Transcript Constructing an Effective Statutory & Regulatory Framework for

Constructing An Effective Statutory
& Regulatory Framework for
Broadband Networks
Chuck Goldfarb
Congressional Research Service
Phoenix Center Symposium
December 1, 2005
Disclaimer: Views presented here are personal & do not necessarily reflect those of Congressional
Research Service
The Objective
• Construct statutory & regulatory framework that fosters
innovation & investment in both physical broadband
networks and in applications that ride over those
networks…
• While also meeting the many non-economic objectives
of U.S. policy, such as universal service, homeland
security, public safety, etc.
Where We Appear to Be Today
• Current statutory & regulatory framework must be
reformed
• Market convergence is technological spillover
reducing entry costs so firms already having
single-use networks can use those networks with
relatively inexpensive upgrades to offer multiple
services over single platform
• Huge sunk up-front fixed costs will limit number of
efficient broadband networks deployed
Where We Appear to Be Today
• Cable & telephone companies pursuing business
plans & regulatory strategies with same key
elements:
• Deployment of asymmetric proprietary IP network
driven by demand for video services, which
represent “killer application”
• Video services require Quality of Service assurances
not available on public Internet
Where We Appear to Be Today
• Broadband network providers must control access to
their networks to manage bandwidth needed to
assure quality of their own video (and other) service
offerings
• Hence access to proprietary network should not be
regulated
• Form control takes will affect/determine ability of
independent applications providers to compete
with integrated network providers
The Issue:
• If allowed to control access, broadband networks
providers might have both incentive & ability to
constrain competitive provision of applications
• What market constraints or incentives exist to keep
broadband network providers from making strategic
capacity, access, and/or pricing decisions?
• Duopoly broadband network market structure is
unlikely to provide market incentives & constraints
needed to foster efficient innovation & investment in
both physical networks & applications
What are Statutory & Regulatory
Options?
• Network neutrality and/or open access requirements
• Policies to foster competitive entry by wireless or other
alternatives
Network Neutrality and/or Open Access
Requirements: Some Questions
• Possible to construct simple, but operational, network
neutrality or open access requirements that will neither
create opportunities for strategic litigation nor require
FCC to get involved in thousands of network
provider/applications provider negotiations?
Network Neutrality and/or Open Access
Requirements: Some Questions
• Can simple pricing rule (stating network providers
cannot restrict customer access to any application, but
can charge for bandwidth usage) work?
• How would rule address situation of broadband provider
reserving so much network bandwidth for its own services
that competitors had too little bandwidth available to offer
service of equal quality?
• Would it matter if broadband network provider charged end
users less for bandwidth when they purchased that
provider’s video & voice services than when they purchased
independent applications providers’ services?
Network Neutrality and/or Open Access
Requirements: Some Questions
• Are network neutrality requirements focusing on
end user access to applications sufficient or do
applications providers need guaranteed access
to broadband providers’ proprietary networks?
Competitive Entry
• Who has incentive & ability to provide
competitive alternative to cable & telco
broadband networks in reasonable time frame?
• Can Wi-Fi make enough difference at margin to
constrain cable and telephone companies?
• Does Google (or Yahoo or some other edge entity)
really plan to acquire dark fiber to connect
nationwide broadband Wi-Fi network capable of
carrying its new bandwidth-intensive applications?
Competitive Entry
• Will there be federal or state prohibitions on
municipal ownership of Wi-Fi or other broadband
networks?
• Is it in interest of any major independent wireless
carrier to pursue competitive entry rather than
partnering with cable companies?
• Do content owners believe it is easier to fight piracy
in duopoly broadband network market structure than
in competitive market structure?
Solutions to Other Issues May Affect
Innovation, Investment, & Competition for
Broadband Networks & Applications
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Digital rights management
CALEA
E-911
Intercarrier compensation
Universal service