The FCC’s latest proposal to regulate the Internet just got a little more interesting. The agency announced its “third way” approach to classifying broadband services.

First, a little background: Back in 2002, the FCC decided to classify internet access as an “information service” under Title I, rather than as a “telecommunications service” under Title II of the Communications Act.  

This meant that the FCC would not have specific and direct authority to regulate Internet Service Providers (ISPs), but would reply upon its “ancillary authority.” This essentially says that the agency is allowed to do anything reasonable to accomplish the goals that Congress prescribes, but will not regulate the ISPs with the broad sweeping powers that it exercises under Title II.

Fast forward to the recent decision by the US Court of Appeals for the District of Columbia in April in the case of Comcast v. FCC. The court ruled that the FCC’s “ancillary authority” wasn’t strong enough to impose restrictions on ISPs. Both the FCC and proponents of net neutrality viewed this decision as a huge blow to the cause.

Conventional wisdom saw two possible results:

1)       The FCC would withdraw and ISPs would prevail as beneficiaries of Title I “ancillary authority”, or,

2)       The FCC would move to reclassify broadband access as a Title II “telecommunications service.” If successful, ISPs would suddenly find themselves subject to the regulatory scrutiny of the FCC.

Although that would insure that the FCC would win the battle against Comcast to preserve net neutrality, almost everybody agrees that Title II classification would be far too heavy-handed. Even FCC chairman Genachowski said “prescriptive regulation can chill investment and innovation, and a do-nothing approach can leave consumers unprotected and competition unpromoted, which itself would ultimately lead to reduced investment and innovation.”

So what has the FCC proposed? “The Third Way.” It’s what might be called a hybrid approach: the FCC will say that broadband transmissions — the flow of data — are subject to Title II regulations, while broadband “computing functionality” — the data itself — remains under Title I oversight.

Furthermore, the FCC says it will excuse broadband transmissions from many Title II regulations and only impose a few specific provisions of Title II. Together, these provisions generally include the following:

1)       A collection of provisions to “forbid unreasonable denials of service and other unjust or unreasonable practices.” It is important to comment that AT&T, Comcast, Sprint and Verizon have all voiced support of these provisions in the past.

2)       The Universal Service provision that provide “access to advanced telecommunications and information services in all regions of the Nation.” The FCC would promote universal broadband access under this provision. Again, both AT&T and the cable industry have argued in favor of this provision in just the past few months.

3)       A provision that requires service providers to protect confidential information they receive while providing service. Who would argue against this provision?

4)       A provision that requires that service providers must make their services and equipment accessible to people with disabilities, unless it’s not “reasonably achievable.” Seems like a good idea to me.

It seems clear that the FCC is pursuing its mandate from Congress and remaining true to its goal: Impose as little regulation as possible while still trying to achieve the basics of net neutrality.

The F.C.C. has finally handed in its homework. It submitted The National Broadband Plan to Congress yesterday.

 Weighing in at 376 pages, The Plan is a treatise asserting that the broadband Internet is becoming the common communications medium of the United States, eventually displacing the telephone and broadcast television.

The Chairman of the F.C.C. called The Plan “a 21st-century roadmap to spur economic growth and investment, create jobs, educate our children, protect our citizens and engage in our democracy.”

He went on to comment that The Plan would be largely paid for by the auctioning of unused or under-utilized wireless spectrum. The Plan calls for reallocation of 120 MHz of broadcast TV spectrum. In other words, The Plan would auction off the equivalent of about 20 television channels of wireless spectrum that are currently occupied by broadcast television companies.

These companies are represented by the National Association of Broadcasters. Here is what NAB Executive Vice President Dennis Wharton had to say about The Plan.

“We were pleased by initial indications from the F.C.C. that any spectrum reallocation would be voluntary, and were therefore prepared to move forward in a constructive fashion on that basis. However, we are concerned by reports today that suggest many aspects of the plan may in fact not be as voluntary as originally promised.”

 Back in February I addressed this subject and concluded that the F.C.C. will either have to negotiate with the incumbent broadcasters or seize the spectrum under eminent domain.  Apparently the F.C.C. isn’t interested in making a deal, but is instead proposing to seize it. Maybe it’s a tactic to get the broadcasters to negotiate.  Time will tell.

The Plan also proposes that broadcasters face the prospect of paying a new government fee for use of spectrum that they currently occupy. This is new:  television station owners currently don’t pay an annual fee to the F.C.C.

Understandably, the NAB isn’t happy. “As the nation’s only communications service that is free, local and ubiquitous, we would oppose any attempt to impose onerous new spectrum fees on broadcasters.”

The NAB concluded its comments about The Plan with this:

 “We strongly support congressional efforts to conduct an inventory of all available spectrum, and believe that no reallocation plan should move forward without a complete accounting of how the airwaves are allocated, licensed and used.”

In February I commented that spectrum reallocation is going to take a long time and make a lot of lawyers wealthy.

Let the Games Begin.

In an article released yesterday in BusinessWeek, it was disclosed that the Federal Communications Commission is considering paying broadcasters to vacate wireless spectrum, which the agency would use to alleviate network congestion caused by the growing popularity of devices like smartphones.

It was a slow day for news. This isn’t exactly an earth-shattering revelation. The reallocation of under-utilized spectrum has been considered a logical step for use by rapidly growing wireless networks for a long time. With the steady rise of smartphones and their demand for data services, it is clear that wireless service providers will need more than 4G equipment upgrades to deal with the swarm of new subscribers.

