distort a free marketplace of ideas.

This paper will examine the different First Amendment rights and responsibilities borne by ISPs when they claim to operate solely as conduits and when they combine conduit and content. The paper will show that ISPs face conflicting motivations with light FCC regulation favoring diversification into content management services, like that provided by editors and cable television operators, but with legislatively conferred exemptions from liability available when ISPs avoid managing content. The paper concludes that current media models provide inconsistent and incomplete direction on how to consider ISPs’ joint provision of conduit and content. The paper provides insights on how a hybrid model can address media convergence, and promote First Amendment values while imposing reasonable nondiscrimination responsibilities on ISPs.

First Amendment, Internet Service Provider, safe harbor, network neutrality, FCC

Abstract:
Depending on the source one can conclude that United States consumers enjoy access to a robustly competitive and nearly ubiquitous marketplace for inexpensive broadband Internet access, or they suffer the consequences of a tightly concentrated industry offering inferior service at high rates. On one hand, the Federal Communications Commission ("FCC"), the National Telecommunications and Information Administration ("NTIA") and some sponsored researchers offer a quite sanguine outlook, possibly influenced by their appreciation for the political and public relations dividends in compiling positive results.

On the other hand, other statistical compilations and interpretations show the U.S. behind in terms of market penetration and price, even trailing some nations that have similarly unfavorable geographical and demographic characteristics. In the light of the extraordinary global success achieved by domestic ventures in information and communications technology ("ICT"), it would appear counterintuitive for some current broadband statistics to show the United States lagging other nations in terms of favorable access to next generation networks.

The FCC has used evidence of robust market penetration and competition in broadband markets to support an aggressive deregulatory campaign. Advocates for even more deregulation regularly cite the Commission's statistics as evidence that the unfettered marketplace can achieve broadband access and affordability goals. Both the Commission and many stakeholders assume the frequently cited statistics present a true picture of the marketplace. A recent NTIA document concludes that the United States has achieved the goal of "universal, affordable access for broadband technology by the year 2007" articulated by President Bush in 2004.

This paper will examine the United States broadband penetration and pricing statistics with a critical eye, in light of other contradictory compilations by credible organizations including the International Telecommunication Union and the Organization for Economic Cooperation and Development. Additionally the paper will compare and contrast the FCC's identification of broadband options in the author's home zip code with what actual options the author could identify.

The paper concludes that the FCC and NTIA have overstated broadband penetration and affordability by using an overly generous and unrealistic definition of what qualifies as broadband service, by using zip codes as the primary geographic unit of measure and by misinterpreting available statistics. Additionally the FCC includes as competition services lacking any true cross-elasticity with other services based on substantial price differences.

The paper concludes that credible calculations, using better calibrated measures, show a mixed outcome based on different geographical focus. Some U.S. residents, particularly in urban locales, enjoy comparatively excellent broadband service, while rural residents may have ample access options, albeit at comparatively high prices in light of limited price competition. The paper concludes that the absence of robust price competition among many facilities-based broadband operators in many areas of the nation challenges many of the assumptions built into recent FCC policy initiatives that seek to abandon consumer safeguards. The paper also concludes that a statutory mandate to promote universal access to advanced telecommunications capability requires the FCC to collect and disseminate credible statistics on next generation network deployment.

broadband, telecommunications, market penetration, statistics, next generation networks,

Abstract:
Wireless operators in most nations qualify for streamlined regulation when providing telecommunications services and even less government oversight when providing information services, entertainment and electronic publishing. In the United States, Congressional legislation, real or perceived competition and regulator discomfort with ventures that provide both regulated and largely unregulated services contribute to the view that the Federal Communications Commission ("FCC") has no significant regulatory mandate to safeguard the public interest. Such a hands off approach made sense when cellular telephone carriers primarily offered voice and text messaging services in a marketplace with six or more facilities-based competitors in most metropolitan areas.

