1. Policies for the Broadband Digital Migration Barbara A. Cherry Senior Counsel Office of Strategic Planning & Policy Analysis Federal Communications Commission August 2004

2. Barbara A. Cherry Policies for The Broadband Digital Migration -2- Old Rules and Assumptions n n Old Rules based upon distinct industry and regulatory structures n n Old Rules based upon non-competitive model u u Based upon/assumed scarcity F F Required licenses u u Assumed natural monopolies or regulated oligopolies F F Entry and price regulation u u Government protected incumbents--ensuring scarcity u u Barriers to entry where government decided winners and losers

3. Barbara A. Cherry Policies for The Broadband Digital Migration -3- Revolution in Communications Technology: Convergence Precursors n n Technology: analog digital n n Network: circuit-switched packet-switched n n Packetization/digitization convergence of video, voice and data n n The Broadband Digital Migration

4. Barbara A. Cherry Policies for The Broadband Digital Migration -4- Broadband Digital Migration Voice Copper Video Coax TV/ Radio Spectrum Analog World Digital World Narrowband Broadband Transition APPLICATIONS 3GFTTHSatelliteWi-FiMeshUWB Voice; Video Data; Audio; Etc. CableDSLPowerLaserFixedDTV PLATFORMS

5. Barbara A. Cherry Policies for The Broadband Digital Migration -5- Potential Competing Platforms n n Cable n n DSL n n Powerline n n Free space optics n n Fixed wireless n n UWB n DTV n FTTH n Satellite n WiFi n Mesh networks n 3G n ???

6. Barbara A. Cherry Policies for The Broadband Digital Migration -6- 2004 Emerging Realities n n Competition u u CLECs u u Cable TV u u Mobile wireless u u VoIP n n Consolidations n n Spinoffs/Divestitures n n New all fiber/IP-based networks/backbones

7. Barbara A. Cherry Policies for The Broadband Digital Migration -7- Emerging Realities: Mobile Wireless n n 1993 Deregulation n n 1994 Auctions n n Very Competitive u u Six nation-wide competitors u u Long distance substitution u u Beginning to see local substitution n n Consumer benefits u u Among lowest prices in the world u u Nation-wide calling areas u u Death of roaming u u VERY High MOU u u Wireline substitution

8. Barbara A. Cherry Policies for The Broadband Digital Migration -8- Emerging Realities: The Broadband Migration n n The next phase in the Internet’s development n n Global recognition of broadband’s importance n n Framing the debate u u What is “broadband”? u u How should we measure progress and success? Deployment/availability (supply) v. adoption (demand)? n n How do we get there?

9. Barbara A. Cherry Policies for The Broadband Digital Migration -9- Broadband Trends n n First generation broadband (cable modems and DSL) available to 85-90% US households n n 28% of U.S. households subscribe to DSL or cable Modems n n 50% of online U.S. households n n Japan and Korea have higher penetration u u Value proposition u u High cost of dial-up u u Voice over IP as driver n n What’s the value proposition?

10. Barbara A. Cherry Policies for The Broadband Digital Migration -10- VoIP Developments n n Why we care n n Industry developments u u FROM VoIP to EoIP n n State regulatory action/court actions n n Petitions to FCC n n FCC VoIP Forum n n FCC IP Working Group—EoIP n n IP Enabled Services Proceeding n n FCC decisions/actions u u Pulver.com u u Notice of Proposed Rulemaking u u Solutions summits u u CALEA petition/proceeding

11. Barbara A. Cherry Policies for The Broadband Digital Migration -11- Policy Questions When Everything’s over IP n n What, if anything gets regulated? u u Applications? u u Access for content providers? n n Who, if anyone, regulates? n n How to achieve social goals? n n Consumer protections? n n What about legacy economic models/revenue flows and assumptions? n n What about old definitions? u u What is “video programming” or “cable system”? u u What is “broadcasting”?

12. Barbara A. Cherry Policies for The Broadband Digital Migration -12- The Broadband Digital World: An Agenda for Change n n Do NOT assume a problem n n Separate economic regulation and social policy u u Finding new ways to maintain critical social policy goals F F Universal Service F F Emergency service—E911 F F Support law enforcement—CALEA F F Disability access n n Market solutions must be allowed to develop n n Facilitate facilities-based broadband competition u u The importance of spectrum and market-based spectrum policies n n Need new thinking and new rules for new realities

13. Barbara A. Cherry Policies for The Broadband Digital Migration -13- Viele Danken