Transcript CLEC STATUS: HOW TO SLEEP WITH ELEPHANTS

The FCC in the New Administration
Broadband Wireless Forum
February 21, 2001
San Francisco, CA
Stephen E. Coran
RINI, CORAN & LANCELLOTTA, P.C.
© 2001 RINI, CORAN & LANCELLOTTA, P.C.
All Rights Reserved.
Meet the New Bosses

New President

Did not invent the Internet

Little track record on technology and spectrum
issues

New Leadership in Congress

W.J. “Billy” Tauzin elevated to Chairman of House
Commerce Committee – focus:
• Reform and restructure FCC to limit scope and
timing of merger review – no voluntary conditions
• Expedite Section 271 approval (RBOC long
distance) and allow RBOCs entry into inter LATA
data
• Revisit DTV transition

Conrad Burns remains Chairman of Senate
Communications Subcommittee – focus:
• Emphasis on wireless and Internet issues
• Tax incentives for broadband providers in
underserved areas
• Look at LPTV Internet trial for expansion

New Leadership at FCC

Michael Powell elevated to Chairman

Two Republicans and two Democrats
• Harold Furchtgott-Roth has announced departure
• Susan Ness not likely to be reconfirmed
• Gloria Tristani rumored to be leaving
Not the Same as the Old Bosses

The Kennard Years: Regulate the New

Expanded scope of merger review to promote competition
• AOL/Time Warner is best example

Expanded access to communications services
• E-rate
• Tribal lands

Expanded opportunities for start-ups
• LPFM
• EEO Rules
• Data CLECs line-sharing, colocation, local loop unbundling

Clashed with Congress on activist policies

The Powell Philosophy: Deregulate the Old


Favors marketplace competition – will be mostly nonactivist
Limit scope of FCC merger review
• AOL/Time Warner statement: opposed conditions
mandating interoperability for future high speed
advanced instant messaging services

Relax ownership concentration rules
• Wireless spectrum caps – NPRM adopted January
19, 2001
• Broadcast ownership?
• Cable ownership?

Has unqualified support of Rep. Tauzin
What’s Hot?


Access

Open Access Proceeding

Gulf Power Issues
“Third Generation”

Spectrum Identification and Allocation

700 MHz Auction

Unlicensed Operations

Internet Tax
Access

Section 706 requires FCC to monitor development
of broadband capability (defined as more than 200
kbps in at least one direction) and take action, if
necessary, to accelerate deployment – FCC’s
initial findings:

Multiple broadband sources including DSL, cable
modems, fiber to the home, satellite and terrestrial
wireless will be available

No reason to take action, but will continue to monitor
broadband deployment (e.g., merger review, other
proceedings)
Notice of Inquiry (September 28, 2000)
Proponents of Open Access:

Without access, cable companies will monopolize
the broadband Internet access market

Without access, cable will thwart development of
Internet-based competition to cable’s core video
offerings

ISPs do not have the necessary leverage to
negotiate access arrangements with the few
powerful MSOs
Opponents of Open Access:

Cable took the risk of building the platforms and
should be allowed to benefit from that risk

Access requirements lead to disincentives to invest
in upgrades in cable broadband plant

While open access is technically feasible, it may
not be technically optimal

Even if the market is defined as broadband only,
there are other options that would foreclose cable
operators from establishing monopoly prices
AOL/Time Warner Merger

FTC required AOL Time Warner to
negotiate in good faith with any unaffiliated
ISP that seeks access

FCC imposed additional conditions on AOL
Time Warner:

Where ISP has contract with AOL Time
Warner, AOL Time Warner can’t prevent ISP
from selecting service from the unaffiliated ISP

No exclusivity with AT&T

No discrimination regarding quality of service

Can’t compel AOL Time Warner “first screen”

Must open instant messaging to at least three
rivals if it adds AIHS in the future, unless AOL
Time Warner is non-dominant AIHS provider
for at least four consecutive months
High-Speed Data Subscribers*
4Q
Total
1.0 million
3.9-4.2 million
AT&T
259,000
1.1 million
AOL Time Warner
227,000
946,000
DSL (RBOCs)
534,000
2.3 million
SBC
251,000
767,000
Verizon
190,000
540,000
Cable
DSL (DLECs)
Covad
*Communications Daily, February
6, 2001
131,700
69,000
Gulf Power Issues

Section 224 of the Communications Act requires all
utilities, upon request, to attach equipment owned by the
following:

Cable television systems

Telecommunications service providers

Section 224 requires FCC to establish rates for pole
attachments when parties are unable to negotiate a rate

Only categories of service listed for rate formulas are
“telecommunications service” and “cable service”
Gulf Power Decisions

Eleventh Circuit Decision:



Utilities are not required to permit wireless providers to
attach to their equipment
Ninth Circuit Decision:


Internet service is neither “telecommunications service”
nor “cable service”
Cable modem service is “telecommunications service”
Fourth Circuit Decision:

Cable modem service is “cable service”
Effect of Gulf Power

Utilities have increased pole attachment rates
following Gulf Power decision, restricting ability
of competitors to construct networks

In Ninth Circuit, Cox has stopped paying franchise
fees on cable modem service to local authorities
on basis that holding is “non-binding dicta”

But, question in Portland, OR is whether cable modem
service is permitted under existing franchise agreement

