FCC to Scrutinize Wireless Handset Exclusives

Copps has already instructed bureau staff to draft an item on handset exclusives, he said. The FCC “should determine whether these arrangements have adversely restricted consumer choice, or harmed the development of innovative devices, and we should take appropriate action if it finds harm.”

“We would be delighted to see action on the handset exclusivity issue by the commission, especially if the proposed rules would ban these agreements,” said David Nace, attorney for the Rural Cellular Association, which asked the FCC to address the issue in a petition for rulemaking it filed a year ago. The FCC has completed a comment cycle on the petition.

“The consumer should be free to purchase any handset desired from multiple sources and use the product on any compatible network,” Nace said. “The dark age of wireless service should be in the history books before the year is over.”

Caressa Bennet, counsel to the Rural Telecommunications Group, said she’s pleased that the FCC will consider the handset exclusivity petition. “Rural Americans are not second-class citizens,” Bennett said. “Just because AT&T and Verizon choose not to provide coverage in rural areas doesn’t mean that those rural wireless carriers who do provide coverage should not be able to offer popular handsets to those rural Americans because of exclusive handsets agreements. It is the FCC’s charge under the Communications Act to work hard to right this wrong and allow those working and living in rural America to have the same handsets urban Americans take for granted.”

With the USF contribution factor about to go to an all- time high (CD June 17 p12), Copps renewed his call for a comprehensive revamp of the fund. Not just because consumers’ costs are climbing, he said, but to bring the fund “into the 21st century” by shifting support to broadband. The U.S. can’t have a strong national broadband plan without also retooling USF, he said. Copps said he hopes the FCC will overhaul both the contribution and distribution sides of USF.

Copps declined to say whether action on USF would require a concurrent overhaul of intercarrier compensation. “I'm not going to say you can’t do anything on universal service without doing intercarrier compensation,” he said. However, it’s difficult to divorce those “interconnected” issues, and the current compensation regime is “horribly tangled” and needs resolution, he said.

Copps said he sees the FCC’s national broadband plan proceeding as a “huge funnel.” The lengthy notice of inquiry asked questions about many diverse broadband questions, but the FCC must write a “focused, really dead-on” broadband plan, he said. People shouldn’t see the proceeding as an “opportunity to resolve every contentious telecom issue,” he said. “If we get bogged down trying to resolve every telecom issue out there, we're not going to get that focused and achievable broadband plan that we so desperately need.”

Copps believes the national plan should deal with all Americans. Underserved Americans are just as deserving of broadband as the unserved, he said. Rural areas are a priority, but so are low-income residents of urban areas, he said. The U.S. should not get “sidetracked into debate” over which Americans need broadband more, he said. If one group is picked, “we will not get a broadband plan that does justice to America’s needs,” he said.

Copps said he hopes the broadband proceeding will mark the first step in transforming the FCC into a more consumer- oriented agency, he said. “This broadband proceeding is not going to be business as usual; it’s not going to be an inside job.” The FCC should be working for consumers, not companies, he said. “We were not designed as a special- interest commission.” Citizens should be the broadband plan’s No. 1 priority, he said. Copps plans to spend the remainder of his chairmanship working toward that goal, he said.

The FCC eighth floor is still waiting for a summary of comments received on the broadband plan notice of inquiry, Angela Giancarlo, Commissioner Robert McDowell’s chief of staff, said on a panel. McDowell wants the FCC to put out a proposed set of rules for public comment before sending the broadband plan to Congress, she said. He’s also pushing for a series of broadband hearings around the country that would follow a format similar to FCC hearings held on media ownership, she said.

Copps has been meeting with NTIA and the Rural Utilities Service, but the McDowell office hasn’t been involved in the meetings, Giancarlo said. In oral discussion, Copps has provided NTIA with options on the terms it must define under the American Recovery & Reinvestment Act, she said.

Once reconfirmed, McDowell wants to make attracting more capital investment in broadband infrastructure an FCC goal, Giancarlo said. The commissioner also plans to emphasize technological neutrality, ensuring wireless and satellite technologies are not disadvantaged, and to urge caution on regulation that might have “unintended negative consequences,” she said.

The House Commerce Committee will review broadband stimulus rules coming out of NTIA and the FCC, said Roger Sherman, the committee’s chief counsel on communications and technology policy. Chairman Henry Waxman, D-Calif., “feels very strongly” that conducting oversight hearings on the broadband grant program rules is a key Congressional priority, Sherman said. Reviewing the FCC’s national broadband plan “will be a priority” for the committee, which likely will hold a number of hearings on the topic. It’s unknown whether additional legislation will be needed, he said. “We'll have to see.”

In addition to broadband deployment, adoption and sustainability are important goals for the committee, Sherman said. Waxman has said he believes broadband should be a supported service in the Universal Service Fund, he added.

Privacy, Neutrality Rules Expected Soon

Privacy and network neutrality will likely get much attention under the new administration, said officials representing phone, cable and Internet companies and public interest groups on the panel. And executives from Verizon and Time Warner Cable went head-to-head with Free Press Policy Director Ben Scott on the competitiveness of the broadband market.

Privacy will be a key issue in the next couple years, panelists said. Verizon Assistant Vice President Link Hoewing singled it out as the issue to watch. Verizon is currently working with others in the industry to develop standards on behavioral advertising, he noted. Crafting the right rules is critical, because every person on the Internet is “one click away from someone else,” said Richard Whitt, Washington counsel for Google.

Meanwhile, people are starting to find common ground on net neutrality, Hoewing said. Verizon believes current policies provide sufficient protection against unreasonable discrimination but is “willing to engage” in discussions, he said.

Current Comcast litigation on network management is unlikely to steer future net neutrality policy, said Ben Scott, policy director of Free Press. It’s “reasonable to expect” the FCC and Congress to act before the court releases a decision, he said.

Later, phone and cable officials went head to head with Scott on whether there’s enough competition in broadband. Cable and phone have a duopoly, said Scott. “I just don’t know how you read the numbers and make any other determination.” Pew data released earlier this week said one in five users had a single broadband provider, he said. And wireless in most cases is complementary to wireline broadband, not a substitute, he said. BlackBerry owners probably aren’t going to cancel their cable-modem service just because they can connect wirelessly to the Web, he said.

It’s “not fair” to say phone and cable have a broadband duopoly, said Steven Teplitz, Time Warner senior vice president. Wireless and satellite companies are providing significant competition in many areas served by cable, he said. Hoewing agreed, citing Pew data showing about 60 percent of consumers have three or more broadband providers in their area.