However the wireless industry has become significantly more concentrated even as wireless networking increasingly serves as a key medium for accessing a broad array of information, communications and entertainment ("ICE") services. As wireless ventures plan and install next generation networks ("NGNs"), these carriers expect to offer a diverse array of ICE services, including Internet access, free from common carrier regulatory responsibilities that still apply to telecommunications services. Wireless carrier managers reject the need for governments to ensure consumers safeguards such as nondiscriminatory access and separating the sale of radiotelephone handsets from carrier services. Critics of wireless regulation claim that government-imposed obligations would create disincentives for NGN investment and have no place in a competitive marketplace.

This article will examine the costs and benefits of government-imposed rules that would require wireless carriers to separate sales of handsets from service subscriptions and to comply with network neutrality rules designed to ensure nondiscriminatory access to content. The article will assess the rights of both wireless subscribers and carriers to control how handsets attach to networks and what services the handsets can access. The article will consider whether wireless network access should parallel long established rules for wired networks and will compare wireless network neutrality issues with a preexisting debate about neutral Internet access via wired networks. For example, wireless network neutrality includes consideration of separating Internet access equipment from Internet services, an unbundling principle established for wired networks decades ago. Because wireless carriers package subsidized handset sales often with a blend of ICE services and consumers welcome the opportunity to use and replace increasingly sophisticated handsets, regulators have refrained from ordering handset unbundling. But for other services, such as cable television, the FCC has pursued public safeguards that attempt to allow consumers the opportunity to access only desired content using least cost equipment options.

The article also examines why wireless carriers could avoid becoming involved in a network neutrality debate for several years, despite the fact that their common carrier status, vis a vis voice services, provides a statutorily supported basis for imposing nondiscrimination responsibilities. The article concludes that the rising importance of wireless networking for most ICE services and growing consumer disenchantment with carrier-imposed restrictions on handset versatility and wireless network access will trigger closer regulatory scrutiny of the public interest benefits accruing from wireless network neutrality.

wireless, unbundling, Carterfone policy, network neutrality

Abstract:
This article will examine the merits of maintaining, revamping or abandoning the current administrative processes for managing international spectrum and satellite orbital slots. It will examine efficiency enhancing strategies including the use of competitive bidding and technological innovations that make it possible for more users with possibly different service requirements to share the same spectrum. Having considered the similarities and differences in satellites' spectrum use relative to earthbound uses, the article concludes that developing a market for orbital slots in lieu of the existing multilateral coordination and registration process would impose more costs and problems than benefits. The transborder technological characteristics of satellites raise sovereignty, equity and jurisdictional issues not triggered by economic and technological initiatives for terrestrial spectrum use. Accordingly, neither international, multilateral forums nor domestic policy making bodies can jettison the status quo and implement a competitive bidding model for all types of spectrum regardless of geographical coverage and transmission characteristics. In particular spectrum used for international satellite services and access to the orbital parking places used by satellites do not favor a complete migration to competitive bidding. Proponents of competitive bidding for spectrum have largely ignored the fact that many nations lie under a satellite transmission "footprint," treaty commitments foreclose national or private ownership of outer space resources and the likelihood that auctions would exacerbate parity of access disputes between developed and developing countries. The article concludes with recommendations on how domestic and international policy making forums can improve administrative processes, including the brokering of financial inducements to developing nations to refrain from opposing registrations of developed nations, and implementing technologies that promote interference free sharing.

Spectrum management, satellites, spectrum commons, competitive bidding

Abstract:
Annually the FCC requires consumers to pay over $5.7 billion dollars to subsidize service by local exchange carriers operating in high cost areas, and the rates paid by residents in rural areas and Indian reservations, the poor, schools, libraries, rural hospitals and clinics. Despite this significant sum, the universal service mission remains unsolved even though new technologies and strategies could make parts of the task achievable. On the other hand, the scope of the universal service mission has become more extensive and costly as Congress identified new beneficiaries in the Telecommunications Act of 1996, including some broadband applications such as the transmission of ex-rays from a rural clinic to experts located in major urban hospitals and the installation of internal wiring in schools and libraries. Additionally the stakes have risen as a Digital Divide separates people with cheap and plentiful broadband access and those without.

