Broadband Digital Migration Policies: Embracing New Realities

1. Policies for the Broadband Digital Migration Barbara A. Cherry Senior Counsel Office of Strategic Planning & Policy Analysis Federal Communications Commission <bcherry@fcc.gov> August 2004

2. Old Rules and Assumptions • Old Rules based upon distinct industry and regulatory structures • Old Rules based upon non-competitive model • Based upon/assumed scarcity • Required licenses • Assumed natural monopolies or regulated oligopolies • Entry and price regulation • Government protected incumbents--ensuring scarcity • Barriers to entry where government decided winners and losers

3. Revolution in Communications Technology: Convergence Precursors • Technology: analog digital • Network: circuit-switched packet-switched • Packetization/digitization convergence of video, voice and data • The Broadband Digital Migration

4. Analog World Digital World Narrowband Broadband Transition Voice Copper Video Coax TV/ Radio Spectrum Broadband Digital Migration Voice; VideoData; Audio; Etc. APPLICATIONS PLATFORMS Cable DSL Power Laser Fixed DTV 3G FTTH Satellite Wi-Fi Mesh UWB

5. Potential Competing Platforms • Cable • DSL • Powerline • Free space optics • Fixed wireless • UWB • DTV • FTTH • Satellite • WiFi • Mesh networks • 3G • ???

6. 2004 Emerging Realities • Competition • CLECs • Cable TV • Mobile wireless • VoIP • Consolidations • Spinoffs/Divestitures • New all fiber/IP-based networks/backbones

7. Emerging Realities: Mobile Wireless • 1993 Deregulation • 1994 Auctions • Very Competitive • Six nation-wide competitors • Long distance substitution • Beginning to see local substitution • Consumer benefits • Among lowest prices in the world • Nation-wide calling areas • Death of roaming • VERY High MOU • Wireline substitution

8. Emerging Realities: The Broadband Migration • The next phase in the Internet’s development • Global recognition of broadband’s importance • Framing the debate • What is “broadband”? • How should we measure progress and success? Deployment/availability (supply) v. adoption (demand)? • How do we get there?

9. Broadband Trends • First generation broadband (cable modems and DSL) available to 85-90% US households • 28% of U.S. households subscribe to DSL or cable Modems • 50% of online U.S. households • Japan and Korea have higher penetration • Value proposition • High cost of dial-up • Voice over IP as driver • What’s the value proposition?

10. VoIP Developments • Why we care • Industry developments • FROM VoIP to EoIP • State regulatory action/court actions • Petitions to FCC • FCC VoIP Forum • FCC IP Working Group—EoIP • IP Enabled Services Proceeding • FCC decisions/actions • Pulver.com • Notice of Proposed Rulemaking • Solutions summits • CALEA petition/proceeding

11. Policy Questions When Everything’s over IP • What, if anything gets regulated? • Applications? • Access for content providers? • Who, if anyone, regulates? • How to achieve social goals? • Consumer protections? • What about legacy economic models/revenue flows and assumptions? • What about old definitions? • What is “video programming” or “cable system”? • What is “broadcasting”?

12. The Broadband Digital World: An Agenda for Change • Do NOT assume a problem • Separate economic regulation and social policy • Finding new ways to maintain critical social policy goals • Universal Service • Emergency service—E911 • Support law enforcement—CALEA • Disability access • Market solutions must be allowed to develop • Facilitate facilities-based broadband competition • The importance of spectrum and market-based spectrum policies • Need new thinking and new rules for new realities

13. Viele Danken