The Metaphysics of Broadband

In what now seems eons ago, I published a piece on CNET called “The Metaphysics of VoIP.” Actually, the piece was published in January 2004 -- eons ago in telecom time, but short of four years by the Gregorian calendar.

The main point of the essay was to suggest that regulation of the then-emerging VoIP services likely would turn on regulatory classifications at once arcane and, yes, metaphysical, such as the difference between “telecommunications” and “information” services. Without going on and on here, metaphysics comes into play when the regulatory question turns, for example, on whether there has been, in the parlance of the telecommunications services definition, “a change in the form or content of the information sent or received.” Shortly thereafter, in October 2004, I advocated adoption of a new regulatory paradigm, one in which regulation is not tied to the “stovepipe” regime that is based on what I called “techno-functional” constructs. In “Calling for a Regulatory Overhaul, Bit by Bit,” I proposed a new market-oriented regulatory paradigm based on competitive analysis. A more extended treatment of communications metaphysics and techno-functional constructs was published in the Federal Communications Law Journal under the title, “Why Stovepipe Regulation No Longer Works: An Essay on the Need for a New Market-Oriented Communications Policy.”

Acting within the confines of the current Communications Act and under the leadership of Chairmen Michael Powell and Kevin Martin, the FCC deserves credit for adhering, for the most part, if not consistently, to what the agency calls a “minimal regulatory environment” for broadband. This generally deregulatory policy has worked well in stimulating new investment in broadband facilities. And new investment has fueled more facilities-based competition.

The musings above about metaphysical techno-functional constructs come to mind as I read reports of impending FCC actions relating to “broadband” services, possibly as early as September 11. The FCC is considering telephone company requests that various business-oriented packet-based broadband services be allowed to be offered free from common carrier regulation. According to the knowledgeable telecom analysts at Stifel Nicholaus, among the broadband services targeted for regulatory relief are “Frame Relay, Asynchronous Mode Transfer (AMT), Ethernet-based, and very-high- capacity optical networking, hubbing, and transmission level (“Ocn” level),…but not TDM (Time Division Multiplexing) services, including DS1-level (24 voice-grade equivalents) and DS3-level (672 voice grade equivalents) special access services.” According to the Stifel Nicholaus analysts, Sprint opposes the requested broadband relief on the basis that the TDM/non-TDM distinction would create a loophole that the telcos would exploit by reconfiguring their networks and rebranding their services as non-TDM. Sprint says that by seeking relief “from all but their TDM-based special access services, the [telcos] are effectively cutting off carriers from the IP-based network of the future.”

The main point I want to make is this: The distinctions among the above services—as indicated by their “Frame Relay”, “AMT”, “Ethernet”, and “TDM” monikers— really are based on techno-functional constructs having little to do with marketplace realities. The decision as to whether regulatory relief is granted should be based on whether customers have choices in the marketplace for comparable services, not on whether a service provider might possibly be able to technically reconfigure a network or rebrand a service, or might be discouraged from doing so for fear of regulatory consequences.

In my view, the “business broadband” services at issue in the telcos’ request for relief are generally subject to marketplace competition, with more competition on the way, and, for that reason, should be granted regulatory relief. Because the FCC now is considering “forbearance” petitions under Section 10 of the Communications Act, the agency does not have to overly concern itself with regulatory classifications based on techno-functional constructs, or marketing brands. Marketplace competition, not metaphysics, should be the focus.

Based on its experience thus far with a “minimal regulatory environment” for broadband Internet services, most notably the success in stimulating new network investment leading to more competition, the Commission should be receptive to requests to extend regulatory relief to the broadband services used principally by large businesses and carriers. The FCC should keep broadband policy moving in a deregulatory direction.