The FCC and its state public utility counterparts must balance the wants, needs and desires of numerous stakeholders including ones with significant political clout. Historically the universal service mission has served such ulterior motives as preserving the Bell System monopoly, transferring funds from urban to rural carriers, subsidizing service even for consumers quite able to afford the full price and making it possible for regulators to showcase extraordinarily cheap local calling rates. Now that small and large volume consumers alike have readily available ways to evade some universal service funding burdens, the FCC and state regulators cannot ignore the inefficiencies and inequities in the system.

Technological innovations such as Voice Over the Internet Protocol and marketing strategies that attempt to make calling card long distance an enhanced, information service show that carriers and consumers alike have resorted to self help. Because universal service funding largely relies on long distance telephone service minutes of use, carriers and consumers have devised ways to exempt such traffic thereby increasing the burden on others. Universal service funding avoidance, coupled with an increasing financial burden makes the existing regime unsustainable.

This paper will examine the flaws, defects and political accommodations existing in the current universal service funding process with an eye toward proposing a new workable system. The paper will propose a system that spreads the financial burden among all users of networks that offer services that access the public switched telephone network. Additionally the paper will identify ways to make funds work better, including equipment grants that have much lower recurring costs than annual switched service discounts. Lastly the paper will address what compromises and tradeoffs that Congress must impose on incumbent universal service beneficiaries, such as local exchange carriers.

universal service, VoIP, ICT development

Abstract:
This paper will examine whether and how the Federal Communications Commission ("FCC") can lawfully deregulate most next generation network services, while selectively depriving some apparently qualified ventures from fitting within an otherwise expansive deregulatory "safe harbor." The FCC has erected a regime largely predisposed to treat next generation services as information services free of interconnection, unbundling, tariffing, line sharing and other requirements Title II of the Communications requires the FCC to impose. To support its deregulatory mission the FCC has found ways to subordinate the telecommunications components in a service that blends telecommunications transmission of bits with information services. For example, in reclassifying Digital Subscriber Link ("DSL") Internet access from a telecommunications service to an information service the FCC combined the need for deregulatory parity with a new finding that the once stand alone telecommunications service characteristic of DSL had become inextricably integrated with information services with the latter predominating.

Notwithstanding the urge to deregulate, either on rational or doctrinal grounds, the Commission has had to confront the fact that competition alone will not ensure the achievement of all Congressionally mandated, or FCC identified public interest objectives. On four separate occasions the FCC has imposed new regulatory requirements on Voice over the Internet Protocol ("VoIP") services and once for all types of broadband Internet access information services.

The paper also examines whether and how Title I of the Communications Act can provide the basis for the FCC to expand its "ancillary jurisdiction" and whether reviewing courts will defer to the Commission's decision to expand its regulatory wingspan. The paper concludes that Title I provides a shaky foundation to support regulation particularly in the absence of separate legislation supporting jurisdiction. The paper also concludes that the FCC cannot expect to qualify for judicial deference based primarily on the Commission's creative interpretation of statutory definitions.

next generation networks, VoIP, ancillary regulation, telecommunications policy, information services

Abstract:
Wireless handsets increasingly offer subscribers a third screen for accessing the Internet and video programming. The converging technologies and markets that make this possible present a major regulatory quandary, because national regulatory authorities seek to maintain mutual exclusivity between regulated telecommunications services and largely unregulated information services.

Many existing and emerging services do not easily fit into one or the other regulatory classification, nor can the Federal Communications Commission determine the appropriate classification by extrapolating from the regulatory model applied to existing or discontinued services. By failing to specify what model applies to services appearing on cellphone screens, the FCC has failed to remove regulatory uncertainty. Cellular telephone service providers may infer from the Commission's inaction that any convergent service eventually will qualify for the unregulated information service "safe harbor" despite plausible arguments that government oversight remains essential to achieve consumer protection, national security, fair trade practice, and other safeguards.

