Changing Federal Policies in Response to the Broadband Revolution

by John P. Janka

Virtually all of us rely on broadband access to more video content is now viewed online, from services such as the Internet in our law practices, and many Hulu, Netflix, HBO to Go, and YouTube. The Internet has are using social media as a means of become the virtual highway over which we travel each day. enhancing our professional profiles. These Broadband service is available to almost the entire U.S. pop - ulation, through a variety of technologies, including cable, fiber tools, coupled with the broad availability of 1 optics, satellite and wireless. However, large parts of the land mobile wireless communications devices, mass of the U.S. do not have mobile broadband service (except enable us to stay connected wherever we for some satellite-based services). And even in the populated travel, providing increased flexibility, but also areas that are served, the existing technology many telephone expanding the work day. This article provides companies rely upon has passed its prime, and does not provide a brief overview of some of the evolving the quality of service needed to support many increasingly federal legal issues in the industry. important broadband applications, such as two-way, high-defi - nition (HD) video conferencing (for distance learning and busi - ness meetings), running multiple applications over a virtual pri - ver the past decade, a revolution has vate network ( i.e ., making VoIP calls and accessing files while occurred in the field of broadband com - working remotely), or streaming HD video programming (to munications. Access to the Internet has catch up on the latest shows while away from home). In many become a necessity: Email is increasingly areas, the choice of service providers is limited. And broadband displacing voice as the preferred means of service to the home, as well as mobile broadband service, can be communications for many, students must more expensive than plain old telephone service (POTS). Ohave Internet access to do their homework, and many busi - For these reasons, among others, the developing ‘digital nesses rely on the Internet to get their products to market. We divide’ between the haves and have nots remains a serious pol - are no longer tethered to our desks. What used to be a simple icy concern. Thus, a number of federal initiatives are aimed at analog cell phone has evolved into a sophisticated digital making broadband service more available, affordable, and capa - device that can serve as a pocket computer, television, camera, ble of meeting growing demand. and phone, all in one. The Federal Communications Commission (FCC) is the lead The introduction of the iPad launched the development of a regulator on broadband Internet access matters. The FCC, an range of easy-to-use and ‘always on’ tablet computers. A wide independent regulatory agency established by the U.S. Con - variety of apps allow these mobile and portable devices to per - gress pursuant to the Communications Act of 1934, as amend - form functions that once were the domain of desktop comput - ed, is charged with regulating commercial use of the radiofre - ers or dedicated function devices, such as GPS navigation sys - quency spectrum (such as that used for wireless broadband tems. Many people are cutting the cord with their landline service), interstate communications, and international com - phone company, and relying instead on wireless phones and munications involving an end-point in the United States. 2 voice over Internet protocol (VoIP) service through the Internet At the state level, the provision of communications is gov - connection to their homes. The broadcast television and cable erned by state regulatory agencies (such as the New Jersey television sectors also are in a state of evolution, as more and Board of Public Utilities), typically having jurisdiction over

WWW .NJSBA .COM NEW JERSEY LAWYER | October 2012 21 telephone companies, cable television of, and also regulating, broadband Inter - telecommunications and information companies, and other ‘public utilities net access services. services at affordable rates through, providing services within the state, as The FCC’s 2010 National Broadband among other things, a federal universal well as many consumer protection mat - Plan 8 represents a blueprint for U.S. service fund (USF). 13 The USF is used to ters. In addition, municipalities often broadband policy, and includes recom - finance a number of separate programs have zoning regulations that govern the mendations for expanded access to with different focuses. 