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A public policy blog from AEI
The Telecommunications Act requires the Federal Communications Commission (FCC) to report annually “whether advanced telecommunications capability is being deployed to all Americans in a reasonable and timely fashion.” In connection with that duty, the agency recently released a Notice of Inquiry (NOI) seeking “objective data and other evidence reflecting the state of broadband deployment and availability.”
Perhaps predictably in today’s political climate, opponents immediately criticized this inquiry. The criticism is odd (or at least premature), given that the notice simply solicits information from the public and given that it is required by law. The criticism focuses on the inquiry’s two central questions: How much speed is enough, and what role should mobile play in an assessment of the modern broadband marketplace?
How much is enough speed?
Critics immediately seized on the inquiry’s request for comment regarding whether to set a speed benchmark for mobile service at 10 megabits per second (Mbps) download/1 Mbps upload. They correctly note that this is significantly lower than the 25 Mbps/3 Mbps benchmark for a fixed broadband service to count as “advanced telecommunications capability.” But the NOI did not pull the 10/1 standard out of thin air. Under FCC Chairman Tom Wheeler, the agency established 10/1 as the minimum speed for fixed broadband providers to receive subsidies from the Connect America Fund, the universal service mechanism designed to expand broadband to underserved areas. (Indeed, as the inquiry notes, the agency uses an even lower benchmark of 5 Mbps download to determine eligibility for mobility fund subsidies.) If the purpose of the inquiry is to determine whether broadband “is being deployed to all Americans,” it is not irrational to consider services that meet the universal service standard.
But the discrepancy between the 10/1 universal service standard and the 25/3 fixed broadband benchmark begs the question of how these standards were established. As we’ve noted before, several critics claim the shift to 25/3 in 2015 was politically motivated to help justify the agency’s decision to impose Title II obligations on broadband providers. It bore little relation to actual consumer practice, as 71 percent of households with access to 25 Mbps plans instead chose a smaller plan. The FCC justified the figure by citing the need to support 4K video, a service that was not widely available then and remains a fairly trivial application now.
I have previously suggested that the commission select an activity-based broadband speed benchmark. Rather than simply selecting a nice round number, the commission should identify a bundle of activities that a minimum broadband plan should permit and then calculate the speed necessary to support those activities. Netflix recommends 5 Mbps per screen for HD-quality video streams. This means that the proposed 10 Mbps benchmark is sufficient to support two Netflix streams simultaneously. Some could quibble with details, but it seems difficult to assert that a service fast enough to support multiple Netflix streams falls short of the minimum necessary to be considered “advanced telecommunications capability.” Video, of course, requires greater speeds than other common activities such as Skype (1.5 Mbps for video calling) or Pandora (0.3 Mbps).
How should mobile broadband count?
The other related but broader question is to what extent mobile broadband plans should count as substitutes for a fixed broadband option. This is a tremendously important question to ask, given the billions that wireless companies invest in mobile networks and given the ubiquity of mobile connections compared to fixed-line connections. In the pay television market, wireless distribution (via satellite) closed the gap between urban and rural areas by making advanced programming available to locations that were not cost-effective to wire with traditional coaxial cable. Similarly, mobile broadband infrastructure could be deployed at lower cost than fixed wireline assets. But it’s important to determine the extent to which mobile can serve as a substitute for a traditional fixed-line service.
The answer, of course, is “sometimes.” Like most users, I move seamlessly between fixed and mobile devices for many activities online, including email, web browsing, social media applications, and watching short videos. When my Wi-Fi connection goes down at work or at home, I can use my wireless device as a mobile hotspot and tether my other devices to use my mobile connection as a substitute. But despite the convenience of tethering, I have not foregone a fixed wireline plan completely because bandwidth-intensive activities (such as Netflix) are more convenient via a fixed connection.
Traditionally, fixed connections are thought to have two primary advantages over their mobile counterparts. The first is capacity: Because mobile networks tend to be more prone to congestion, consumers have faced greater limits on monthly mobile data use. One can tether to a cell phone to watch “House of Cards” on an internet-ready (or Chromecast-equipped) television, but historically one would not do so because one would quickly approach the limit on his or her monthly data plan.
But in the past year, most wireless providers have promoted unlimited data plans, which changes this calculation for consumers. Without a monthly data limit, a consumer could conceivably tether to a cell phone as a substitute for a Wi-Fi connection without incurring overage charges. The advent of such plans dramatically increases the substitutability of mobile connections. The Commission is exactly right to ask what effect this innovation has had, or could have, on consumer behavior.
The second advantage of fixed connections is reliability. Nonfixed services such as mobile and satellite are broadly available, but connectivity and latency issues can make them less reliable than fixed connections. That said, the gap is closing as mobile networks become denser and satellite technology is improved. The commission is also right to ask how much has improved since the last report. It may be that mobile and satellite remain imperfect substitutes for fixed connections, but it would be helpful to quantify that performance gap and determine objectively whether it has narrowed sufficiently to impact consumer behavior.
Like many tech industries, telecommunications is constantly evolving, as technological breakthroughs consistently improve the consumer experience. One should not fault the FCC for asking questions regarding what has changed since its last update and how that might affect its assessment of broadband deployment nationwide.
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