Regardless of whether the Federal Communications Commission ultimately reclassifies broadband termination as a Title II telecommunications service or not, the agency will likely justify its efforts to regulate broadband service based on its mandate in Section 706 to “encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans” using “measures that promote competition [and] remove barriers to infrastructure investment.”  Indeed, at the center of the agency’s net neutrality argument is the theory of a “virtuous circle,” whereby innovation and investment at the edge of the network increases the demand for advanced telecommunications capability” and thus, in turn, drives investment …
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Next month, a new book entitled Captive Audience:  The Telecom Industry and Monopoly Power in the New Gilded Age (Yale University Press 2012) from Cardozo Law School Professor Susan Crawford will hit the bookshelves.  According to her publisher’s blurb, Professor Crawford’s book will examine how the United States has “created the biggest monopoly since the breakup of Standard Oil a century ago.”  But what is this “monopoly” to which Professor Crawford refers?  While the publisher’s promotional blurb is silent on this question, according to a 2010 paper authored by Professor Crawford in the Yale Law and Policy Review, it appears that she is talking about …
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Late Wednesday night, the Federal Communications Commission released a Report and Order that would suspend, on an “interim” basis, its rules for automatic grants of pricing flexibility for special access services “in light of significant evidence” that the current deregulatory trigger—i.e., two competitors have collocated in a single Metropolitan Statistical Area (“MSA”)—is “not working as predicted.”  In particular, the Commission found that the geographic territories contained in most MSAs are “overly broad” and, in contrast, most competitive entry is occurring only in areas with “extremely concentrated demand.”  Although the Commission concedes that it “currently lack[s] the necessary data to identify a permanent replacement approach to …
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Over the last several years, we have seen the Federal Communications Commission put forth a rather clever argument to expand its regulatory authority over broadband services.  The argument goes basically like this:  Under Section 706(a) of the Communications Act, the Commission “shall encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans … by utilizing … price cap regulation, regulatory forbearance, measures that promote competition in the local telecommunications market, or other regulating methods that remove barriers to infrastructure investment.”  As part of its mandate, Section 706(b) requires the Commission to conduct a regular inquiry into “whether advanced telecommunications …
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With the Olympic Games opening tonight, it doesn’t take a PhD in electrical engineering to recognize that the broadband infrastructure in the United Kingdom will be stretched to its limits.  According to a recent article, in order to accommodate the huge spike in expected traffic, the Olympics network will span 30,000 connections across 94 locations and will include: 5,500 kilometres of new fiber optic cables; 2,200 switches; 1,800 wireless access points; 7,000 cable TV sockets; 16,500 telephones; and 65,000 active network ports (active connections). But with nearly a million people expected to attend the Games—nearly all of which will be calling, tweeting, photo sharing, updating …
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As both the courts and the Federal Communications Commission have consistently recognized, price regulation is “far from an exact science”.  For this reason, since the late 1980s, the FCC has slowly and steadily sought to eliminate the direct price regulation of communications services at nearly every possible opportunity.  (See, e.g., the FCC’s Competitive Carrier paradigm, which culminated in the total forbearance from tariffing requirements.)  Given this long-standing policy, it is indeed curious that the FCC is reportedly circulating an order among its Commissioners that not only would re-evaluate how the agency de-regulates special access services provided by incumbent local exchange companies (“ILECs”) but, more importantly, …
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In 1999, the FCC began to grant incumbent LECs pricing flexibility on special access services in some Metropolitan Statistical Areas (“MSAs”) when specific evidence of competitive alternatives were proven to be present.  Ever since, whether or not the Commission was justified in following the path toward deregulation of special access services has been disputed.  A proceeding initiated in 2002 on the topic of special access pricing flexibility remains open today. Recent press reports indicate that FCC Chairman Julius Genachowski is now circulating a proposal that would transform the way the FCC regulates such high capacity services.  Among other things, this agency’s review of the regulatory …
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In his recent keynote speech at the CTIA show in New Orleans, Federal Communications Commission Chairman Julius Genachowski reiterated his (and the industry’s) concern that the “demand for mobile services is on pace to exceed the capacity of our mobile networks” and, therefore, we must “tackle the capacity challenge.” The Chairman has previously foretold of a future where spectrum exhaust could make “consumers […] face slower speeds, more dropped connections, and higher prices.” Plainly, spectrum exhaust remains a key challenge for both mobile service providers and policymakers. The Chairman also took the chance in his CTIA speech to challenge what we and others have said …
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What is the effect of regulation on investment?  At a high level of abstraction, it is impossible to say.  Rate-of-return regulation, for example, is criticized by economists for possibly encouraging too much investment—a principle known as the Averch-Johnson Effect.  On the other hand, if a firm fears that the regulator will alter the rules in a way that reduces the ability to earn profits on large, long-term capital investments, then the incentive to make such investments is reduced.  Importantly, the issue is not, as some claim, just about “regulatory uncertainty.”  There could be great uncertainty about future rule changes, but if the expectation is that …
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