14 One program location of communications facilities broadband services in areas deemed supports service to so-called ‘high-cost’ (such as towers), and many issue fran - ‘unserved’ by the FCC. Initially, the plan areas, where geographic features, remote - chises that allow cable television sys - recommends that all Americans have ness, low population density, or other fac - tems to run their cables over public dedicated Internet access at speeds of at tors, raise the cost of service to the end rights of way. The authority of these least four megabits per second (Mbps) user above what it typically is in urban types of public utility commissions downstream ( i.e., receiving information areas. Another program provides subsi - (PUCs) and municipalities is provided in the home or office) and one Mbp dies to make basic services more afford - by state constitutions and statutes, but upstream ( i.e., sending information able to those of limited means. Yet anoth - is limited by the principle of federal from the home or office).These broad - er program provides funding for schools supremacy under the U.S. Constitution. 3 band speeds generally are considered and libraries. And another program pro - In the case of a conflict between FCC the bare minimum of what is needed vides funding for rural healthcare facili - and state regulations, the state usually is today, but are rapidly becoming inade - ties. All in all, about $8.5 billion in subsi - preempted, unless Congress or the FCC quate for Internet applications such as dies were provided under these programs permits the states to enforce divergent streaming HD TV shows and movies, in 2011, with the high-cost program con - regulations. 4 and two-way HD videoconferences. suming over half of this total. The FCC has indicated that it has Recognizing the need for increasing The USF is funded through contribu - exclusive jurisdiction over most matters broadband speeds, the FCC’s plan also tions from all providers of interstate and involving broadband Internet access serv - recommends that 100 million American international telecommunications and ices, due to the interstate and internation - households have access to broadband all providers of voice over Internet proto - al nature of the Internet. 5 The FCC has transmission capability within 10 years col services that are interconnected with already preempted state and local restric - that provides 100 megabit per second the public switched telephone network, tions on the installation of small anten - download speeds, and 50 megabit per as well as certain other providers of nas used for wireless services or the provi - second upload speeds. 9 ‘telecommunications.’ Notably, providers sion of satellite-based communications The FCC is attempting to advance of broadband Internet access historically (such as Internet access and subscription these goals through a number of initia - have not been required to contribute, but television service). 6 Moreover, Congress tives, including expanding the federal this may change in the future. 15 Typical - has generally preempted state regulation ‘universal service’ program to cover ly, service providers recover the cost of over wireless mobile communications, broadband, 10 and making additional the contributions they make to the USF while leaving states with authority over spectrum bands available for mobile by adding a surcharge to the customer’s the location of transmission towers and broadband networks to ease the capaci - bill. The required contribution rate consumer protection issues. 7 ty crunch caused by the rapid adoption varies, but is currently 15.7 percent of Initially, the federal government used of smartphones and tablet computers. 11 covered revenues. 16 a relatively light touch with respect to In addition, the FCC’s recently adopted As initially proposed in the National the regulation of broadband Internet (and controversial) ‘network neutrality’ Broadband Plan, the FCC has taken access service, relying largely on market rules that restrict how broadband steps to modify the existing high-cost forces. By many accounts, this hands-off providers operate their networks reflect USF program to target broadband infra - approach contributed to the rapid a perception by some that broadband, a structure deployment to areas the FCC growth of the U.S. Internet-based sector, critical part of our nation’s infrastruc - has identified as currently unserved by and the growing reliance on broadband ture, must be further regulated. 12 terrestrial-based broadband providers. 17 Internet access as an effective substitute (The FCC does not take into account for services such as landline telephony Universal Service nationwide, satellite-delivered broad - and cable television. However, the FCC The Communications Act of 1934, as band service for these purposes.) The now is playing a more active role in amended, directs the FCC to facilitate the FCC justifies this new Connect America attempting to facilitate the deployment nationwide availability of essential Fund (CAF) by asserting that broadband

