FCC Broadband Plan In Public Interest?

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The FCC this week unveiled its grand plan to regulate America’s broadband industry. It’s an admitted compromise which Chairman Julius Genachowski calls “a third way.”

The plan would reclassify high-speed Internet service providers as “common carriers,” allowing the Federal Communications Commission to regulate cable operators such as Comcast and telcos such as Verizon who would prefer to determine what (and how much) content users are downloading.

Addressing the hot-button issue of net neutrality, the commission said it would strive to not overly “regulate the Internet, including web-based services and applications, e-commerce sites, and online content.”

The specter of broadband regulation sent Wall Street into a deep dive, with cable stocks falling 5% to 6% as investors feared the commission’s proposed policy will hamper broadband providers’ control over their own networks.[more]

“The FCC is trying to walk the line between a heavy-handed regulatory approach that could theoretically lead to the agency mandating that ISPs open up their pipes, and a hands-off approach that could lead to ISPs violating net neutrality rules with impunity,” GigaOm observed.

The Consumers Union sees the proposal as “sound” and “sensible,” while others see the current FCC as not forceful enough in protecting consumers’ rights today’s highly competitive communications marketplace.

Telephone and cable operators are worried about the business implications of proposed regulatio, with telcos threatening to sue. Wall Street analyst Craig Moffett of Sanford Bernstein classifed the FCC plan as anti-cable and -telco, but a boon to the satellite industry.

“We would expect a profoundly negative impact on capital investment,” Moffett wrote in a report. “The only potential winners are the satellite providers, DirecTV and Dish Network, for whom incremental broadband regulation would dramatically reduce the risk of competitive foreclosure in the video business at the hands of bottleneck broadband providers.”

When Newton Minnow was appointed FCC Chairman by President John F. Kennedy, he gave his now infamous “Wasteland Speech.” Minow addressed the National Association of Broadcasters on May 9, 1961 – almost exactly 49 years ago – and advocated strongly for programming in the public interest.

“When television is good, nothing — not the theater, not the magazines or newspapers — nothing is better. But when television is bad, nothing is worse. I invite each of you to sit down in front of your own television set when your station goes on the air and stay there, for a day, without a book, without a magazine, without a newspaper, without a profit and loss sheet or a rating book to distract you. Keep your eyes glued to that set until the station signs off. I can assure you that what you will observe is a vast wasteland.”

Minow was irked that the words most quoted from his speech were “vast wasteland,” when for him, the most important were “public interest.”

The FCC’s current proposal is middle-of-the-road, but the ‘third way’ leaves small space for ISP negotiations.

Consumers may benefit, but ISPs will remain extremely powerful – the reason open access is not even on the table in the proposed National Broadband plan. The jury is out as the vast wasteland broadens its territorial imperative and follows its manifest destiny into broadband.

In the meantime, as ZDNet’s Dana Blankenhorn observes, “With no new competitors promised, no competition forced onto the Bell lines, and with the Bells fighting the agency, the only clear fact is that users in the post-Obama years may still be have to make do with Clinton-era broadband.”

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