Comcast Puts Dent in FCC’s Armor

April 6th, 2010 by · 8 Comments

The FCC has been flexing its muscles since the Obama administration begin, from stimulus packages to network neutrality rules and on to the national broadband plan.  But today in federal court, they got spanked by the judge as Comcast was vindicated – legally at least.  The issue was whether or not the FCC under Kevin Martin had the authority punish Comcast for meddling with traffic on its network, specifically BitTorrent traffic.  The court said that the FCC had acted without an actual law to back them up, i.e. they saw an injustice and just made up a rule to stop it.

So is the rest of the FCC’s network neutrality agenda floating without sufficient legal support?  Well, yes and no.  The problem stems from the FCC’s deregulation of broadband in 2005 under Kevin Martin, after which they then decided they could still regulate it anyway.  If that seems like a rather obvious logical inconsistency, then welcome to the FCC.  However, all they have to do is roll back that deregulation, and they’re all set again.  This of course would be what last mile providers really *don’t* want to have happen.  Did Comcast really want to win this ruling?

The alternative is that the FCC could wait for Congress to pass a law to re-establish the status quo, which is probably what Comcast wants them to do since it would take so long and slow them down.  Or perhaps they could just ditch the whole neutrality angle entirely, which of course isn’t going to happen – it’s too popular.

Right now though, the industry sits in an ambiguous stew.  Network neutrality is popular, it is being imposed, and it is an integral part of the government’s broadband plans. And it has little legal force behind it.  Popularity, however, will hold it up for now.  Comcast isn’t going to now go out and start filtering BitTorrent because legal or not they would come under a ferocious attack for it.

So while the FCC’s position is weakened a bit, what will actually happen is probably a whole lot of nothing.  In the meantime, the lawyers and lobbyists have managed to make a couple years of work for themselves.  Again.

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Categories: Cable · Government Regulations

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8 Comments So Far

  • Anonymous says:

    Does this ruling provide any indication of the FCC’s ability to regulate/lower pricing on Special Access?

  • Dave Rusin says:

    Once an ILEC or a large Cable Company takes the FCC to court … never bet against them …

    The FCC gets confused, they can’t make up laws – they have to maintain policy within the law — which includes the First Amendment rights of ISPs and Internet users.

    And even when they make bad policy within the law, they have been dragged into court and spanked before in doing so with said policy being called unconstitutional.

    Special Access – regulations should be phased out. I have yet to hear any CLEC for 14-years not demand anything but lower prices from the ILEC. Retail prices fall due to competition, idiot carrier price wars and organic bandwidth demand growth … is it incumbent upon the ILEC to lower special access prices to keep a CLECs margins steady or subsidized?

    If after 14-years since CA1996 a CLEC has not figured out independence from Ma Bell, it’s time to phase out the regulations on the ILECs provide special access, copper loops and the like. 14-years is a long time to figure things out if you have not by now.

  • Anonymous says:

    I believe the ILECs had much more than 14 years to put in place their existing network… subsidized by monopolistic pricing for decades. No, I don’t buy the fact that CLECs should have duplicated this network in that short of time span and it was not the “rules” set by CA1996 of which the business models were built around.

    Also, what do you tell a non-CLEC company like Sprint who is paying astronomical rates to wire a tower?

    Dave, your opinions are self-serving. I am sure you have issues with pole attachment rates…

    • Dave Rusin says:

      Dear Anonymous:

      I have been consistent and pro-America.

      The “rules” in CA 1996 also did not preclude any CLEC from building fiber … you make it sound they were restricted to renting … too many CLECs didn’t know a thing about local network operations … they thought the ILECs would be a pushover … and thought lowest price is how to compete … Wall Street valued co-location not revenue and cash flow … the lemmings followed …

      My issues with pole attachment rates is this: if you have a closed network (like an ILEC or Cable Company) you should pay a substantially higher rate … if you have an open network (like AFS, FiberTech, FiberLight, Level 3 et al) you pay a low rate … why … that way you don’t have 15 cables hanging on the same pole as an eye sore plus you get rational fiber deployment… I have been consistent on this as well. I would like to see this aspect into Law under a new Broadband Telecom Act.

      Fourteen years – call it self-serving — I say the arbitrage game has gone on too long … most CLECs started out to rent and hoping to flip to what was known back then as long haul carriers before they went extinct – so when things didn’t work out as the Internet bubble burst and long haul consolidated — many, many CLECs went bankrupt … renting does not work.

      There were also idiot CLECs with fiber that built on top of each other … basic supply and demand on an over built route tells you that price erosion is built-in due to over capacity – healthy companies with fiber today that are still alive AND never used BK as a financing strategy are here because they built unique fiber routes.

      Yeah, call me self-serving … I am also experienced, cautious and AFS was not built from hindsight.

      Self-serving were the idiots that burnt their investors all seeking the same 12.5% market share to break-even with 30 other competitors seeking the same share and hoping someone will buy them … last I knew 100% is top market share not 650%! Wall Street is just as much to blame for funding it as well …

      Not afraid to put my name out here.

      Dave Rusin

  • Anonymous says:

    Not even the most fiber rich CLEC in the US, aka tw telecom, completely serves customers via its fiber network… They could not compete based on such a small addressable market. They HAVE to lease access from the ILEC (and they lease a ton of it) because there is no AFS network around to get to the end user.

    I am happy to exchange opinions with you. Even though I do not agree 100%, I value your thoughts.

    Take care,

  • Dave Rusin says:

    Dear Anonymous:

    TW Telecom et al CHOOSE to take on Type 2 circuits as part of their business model. Their margins would be even higher without them.

    Here is what they do – they aggregate Type 2 circuits into a building until it justifies a fiber build into the building from their existing, owned fiber backbone and then they rid themselves of the type 2 circuits.

    In our case, we prefer fiber into a building by demand pull of a large customer – we don’t incent our sales people to bring in low margin type 2 business as an entry vehicle of a relationship — that’s our model. The only time we get involved with a Type 2 circuit situation is if we have a large EXISTING big pipe customer who needs less than fiber optic capacity at several locations. Since these customers came to us in most cases due to ILEC performance, they ask us if we will deal with the ILEC for type 2 circuits since they no longer want that “interface experience or frustration.” So, we deal with the ILEC which is a value-add to our fiber solution which must be bought first.

    Lastly, I look at our alarm reports every month from the NOC — over 95% of alarms get generated from … drum roll please … type 2 circuits. Thus our disdain as Type 2 as a lead-in service as a strategy.

    Any idea how many customers big carriers may have who think they switched from a bad ILEC circuit experience to another carrier being sold and believing that they are getting away from the ILEC? They go nuts when they have a problem with their “new” carrier confesses Ma Bell is still part of the Scooby-Doo reliability mystery.

    Our customers sign a document that they clearly understand the type 2 circuit, source and risks … we are very up-front about it.

    Anonymously yours,

    Dave Rusin

  • anon says:

    type 2 service implies that a company is “distributing” services “manufactured” by another company. while i am sympathetic to the argument (fact) that the ILEC received public subsidies to build the RBOC wireline networks, the fact is that type 2 service has been tough for the CLEC “distributors” to sell and many many clec’s have gone ch.11.

    as for the topic of this blog entry, i can’t see why or how the FCC would propose to force ‘common carrier’ status on the cable MSO’s who were built by street savvy entrepenuers, not as publicly regulated and subsidized common utility plants

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