22 NEW JERSEY LAWYER | October 2012 WWW .NJSBA .COM service providers do not have a business tively picking one ‘winner’ in that area, service regulation. 20 As noted above, case to extend service to these areas, competition from other providers is sti - state PUC jurisdiction over broadband absent this type of financial support. fled. It is tough for a business to com - Internet access services has been severe - These changes are being coupled with pete with someone who is getting an ly limited by federal preemption. changes to the existing—and exceeding - advantage in the form of a significant That said, the FCC has recently decid - ly complex—‘intercarrier compensation’ government subsidy. ed to regulate broadband Internet access scheme by which local and long dis - Another risk is that if the subsidy providers in another way—through its tance carriers pay or receive compensa - recipient does not face effective compe - ‘net neutrality’ rules, which generally tion for traffic that is handed off to each tition, it may have little incentive to aim to constrain the rights of broadband other’s networks. 18 innovate and keep up with the network providers to block, filter or pri - As with the legacy USF program, the improved broadband speeds in urban oritize lawful Internet applications, web - new CAF program has a number of struc - areas. If these issues are not addressed, sites and content. The first step was a tural biases in favor of the local, incum - there is a significant risk that those 2005 policy statement that consumers bent phone company. (The subsidy Americans who currently are unserved are entitled to: 1) access to the lawful schemes underlying the legacy USF pro - will be given the broadband equivalent Internet content of their choice; 2) run gram were established at a time when of horses while the rest of us enjoy the applications and use services of their the local phone company was a monop - broadband equivalent of race cars. choice (subject to law enforcement); 3) oly—before wireless service existed and Another issue is how this new pro - connect any legal devices that do not before the cable companies offered gram gets funded. As noted above, there harm the network; and 4) benefit from phone service.) It essentially provides is essentially a ‘tax’ of about 16 percent competition among network providers, the incumbent phone company with of the interstate portion of each phone application and service providers, and first dibs on the new high-cost broad - bill to fund the current USF programs. content providers, all subject to a service band subsidy, and ends the prior support The FCC has just proposed to extend provider’s right to engage in “reasonable for multiple service providers in a given this surcharge to all broadband Internet network management.” 21 area. While these aspects are based on a access services. 19 The idea is to spread Exactly what constitutes reasonable stated desire to ensure continued broad - the burden of the surcharge, and thus network management remains unclear. band network deployment and reduce lower the rate. The risk is that doing so After a federal court overturned, on juris - the burden of the CAF on the consumers may make broadband service less afford - dictional grounds, the FCC’s attempt to who fund it, it is not at all clear that the able in these challenging economic apply these ‘principles’ to the operation first of these goals will be achieved. times, particularly for those without it. of Comcast’s broadband network, 22 the There currently are no clear penalties for FCC adopted express, new rules. 23 The an incumbent electing to receive CAF Net Neutrality new rules, which are very general in funding, but not ultimately providing One of the ways the FCC has enabled nature, also are being challenged in fed - broadband to all of the unserved house - broadband service to flourish is by eral court on jurisdictional grounds. 24 holds and businesses in its service area. avoiding the burdens typically imposed They require all broadband Internet Another concern with the CAF is that on providers of common carrier access providers to disclose the network it has not been tailored for the compet - ‘telecommunications service,’ such as management practices, performance itive broadband environment. Those rate regulation, and the obligation to characteristics, and terms and condi - who live in urban areas enjoy the bene - sell capacity to consumers and compet - tions of their broadband services. 