Thursday, February 17, 2011

A Crazy Week for The Telecom Industry: NTCA vs. Blair Levin, Net Neutrality Challenged, World Mobile Congress, and More!

Wow, another big week for the telecom industry! So many exciting things have happened, adding to an already pretty exciting month. There was a nearly hostile showdown the National Telecommunications Cooperative Association (NTCA) annual meeting with Blair Levin; exciting smart phones and tablets were revealed at the World Mobile Congress in Barcelona, Spain; the Republicans dished out some harsh criticism about the Net Neutrality Rules, and the competition between Google and Apple heated up over published content distribution (also Apple is being targeted for antitrust violations—oh how fun!). What else? Well, the NBP national broadband maps are finally online, and I have already found one glaring error for Iowa within the first 10 seconds of looking at it (not surprising, considering the mess that some of the statewide maps have been). Wisconsin gave back its broadband stimulus grants, and there was some drama in Minnesota over the CenturyLink-Qwest merger. With all these exciting events, it should not come as a shock that I still haven’t finished reading that USF NPRM to do a proper analysis, although I have gotten a pretty good start and covered most of the main points. Oh, there was also a Federal-State Joint Board Universal Service Workshop today which I hope to watch sometime soon, maybe this weekend if this wonderful faux-spring weather goes away. Other news… a computer beat some really smart humans at Jeopardy which has a lot of people wondering if AI technology really is a force to be reckoned with. Along these lines, I just finished reading The Shallows: What the Internet is Doing to Our Brains, by Nicholas Carr, which has lead me to vow to read more entire books and articles and not to rely so much on Google to answer every single question that pops into my mind every day. A little hard research never killed anyone, and I certainly have the skills and determination to look further than the first page of search results to really learn about something. I would love to provide some details on all of these interesting events from the week, but The Shallows taught me that most people do not pay attention to long articles online anyway, so I will try to be brief with highlighting a few of my favorite things from the telecom industry this week.

Blair Levin vs. NTCA: My inside source at the NTCA annual meeting in Dallas informed me early Monday morning that the Blair Levin (National Broadband Plan author and enemy of rural telecom providers) would be engaging in a debate with some rural telecom managers (my “inside source” is my dad, Bruce Heyne, President and GM of Walnut Communications). He said that the audience was instructed not to yell or ask questions, and there was a stage divider installed to separate the rural guys from their nemesis, Mr. Levin. These precautions were apparently necessary as the debate became fairly hostile. I really wished I would have been there! I have been following the Blair Levin vs. Rural Telecom for awhile now, and it never ceases to amaze me how Mr. Levin will boldly walk into the proverbial lion’s den and taunt the lions repeatedly. A few months ago, he insulted rural telecom providers in the Des Moines Register (Iowa has the most rural telecom providers of any state), and now he goes into one of the biggest events in the rural telecom industry with guns blazing. Anyway, Levin debated Delbert Wilson of Hill Country Telephone Cooperative (TX) and Randy Houdek of Venture Communications Cooperative (SD) on some pretty heavy issues. The rural participants argued that the National Broadband Plan implications will be harmful to consumers and the rural industry, and the plan is a great source of uncertainty, “with Houdek noting that if Levin’s assumptions [in the NBP] are wrong, there is a risk an entire infrastructure will be destroyed” (NTCA). Levin is a big advocate of the dreaded 4/1 Mbps speed limit for USF support, which was thankfully attacked by the rural participants. Additionally, there have been many accusations lately about abusive and wasteful use of USF support, where rural telecom providers allegedly receive thousands of dollars per month, per line in some cases. For some reason, I feel like many FCC staff members who are unfamiliar with the rural telecom industry honestly believe that all rural telecom providers do this. This point was argued in the debate, with the rural telco managers explaining that most rural providers see more like a couple hundred dollars per year per line. This is a fact that needs to be echoed until the FCC realizes that not all rural telecom providers are wasting money on "frivolous" things like FTTH that costs the government $2,000 per month for one customer (FTTH is certainly not frivolous). Apparently, Levin argued that rural telecom providers need to look at other business opportunities to remain sustainable, and on this point I completely agree—but this is a topic that I will explore in more detail on another day. Click here to read more about this heated debate on the NTCA website.

GOP Challenges Net Neutrality Rules: I’ve been very pleased to see how many valid and reasonable arguments have popped up lately with regards to those onerous and utterly pointless Net Neutrality Rules.  We are definitely headed for a lengthy battle to get these rules reversed, and Republicans are gearing up to for a fight to the death. I personally don’t think they will be dead and buried until we have a Republican president and FCC majority, but I will be watching every move until then. Anyway, House Republicans attacked the Rules “as unnecessary and overly burdensome on industry,” in a hearing on Wednesday, Feb. 16. Although rural telecom providers might not face the scrutiny that companies like Comcast and Verizon will face under these rules, everyone is going to have to deal with hassles like compliance forms and all of the other fun stuff that costs precious time and money to prevent getting slapped with some sort of vague Net Neutrality violation. The Net Neutrality Rules address a problem that does not exist, and their entire logic is based on “what if” scenarios and not solid truths. I do not think that the FCC has the authority to regulate something as great and far-reaching as the Internet, and hopefully Congress and the Courts will make this conclusion as well. The Republicans are trying to derail the rules through “various legislative avenues,” such as cutting the FCC’s funding for implementing the rules and overturning the rules under the Congressional Review Act (Wall Street Journal). Good luck GOP! I am rooting for you guys and I really hope that your efforts are fruitful and that you choose your strategic maneuvers wisely because Obama and Genachowski will not back down easily. Click here for an article in the Wall Street Journal about Wednesday’s hearing.

Wisconsin Gives Back Broadband Stimulus Money: I found this story to be really entertaining, but also a huge cautionary warning for the FCC as the government moves towards implementing new mechanisms to distribute federal funding for broadband (i.e. the unproven reverse auctions). Basically, there were too many strings attached to the government funding for broadband and the state of Wisconsin did not want to burden taxpayers with a $23 million liability if the hefty requirements were not met to the government’s liking. According to a FierceTelecom article, “this is simply not an acceptable risk,” for the state of Wisconsin, even if the money would have been very important for improving broadband infrastructure in rural areas and for schools, hospitals, and emergency responders. Apparently, the government stipulated a 20 year network commitment in exchange for the $23 million, but the state of Wisconsin does not even own the network infrastructure that would benefit—AT&T owns it! I think it was pretty noble for Wisconsin to give back that money—a less admirable recipient could have just kept it and then burdened taxpayers or customers with the negative consequences of failing to meet requirements. I really hope that the government considers this little incident when they are writing the rules for future monetary distributions for broadband—in the Mobility Fund and the new USF system especially. Too many requirements will scare away potential participants—such as rural telecom providers—who may be the perfect company to receive funding for broadband expansion. I know that this is a reason why some rural telecom providers did not bother participating in the BTOP and BIP programs. I am already really worried about low participation by rural providers in future reverse auctions, and including a ton of overwhelming requirements is definitely not the way to increase participation by small businesses. Click here for an article from FierceTelecom about Wisconsin returning broadband stimulus funds. 

It has definitely been an exciting week!! Stay tuned for my upcoming analysis of the USF NPRM. I am going to be doing my Master's Thesis on USF reform (exact topic is still not determined), so I definitely need to read every page of this document in the near future. 

Cassandra Heyne

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