BuddeBlog

After the Obama hangover euphoria

Following the initial Obama euphoria the telecoms industry, along with other sectors such as banking, healthcare, and environment, is in the grip of a hangover. They are all suffering from a political system in the USA that is looking increasingly like a plutocracy, with little attention for the national interest and where the wealthy rule.

Immediately after the Obama election BuddeComm became involved in a range of telecommunications policies and the early results were actually astonishing – a $7.2 billion telecommunications stimulus plan based on an open network; a National Broadband Plan with a strong focus on trans-sector policies (national purpose); and a trans-sector approach for a wireless broadband network for the public safety authorities.

Plutocracy hampers any serious reform

In meetings with key people in the White House, FCC and the Department of Commerce (NTIA) there was a clear understanding of the need for a transformation of the telecoms industry and the key people that were involved all very much supported this new approach.

While the actual outcomes of these positive initiatives were not as strong as we would have liked – they lacked any real teeth to move the plans forward – they certainly were a major step. Issues such as national purpose and sharing networks are now on the agenda and people are at least discussing them.

But, as several of our respected American colleagues point out, none of these issues will actually be implemented in an effective or timely fashion. At best there will be a few token changes but, according to my colleagues, these will either be in the form of crowd-pleasers or will relate to minor issues.

FCC lacks the power to lead the reform

Some blame the FCC for the disastrous state of affairs in the American telecoms market.

I, however, place that blame more on the political system that rules the FCC. The question is what can the FCC actually accomplish given the political reality in Washington? The FCC is an independent agency that reports to Congress and, as such, is not part of the Obama Administration.

So, first, it is bound by the statutes created by Congress and its actions must be justified according to the rather badly written laws or (as happened a few months ago in FCC vs Comcast) the courts simply overturn any FCC ruling that even looks like being outside their statutes.

Nevertheless, it at least tried and in the process proved the point that its powers are very limited indeed.

In that case the FCC tried to establish that Internet access was different from Internet as an information service, and tried to establish that it had jurisdiction over the telecoms access element of the Internet. Under the Bush Administration the vested interests had been able to convince the FCC that the Internet in its entirety was an information service and that, as such, it fell outside the FCC’s responsibilities except by way of the FCC ancillary authority.The problem this created is that the FCC had to answer the question of “ancillary to what” and just what did the ancillary authority entitle it to do. The FCC vs Comcast decision make it clear that the FCC had no good answer and thus no real stator authority under the Bush framework to regulate the Internet.

This in turn brought up the net neutrality issue – the ISPs (which in the USA for fixed access are basically Verizon, AT&T andthe large cable operators, i.e. Comcast, Time Warner, Cox et al) can, with no regulatory limitation, refuse access to certain content orproviders or discriminate against these providers, although in practice this has not happened for fixed access.Similar issues arise in the mobile world where cellular operators had prohibited access to content or devices

Congress rules the FCC

Secondly, the FCC must be attuned to the will of Congress or Congress will either overturn what it does by legislative action or undo what it does in other ways. Unlike regulatory bodies in most other democratic countries the FCC is not an independent regulator. There have already been stern warnings going out to the FCC to remind it of this. It is Congress who controls the funding of the FCC.

This is a disastrous state of affairs for the American telecoms market and many of ourcolleagues are extremely concerned about the situation. However, I do not blame the people who are currently trying to get the changes through; I place the blame squarely on the plutocratic political system in the USA. It is unacceptable for a country that preaches democracy to the world to itself have a corrupted lobbying political system that is a far cry from what democracy is actually about.

Within that political context, what can President Obama, the FCC or NTIA be expected to do? I think that many of these people also are very disheartened. They know that if they were to do what would be good for the country they would be shot down. And this doesn’t apply only to telecoms (look at the environmental bill, and the watered-down healthcare and banking bills).

Verizon, AT&T and Comcast are firmly in charge

Sadly, the plutocratic power held by companies such as Verizon, AT&T and Comcast has forced many of the vendors to side with them, since they are their major customers. These vendors take a rather different position on these same issues in countries where there is more room for industry reform. In the USA, however, many of them are very comfortable with a regulated duopoly that forces the duopolistic structure of the marketto carry their third-party video and other high cost content. They don’t wish to deal with smaller ISPs who would have difficulty carrying these expensive services.

The bureaucratic system – even those in it who support change – must operate within the plutocracy.Deals have to be made with the rich and powerful and concerns about the public being squeezed in the process are simply set to one side.

Reforms are now under discussion

However, on the positive side, for the first time in US telecoms history open networks, transformation, sharing infrastructure and trans-sector (national purpose) are on the agenda. These issues are now at least being discussed and we consider that, in itself, to be a big win! There will be no going back. However, we have come to the conclusion that progress could easily take a decade to achieve.

Our legal telco colleagues tell usthat changes to bring Internet access in line with other telecom access regulations should be possible without the necessity of going to Congress. Apparently the FCC is negotiating a deal with the incumbents that will at least address to some extent the Internet Neutrality issue that has been put on the table by the President himself.

The question is whether this will just be another example of tokenism, as most expect it to be, rather than a serious attempt to tackle any of the powerful vertically-integrated forces that are the cause of these problems.

We are convinced that the ‘goodies’ within the system will go as far as they can to protect the ‘Open Internet’. Given the legal and political reality of the situation, only time will tell whether that will be enough.

The key issue, however, is that America has become a plutocracy and the difficulty being faced by the American people is how to change that.

Paul Budde

See also:

• USA – Analysis of broadband policies mid 2010
• USA – Analysis of broadband policy developments in early 2010
• USA – Telecoms, Wireless and Broadband – Overview and Analysis – 2009-2010
• USA – National Broadband Plan 2010

Tagged in: Broadband, National purpose, NBN, United States of America

This entry was posted on Tuesday, August 3rd, 2010 at 2:32 pm and is filed under From Paul's Desk. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.