25 fits of vibrant competition among the ing service providers. Telecommunica - The rules then go on to treat ‘fixed’ cable company, the phone company, a tions service providers tend to be heavi - (e.g ., cable, DSL, and fiber) broadband number of wireless providers, and a ly regulated by both the FCC and the Internet access providers differently number of satellite providers. This state PUCs. In contrast, providers of than mobile providers (the FCC asserts dynamic leads to better service, as evi - ‘information services’ are not subject to that mobile providers face more compe - denced by the new 50 to 300 Mbps common carrier regulation, and tradi - tition and have greater operational con - broadband speed tiers that some service tionally have been lightly regulated at straints than fixed providers). 26 Subject providers recently have launched in the federal level. The FCC has classified to reasonable network management, urban areas. One risk with the govern - broadband Internet access as an infor - fixed broadband Internet access ment subsidizing just one provider to mation service, and thus largely providers may not block lawful content, serve an unserved area is that by effec - exempted it from telecommunications applications, services, or non-harmful

WWW .NJSBA .COM NEW JERSEY LAWYER | October 2012 23 devices, and may not unreasonably dis - by the lengths of the waves of an emit - their use both through FCC processes and criminate in transmitting lawful net - ted signal. Like real property, some spec - congressional lobbying, even though that work traffic over a consumer’s broad - trum is more valuable than other spec - use is not authorized. band Internet access service. 27 Subject to trum, because of the propagation Technological developments have reasonable network management, characteristics at a given wavelength— always outpaced the development of the mobile broadband Internet access how far an emitted signal will travel law. Perhaps this is most true in the providers may not block lawful web - (and thus how many transmission tow - communications field, where the sites, or applications that compete with ers are needed to cover an area), how demand for Internet-based services and their voice or video telephony services. well the emitted signal can penetrate devices has driven a number of new fed - Thus, wireless providers appear to have foliage and buildings ( i.e ., does it pro - eral policies, and will continue to do so more latitude to block other websites vide a signal inside a building?), and over the coming years. and applications, and to impose greater whether the signal can be disrupted by constraints on other network traffic and heavy rain. Endnotes devices. 28 These distinctions also are Because of its propagation character - 1. See National Broadband Map, avail - being challenged in federal court. 29 istics, some of the most desirable spec - able at www.broadbandmap.gov/ Many aspects of these new rules trum for wireless communications con - technology (last visited July 17, remain unclear. If they are sustained in sists of the portion currently being used 2012). court, it may well take some time before by many broadcast television stations. 2. Communications Act of 1934, as the FCC provides further guidance on Congress has recently enacted legisla - amended, 47 U.S.C. §§ 151-52. what tools broadband Internet access tion that will allow television broadcast - 3. U.S. Const. Art. VI, cl. 2. providers may use to address network ers to ‘turn in’ some of the spectrum 4. See generally Capital Cities Cable v. congestion, address concerns about con - they use for their television channels, in Crisp , 467 U.S. 691 (1984). tent providers who want to use the net - return for a portion of the proceeds 5. See generally, e.g., Inquiry Concerning works of others to deliver their services when the spectrum is re-auctioned by High-Speed Access to the Internet Over to consumers (but do not want to pay the government for mobile broadband Cable and Other Facilities; Internet Over for the network capacity they consume), use. 31 Because today’s digital signals do Cable Declaratory Ruling; Appropriate and decide the extent to which broad - not require a broadcaster to use all of its Regulatory Treatment for Broadband band service providers can prioritize spectrum, a TV station could still contin - Access to the Internet Over Cable Facili - some types of traffic to provide a quali - ue to provide service, largely as it does ties , 17 FCC Rcd 4798 (2002) (the 9th ty service to the end user. today. Or a TV station could stop broad - Circuit initially reversed this deci - casting over the air, and opt to deliver its sion, but, after a remand by the U.S. Spectrum Policy programming through a cable system, a Supreme Court in National Cable & In order to facilitate the deployment phone company, a satellite company, or Telecommunications Ass’n v. Brand X and growth of