Eleventh Circuit issued stay of decision pending
appeal

U.S. Supreme Court has granted writ of certiorari,
with decision expected in about a year
Third Generation

Key features (per ITU):

Support of multimedia services/capabilities

Interoperability and roaming

144 kbps or higher for vehicular traffic

384 kbps for pedestrian traffic

2 Mbps or higher for indoor traffic
Spectrum Identification

ITU Resolution 223

Demand for 160 MHz of additional spectrum by 2010

Identified five frequency bands for terrestrial 3G:
• 806-960 MHz
• 1710-1885 MHz
• 1885-2025 MHz
• 2110-2200 MHz
• 2500-2690-MHz

ITU Resolutions 223 and 224

Countries can use any of the identified bands

Bands may be used for other services

3G does not have priority over allocated
services

Study of global roaming across different bands
Spectrum Allocation

Satellite Industry Association Petition for Rule
Making (April 2000)

Filed prior to WRC-2000

Sought allocation of 2500-2520 MHz and 2670-2690
MHz for 3G Mobile Satellite Services

No technical support or discussion on incumbent
grandfathering or relocation

Cellular Telecommunications Industry Association
Petition for Rulemaking (July 2000)

Asked FCC to begin spectrum allocation process

Demand for additional services



Need for “harmonization” of spectrum worldwide to
facilitate roaming
Fear that U.S. will be left behind
Acknowledged “significant challenges” presented by
incumbency on 1755-1850 MHz a 2500-2690 MHz
bands

Comments on Petitions (August and September,
2000)

Supporters: AT&T, Verizon, Motorola, Lucent,
Qualcomm, Nokia
• Harmonization needed to avoid “unacceptable” consequences
of multiple bands and to facilitate interoperability
• Harmonization would expedite standards development, lower
equipment costs and increase value of spectrum

Opponents: WorldCom, Sprint, Nucentrix,
educational community

Questioned demand for additional mobile services
spectrum

Suggested that spectrum other than 2500-2690 MHz
band would be less disruptive to convert

Harmonization may not be necessary in light of
software-defined radios

Harmonization may not be likely in light of global
allocation

Recent adoption of two-way rules and investment in
acquisition and technology designed to foster federal
policy of broadband competition

No suitable alternative spectrum

Notice of Proposed Rule Making (January 5, 2001)

Allocation Proposals:
• 1710-1755 MHz Band paired with 2110-2150/2160-2165 MHz
band for fixed and mobile services
• 1755-1850 MHz Band identified for advanced mobile and fixed
services, if spectrum is transferred from federal government
• Comments sought on 2500-2690 MHz Band

Comments due February 22, 2001

Reply Comments due March 9, 2001

Final Reports on incumbent use by end of March,
2001

Final Rules by end of June, 2001

Spectrum Auctions by September, 2002
700 MHz Auction

747-762 MHz and 777-792 MHz Bands

Suitable for advanced wireless and video
services

Occupied by incumbent TV stations that must
be relocated

Auction recently delayed again

Short forms due August 17, 2001

Auction begins September 12, 2001

Will auction really happen?

Will values suffer in light of incumbents and
transition procedures?
Unlicensed Operations

Growing concerns about interference

Focus has been on Part 15 equipment and rules

IEEE 802.llb DSSS Wireless LANs vs. expected
development of FHSS BluetoothTM Wireless Personal Area
Network (WPAN) systems

Standards and testing groups for 2.4 GHz ISM Band

FCC may hold industry forum

With congestion at 2.4 GHz, will 5 GHz the answer?

3Com, Apple, Cisco, Dell, Intel, Intersil, Lucent,
Nokia and Texas Instruments Joint Petition
(October 25, 2000):

Asks FCC to clarify that Part 15 rules allow Frequency
Hopping Spread Spectrum (FHSS) to use adaptive
hopping techniques or to allow adaptive hopping
techniques at 2.4 GHz to mitigate interference

Asks for adaptive frequency hopping on 15 nonoverlapping frequencies in less than 75 MHz

Opposed by Proxim, Mobilian favors rule making

Wi-LAN Application for Review (September 20,
2000

Seeks permission to operate wideband OFDM
transmitter at 2.4 GHz as a DSS device

FCC denied Wi-LAN certification because its
technology didn’t meet “intent” of Part 15 rules, it
minimizes occupied bandwidth to send signal and does
not use high speed spreading code and information data
stream to modulate a single RF signal

Canada approved transmitter under similar standard

Opposed by Proxim, supported by Cisco
Internet Taxes

Cox bill

Would extend tax moratorium five years beyond
October 31, 2001 sunset date

Would set standards and conditions for states to collect
taxes
• Fast-track process
• States would need to simplify nexus requirements for assessing
“business activity” taxes (income, franchise and sales taxes)

Sen. Dorgan expected to propose bill more favorable to
states


Rockefeller bill (S-88)

10% tax credit for current generation high-speed services (1.5
Mbps downstream, 200 kbps upstream) in underserved areas

20% tax credit for next generation services (22 Mbps downstream,
5 Mbps upstream) in underserved areas

10% penetration in order to be eligible
Does this create enough incentive for broadband
deployment in underserved areas?
If you think of something else...
Stephen E. Coran
[email protected]
(202) 296-2007
RINI, CORAN & LANCELLOTTA, P.C.
1350 Connecticut Avenue, N.W., Suite 900
Washington, D.C. 20036
www.rclpc.com