This essay will examine the regulatory status of wireless carrier-delivered video content with an eye toward determining the necessary scope and nature of government oversight. The essay reports on instances where the FCC deemed it necessary to promote video programming competition and subscriber access to wired cable television content, and concludes that wireless subscribers deserve similar efforts in light of wireless carriers' incentives and abilities to blunt competition. The essay concludes that NRAs must balance the carriers' interests in finding new revenue centers to pay for next generation network upgrades with subscribers' interests in maximizing their freedom to use handsets they own.

wireless, next generation networks, telecommunications regulation, information services, handsets

Abstract:
Incumbent carriers often vilify the regulatory process as a drain on efficiency and an unnecessary burden in light of robust marketplace competition. Some claim that regulation creates disincentives for investing in expensive next generation networks (“NGNs”), particularly if regulations mandate unbundling of services into composite parts, with burdensome interconnection and below market pricing of access by competitors. Both incumbents, prospective market entrants and recent market entrants may seek to tilt the competitive playing field to their advantage typically by securing a regulatory sanction that helps them reduce investment costs, delay having to make an investment, or secure a competitive advantage through reduced regulator-imposed costs.

Without assessing the necessity to do so legislators, regulators and judges have accepted the premise that government must create incentives for NGN investment. Incumbent carriers in particular have seized upon the concept of uncertainty as a justification for refraining from making necessary infrastructure investments, despite the onset of declining revenues and market shares in core services.

This paper will examine how incumbent carriers in the United States have gamed the incentive creation process for maximum market distortion and competitive advantage. The paper suggests that the U.S. government has rewarded incumbents with artificially lower risk, insulation from competition, and partial underwriting of technology projects that these carriers would have to undertake unilaterally. The paper provides recommendations on how governments can calibrate the incentive creation process for maximum consumer benefit instead of individual carrier gain.

telecommunications, incentive creation, regulatory arbitrage, FCC, broadband development, best practices

Abstract:
The Federal Communications Commission (“FCC”) has issued a Notice of Proposed Rulemaking (“NPRM”) that would codify rules aiming to preserve a free and open Internet for consumers. The NPRM appropriately concentrates on preventing broadband Internet access providers (“IAPs”) from acting as gatekeepers between end-users and online content and application providers. However, the NPRM does invite comments on a proposal of AT&T that openness principles be applied to Internet content and application providers. This paper strongly opposes AT&T’s imitative as both unlawful and unwise. The FCC’s appropriate concern about end user access to the Internet via IAPs does not justify an extension of regulatory oversight to include those entities providing content and applications. Regulating the vibrant application and content markets would constitute a departure from current policy and would threaten the open Internet.

The paper provides an extensive analysis of what regulatory wingspan the FCC has to establish federal Internet policy. While the Commission does have some statutory authority to oversee operators of wire and radio, including IAPs, the Commission cannot extend its direct or ancillary jurisdiction to regulate providers of content and software applications. The paper also explains how the FCC has long-recognized competitive and operational distinctions between facilities-based network providers and services that depend on those networks to reach end-users. The paper concludes that factors supporting enforceable openness rules for IAPs do not exist for extending any such rules to Internet content and applications that run “over-the-top” of IAPs’ networks.

