DSL Prime: Regulation

From the future of the USF to the architecture of the RBOCs' VoIP and IPTV networks, there's plenty to be decided in the near future.

by Dave Burstein of DSL Prime and Future of TV [December 8, 2004]

Can SBC satisfy Mike Powell with their video plan?
"Consumers should have access to their choice of legal content."
Will the video speed Internet only work with the sites chosen by SBC and BellSouth or will their network upgrades be designed to allow all the programming coming on the net to get through? The default design of Microsoft IPTV ensures that the chosen content gets through by degrading the regular Internet when bandwidth is tight. The Alcatel/Trimetra routers key sales claim is how efficiently they enforce that "quality of service." The network SBC has described is inevitably a "walled garden," a situation all five FCC commissioners will deplore.

That's not an inevitable result. Small changes in SBC's plans could correct the problem. One possibility I can conceive is an open connection to the two mega-pops SBC is planning for their video service. There's no technical reason those centers couldn't be connected to major public peering points by reliable connections, and SBC's servers opened to all legal content at a fair price. British Telecom and Verizon say that's their plan, smart business because then homes will choose to stay on the network for phone service. But the people developing SBC's video service have given no evidence they are willing to work that way, even as cable guys like Brian Roberts talk about expanding consumer choice to "any program, any time."

It's both good business and good policy for SBC to honor this commitment they gave when Mike Powell raised the roof on their Internet plans. "SBC does not plan to give meaningful preference (in terms of bandwidth allocation) to any particular video service or video content provider" said Michael Coe, speaking for SBC on the record. "We don't plan to limit access from computers or give bandwidth preference to content."

USTA's speaker: "I'd guess we can cut access and USF in half"
Rutledge puts a number on the call for "reform"
D.C. lobbyists specialize in not giving direct answers, so I was delighted when John Rutledge, a USTA sponsored speaker at NARUC/NECA, explained what reform of USF might mean. "I'd guess we can cut access and USF in half," said Rutledge. That corresponds to my previous reporting, that one-third to two-thirds of the money was unnecessary for the goal. John Rutledge to the NARUC/NECA event, an investor and formerly a government official. He gave a spirited and opinionated presentation, with access "reform" a key section.

It now hope other reporters will ask Duane Ackerman, Tom Tauke, or Walt McCormick what they mean when saying their key goal this year is to "reform" USF and access. $20 billion a year goes to access charges in the U.S., far beyond any rational need to subsidize rural carriers. These days, the bells pay a substantial part of that sum, now that they are taking over "long distance" service. The conventional wisdom agrees with Glenn Post of Century Tel. Post explained to me, "Fred Upton and other rural Senators will protect us." An FCC commissioner who privately deplores the waste tells me change is politically "almost impossible."

I believe the dynamic has now changed, reflected in the tight two-vote margin that protected USF from VoIP. The bells now are in long distance, and are paying access fees instead of just correcting them. A second NECA/NARUC keynote by PFF president Ray Gifford suggests "negative auctions" for rural service might produce enormous savings. The USF is a tax, and Greg Rosston and other conservatives have spoken out for a decade about how disproportionate it is.

USF adds 10 percent to the cost of DSL in the U.S. I'm a strong believer in universal service, believing the best way to save it is by reducing waste.

Copyright 2004 Dave Burstein.
The DSL Prime Newsletter is reprinted with permission.

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