broadband Internet over the Internet. It remains to be seen Internet Services , 545 U.S. 967 (2005), access services, the National Broadband how many broadcasters will choose to the 9th Circuit ultimately affirmed Plan recommends the repurposing of at take advantage of this opportunity. the FCC’s decision in Brand X Internet least 500 MHz of radiofrequency spec - Other spectrum that is being Services v. F.C.C ., 435 F.3d 1053 (9th trum. 30 Some spectrum would be used to ‘refarmed’ for wireless use was previously Cir. 2006)); Vonage Holdings Corpora - address the strains on wireless system set aside for mobile satellite service (MSS) tion Petition for Declaratory Ruling capacity caused by the growing number systems. 32 LightSquared is one of the com - Concerning an Order of the Minnesota of end users, and the more data-inten - panies planning to use a portion of its Public Utilities Commission , 19 FCC sive applications supported by smart - licensed MSS spectrum in this manner— Rcd 22404 (2004); see also Framework phones and tablets. Other spectrum specifically, to deploy a state-of-the art 4G for Broadband Internet Service , Notice would be used for the essential ‘back - wireless network as a competitive alterna - of Inquiry, 25 FCC Rcd 7866, 7910 haul’ infrastructure connecting wireless tive to AT&T’s and Verizon’s wireless (2010). towers in remote areas with the offerings. As evidenced by the controver - 6. 47 C.F.R. § 1.4000 (2011). telecommunications backbone that ties sy surrounding LightSquared’s efforts, 33 7. 47 U.S.C. §§ 253, 332 (c)(3), (7). into the Internet. converting spectrum to higher and better 8. See Federal Communications Com - Radiofrequency spectrum is a portion uses presents difficult challenges when mission, Connecting America: The of the electromagnetic spectrum defined current users of spectrum seek to protect National Broadband Plan (rel. March

24 NEW JERSEY LAWYER | October 2012 WWW .NJSBA .COM 16, 2010) (“ National Broadband Internet Services, 545 U.S. 967 (2005). Plan ”), available at www.broadband. 21. Appropriate Framework for Broadband gov/plan (last visited July 17, 2012). Access to the Internet over Wireline 9. Id. at xiv. Facilities , Policy Statement, 20 FCC 10. See, e.g., Connect America Fund , Rcd 14986 (2005). Report and Order and Further Notice 22. Comcast Corporation v. FCC, 600 F.3d of Proposed Rulemaking, 26 FCC 642 (D.C. Cir. 2010). Rcd 17663 (2011) (CAF Order), pets. 23. Net Neutrality Order , 25 FCC Rcd for review pending sub nom. Direct 17905. Commc’ns Cedar Valley, LLC v. FCC , 24. See supra n.12. No. 11-9581 (10th Cir. filed Dec. 8, 25. Id. at 17936-41. 2011) (and consolidated cases). 26. Id. at 17956-58. 11. See, e.g., Service Rules for Advanced 27. Id. at 17941-56. Wireless Services in the 2000-2020 28. Id. at 17956-61. MHz and 2180-2200 MHz Bands, 29. See supra n.12. Notice of Proposed Rulemaking and 30. National Broadband Plan at xii. Notice of Inquiry, FCC 12-32 (rel. 31. Middle Class Tax Relief and Job Cre - March 21, 2012) ( 2 GHz NPRM ). ation Act of 2012, Public Law 12. Preserving the Open Internet; Broad - 112–96 § 6403, available at band Industry Practices , Report and www.gpo.gov/fdsys/pkg/PLAW- Order, 25 FCC Rcd 17905 (2010) 112publ96/pdf/PLAW-112publ96.pdf (Net Neutrality Order ), petitions for (last visited July 17, 2012). review and notices of appeal pend - 32. See, e.g., 2 GHz NPRM, FCC 12-32. ing sub nom. Verizon v. FCC , No. 11- 33. See Daniel Fisher, Lightscrewed, 1355 (D.C. Cir. filed Sept. 30, 2011) Forbes, Jan. 16, 2012, at 64; Susan (and consolidated cases). Crawford, Geo-Location, Geo-Loca - 13. 47 U.S.C. § 254. tion, Geo-Location: The Tragedy of 14. See generally www.usac.org/about/about/ Lightsquared, Feb. 23, 2012, avail - universal-service/overview.aspx (last able at www.wired.com/epicen - visited July 17, 2012). ter/2012/02/pipeline-crawford- 15. See infra n.19 and associated text. telecomm-goliath (last visited July 16. Proposed Third Quarter 2012 Uni - 17, 2012). versal Service Contribution Factor, FCC Public Notice, DA 12-917 (rel. John P. Janka practices communications June 11, 2012). law in Washington, D.C. He is a partner at 17. CAF Order, 26 FCC Rcd at 17668-70; Latham & Watkins LLP, where he heads the 17709. firm’s communications law practice group. 18. Id. at 17872-18044. 19. Universal Service Contribution Methodology; A National Broadband Plan For Our Future , FCC 12-46 (rel. April 30, 2012). 20. Essentially, Internet access is distin - guished from ‘telecommunications’ and is deemed an ‘information serv - ice’ that involves the manipulation of information—that is, it involves more than just mere transmission capabilities . See National Cable & Telecommunications Ass’n v. Brand X

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