Network Neutrality, Federal Internet Policy, FCC

Abstract:
In far too many instances, the Federal Communications Commission ('FCC') engages in results-driven decision making that accrues political dividends at the expense of the public interest. Remarkably, the Commission has used questionable and unverifiable statistics to confirm both the need for greater regulation, but also its abandonment. In the former, a former Chairman of the FCC insisted that data, not even compiled by Commission staff, proved that the cable television market had become so concentrated as to meet a Congressionally legislated trigger for heightened regulatory scrutiny. But in the latter, the FCC has used its statistics to support the conclusion that such ample facilities-based competition exists in broadcast, broadband and wireless markets that the Commission can further reduce ownership caps, approve multi-billion dollar, market concentrating mergers, and claim that the United States continues to benefit from best in class access to telecommunications services. In far too few instances, normal governmental checks and balances do not detect and reverse instances where the FCC has deliberately or inadvertently failed to compile a credible record. Many reviewing courts gladly defer to the FCC’s 'expertise' rather than appear to second guess, or to legislate from the bench in highly technical matters. One court accepted the FCC’s arguments that data about commercial ventures’ decisions not to provide broadband service in specific localities constituted a business trade secret qualifying from protection from public disclosure instead of identifying areas of market failure requiring heightened scrutiny in view of the legislative goal of achieving universal access to basic and advanced telecommunications services. Too often, the FCC reaches policy conclusions based on statistical interpretations that do not make sense, and do not have corroboration through peer review. For example, the FCC first concluded that per channel, 'ala carte' access to cable television programming would not save consumers’ money as an alternative to having to acquire a bundle of channels. However, the Commission quickly subsequently reversed itself with limited explanation for its change in findings. The Commission also erected a media diversity index to support relaxation of a cap on media ownership that a reviewing court rejected based on its lack of supporting evidence. Only after a stinging judicial rebuke did the FCC think to subject its statistical analysis and modeling to external review from unaffiliated experts, rather than simply rely on the research and findings sponsored by stakeholders with a financial interest in the outcome of the Commission’s decision. This paper will identify several instances where the FCC could have used empirical research and peer review to achieve a true sense of the marketplace. The paper will suggest ways the Commission could have avoided judicial reversal and public ridicule if it had embraced accepted social scientific practices, including peer review.

peer review, telecommunications policy, Federal Communications Commission, regulation

Abstract:
As the Internet matures and commercializes, it has become more hierarchical particularly regarding the terms and conditions for network interconnection. The previous "democratic" Sender Keep All ("SKA") system promoted networking externalities, but also generated free rider opportunities and great potential for network congestion. The individual networks that make up the Internet remain well integrated, but a more hierarchical pricing arrangement has developed. Only the largest Internet Service Providers ("ISPs") continue to "peer" on a SKA basis, while demanding payment from smaller operators.

Predictably, smaller ISPs and some government officials object to the changed circumstances. The commercial, unregulated nature of ISP interconnection negotiations now require sizeable transfer payments where none previously existed. Much of the payment flows to Tier-1 ISPs located in North America, leading some stakeholders in other locales to object claiming that the system violates trade, antitrust and economic development policies.

This paper will explore the nature of the Internet interconnection dispute with an eye toward examining the strategies used and predicting the outcome. The strategies examination will consider whether and how stakeholders can bring the matter before multilateral forums like the International Telecommunication Union and the World Trade Organization. The outcomes forecast will consider whether the problem will abate or grow acute. This consideration involves an assessment whether Internet traffic flows and content will more substantially diverge from a North American focus and whether interconnection arrangements will become even more finely calibrated.

Internet governance, Internet peering, Internet interconnection

Abstract:
This article examines several instances where Congress and the Federal Communications Commission have created opportunities for stakeholders to exploit differences in regulatory treatment. Such asymmetry in regulatory requirements have destabilized or reduced the potential for full and fair competition, because they tilt the competitive playing field in favor of one class of stakeholder.

The article examines a number of semantically driven regulatory dichotomies, e.g., common carrier versus private carrier, basic versus enhanced services and incumbent local exchange carrier versus market entrant with an eye toward determining whether technological convergence and regulatory opportunism defeats the possibility of establishing a dual track regulatory regime. Additionally the article scrutinizes several marketplace anomalies resulting when a regulatory dichotomy triggers a diversion or inflow of funds based on an operator's regulatory classification and its adeptness at exploiting arbitrage opportunities. The article concludes with suggestions on how legislators and regulators might curb regulatory opportunism by abandoning the strategy of classifying carriers based on static technological or economic definitions.