Local Broadband and Open Access

Context Asymetric regulation: cable and telcos Broadband deployment: xDSL v. Cable modems Mergers cause policy review –AT&T / TCI / MediaOne –AOL / Time Warner Test case for convergence policy

Main themes Stakes: approach adopted will have major implications on Internet evolution Competition alone won't force openness The problem with closed access Conclusion: examine what might be done

This is a Big Deal 3rd phase of internet –Broadband and always on –Widely deployed end 2000: 3.6m cable, 2m DSL (7.1m total) end 2001: 7.1m cable, 3.9m DSL (12.8m total) Network openness was key to internet success in phase 1 and 2 –Policy intervention was critical (unbundling, open access to telephone network) –"Unregulation" myth What mechanisms should shape 3rd phase deployment? –Innovation - what kinds of uses will be explored? –Participants - who gets to play?

Competition won't open networks What is the relevant market? The extent of competition –Different target markets DSL - business Cable - residential –Still many areas remain unreachable by DSL –Cable still has substantial (though narrowing) lead. FCC data end 2001 (extracted from FCC July02 report)FCC data end 2001 FCC July02 report Not quite 2-to-1 56 million homes passed by cable-modem ready plant vs 6m for DSL (2001)

Competition (cont'd) Switching is complicated (either way) –Substantial hardware cost (install, wiring) –Software –Moving activity ( , servers,…) –Bundling (cable w/ video, AOL with IM) –Awareness of what you are missing is elusive Closed cable strengthens the hand of CLECs –Decreases incentives to deal fairly with ISPs Is there a problem justifying investment by cable? –Substantial investment already directed at DTV + telephony over cable –Open cable in Canada

closed access Constraints on end-user activities –Limits Limits on downstream video Limits on upstream traffic Prohibition on servers Prohibition on work-related use Privacy (enforcement) –OVERALL: extension of Broadcast model "programming the internet". –Curtails experimentation with alternative patterns of use (key to innovation in the past)

Comcast AUPs:AUPs "You may not run a server in connection with the Service, nor may you provide network services to others via the Service unless you are subject to a Service plan that permits otherwise. Examples of prohibited uses include, but are not limited to, running servers for mail, http, ftp, irc, wifi, and dhcp, and multi-user interactive forums."

Closed access (cont'd) Shaping the architecture of network marketplace –Caching and replication - tied to content partnership deals –Steer usage and transactions, unknown to users –Who can enter such deals?

Policy decisions 2000: AT&T / TCI / MediaOne: wait and see 2000: AOL / Time Warner –ISP choice –First screen –Billing –Technical performance –Contract disclosure –IM interoperability 2001: Broadband bills submitted --a sample: HR 1542 HR 1542 "Internet Freedom and Broadband Deployment Act of 2001" HR 1698HR 1698 "American Broadband Competition Act of 2001," HR 1697HR 1697 "Broadband Competition and Incentives Act of 2001"

Policy (cont'd) 2002: FCC declaratory ruling:Cable Modem service is an "interstate information service, not a cable service, and there is no separate offering of telecommunications service." (FCC NPRM DA/FCC Number: 02-77, sec. 7, p. 5, 3/14/02) 2002: "The Jumpstart Broadband Act" introduced.The Jumpstart Broadband Act "Coalition of Broadband Users and Innovators" sends Letter to FCC November 18, 2002Letter –consumer groups: the Alliance for Community Media and Media Access Project –Companies: Amazon.com, Apple Computer, eBay, Microsoft, RadioShack Corporation, The Walt Disney Company, and Yahoo! –Trade associations: AeA, Association for Competitive Technology, Association for Independent Video and Filmmakers, Association for Local Telecommunications Services, Competitive Telecommunications Association, CompTIA, Consumer Electronics Association, Information Technology Association of America, and National Association of Manufacturers.

Policy convergence? Moving beyond "technology-based" regulation. Generic problem: Leverage network control into e- marketplace control –Other cable carriers –Other technologies: e.g wireless (Noam, 2001)wireless Noam, 2001 What is the right balance? open, but light-touch OFTEL approach –Disclosure of underlying architecture –Mandatory mediation. –Ex-ante (v. antitrust) What is the harm in waiting?

CONCLUSION A discontinuous transformation technology user pressures a network of network politics and policy

Technology it’s all bits, cheap logic and plentiful bandwidth interchangeable media the end of scarcity “the network is the computer ” (...and inversely) network control separable from network ownership

User pressures explosive growth of data traffic new kinds of applications networks have become key to re- organization and competitiveness strategic networking requires control èusers increasingly drive network evolution

A network of networks multiple technologies multiple users multiple owners overlapping services

Politics and policy deregulation trend conflicting regulatory regimes...but interchangeable providers What should be the common framework? –common carriage? –first amendment? –licensing? –other?