The problem is the plan. You see the U.S. government would buy back spectrum from broadcasters, and then turn around and auction the newly acquired spectrum to companies that desperately need more to augment their networks. Networks that are already straining to support the growth of data-intensive devices like the iPhone. Companies like AT&T and Verizon, who will pay dearly for access to more wireless spectrum.

In a recent study submitted to the FCC by The Brattle Group, one likely scenario suggested that the government could acquire wireless spectrum from incumbent broadcasters for $6 billion and auction that spectrum for $48 billion. That’s a tidy $42 billion profit.

Why would broadcasters agree to sell their spectrum assets to the government, only to have the government turn around and auction those assets to the highest bidder?

Considering these sums of money, the FCC will need to sharpen its pencil or prepare for a lengthy legal battle. It will either have to sweeten the deal for the incumbent broadcasters, or claim eminent domain and seize the spectrum.

Either way it will take a lot of time and a lot of lawyers to sort this one out.

In anticipation of the FCC unveiling a national broadband plan at its February 17 meeting, both the U.S. Department of Justice and the Obama administration have recently made public recommendations that could signal a meaningful change in the wireless broadband market.

First, in a report filed on January 4 that analyzed the state of competition for broadband Internet access, the Antitrust Division of the U.S. Department of Justice said that the best way to promote wireless broadband competition was to free up more radio spectrum.

 “The scarcity of spectrum is a fundamental obstacle that the commission should address,” the Justice Department said. “Reallocating spectrum that is being underutilized would encourage the deployment of wireless services and could help to make such services more competitive with wireline offerings.”

The potential increase in wireless spectrum is significant. The FCC could feasibly auction a sizable slice of the available spectrum; increasing the current 500 MHz to 1300 MHz over the next few years.

The DoJ went on to recommend that the FCC should organize any spectrum auctions so big wireless providers in any given geographical area cannot easily win these auctions. In other words, the FCC should foster a competitive wireless broadband market.

The Obama administration then released its recommendations the following day (January 5).  In a letter to the Chairman of the FCC, NTIA chief Lawrence Strickling said the administration also felt that additional measures were needed to ensure competition in markets where customers have little to no choice of broadband providers.

Let’s see: Both the Justice Department and the Department of Commerce are tasking the FCC with a national broadband plan that will dramatically expand the available wireless spectrum and insure that a competitive market is preserved.  Excellent.

As a consumer of both wireless and wireline broadband services, I am anxious to see what the FCC delivers on February 17.

In a recent speech, John Donovan, the CTO of AT&T commented that “3G data traffic on the company’s wireless network has risen nearly 5000% in the past 12 quarters”. This statistic coincides nicely with the wildly successful release of the iPhone and the App Store. There are now nearly 15 Million iPhones running exclusively on the AT&T network in the U.S.

He went on the say that “This growth has required extensive rethinking of wireless networks as we know them, as well as significant advances in the supporting IP backbone and other infrastructure.”

Clearly Mr. Donovan is responding to complaints about the less-than-perfect performance of the AT&T wireless network, especially in metropolitan areas. It’s no secret that the AT&T network has been taxed by the widespread success of the iPhone and the App Store.

I don’t think AT&T needs me to rush to its defense, but I think we can all agree that 5000% growth in data traffic is staggering. It is likely that any single wireless carrier would struggle with the network congestion problems that 15,000,000 iPhone users bring to the party.

It might be time to change the game. If the network infrastructure cannot grow fast enough to support the continued success of the iPhone, then it might be time for Apple to reconsider its exclusive relationship with AT&T. Apple should spread the wealth, and data consumption, to other deserving carriers. All of us, as consumers, would be grateful.

What could be a key moment in the on-going debate for net neutrality is coming up on Thursday of this week. The Federal Communications Commission (FCC) will be holding an Open Commission Meeting on October 22. It will consider a Notice of Proposed Rulemaking (NPRM) on policies to preserve the open Internet.

The stated purpose of this meeting is to ensure that both wireline and wireless carriers can’t discriminate against traffic traversing their networks based on the type of traffic or the application.

For a little background, dial the ‘way back’ machine to 2005, when the FCC created a set of four principles that were intended to govern net neutrality. To encourage broadband deployment and preserve and promote the open and interconnected nature of the public Internet:

1)      Consumers are entitled to access the lawful Internet content of their choice.

2)      Consumers are entitled to run applications and use services of their choice, subject to the needs of law enforcement.

3)      Consumers are entitled to connect their choice of legal devices that do not harm the network.

4)      Consumers are entitled to competition among network providers, application and service providers, and content providers.

However, these four principles weren’t codified into law through a formal rulemaking process. Meanwhile, Comcast was implementing a network management plan that was expressly designed to slow connections for P2P video traffic. The FCC interpreted this as a violation of Principle #2.

The FCC decided to call Comcast out. To quote the FCC decision regarding the issue, “Comcast did not practice network management; they had arbitrarily picked an application and blocked [consumers'] access to it.”

The ensuing legal battle between the FCC and Comcast resulted in a warning issued by the FCC directing Comcast to change its network management practices. Unfortunately, the warning didn’t have any teeth and stopped short of imposing a penalty or fine.

Comcast went on to implement a network management plan that slows connections for “heavy bandwidth users when the network gets crowded”. It said that the plan was protocol-agnostic, implying that it wasn’t overtly targeting P2P video traffic. In short, Comcast said its network management procedures would not change. Take that, FCC.

Let’s fast-forward to the present day. After four years of lawsuits, counter-suits, and legal maneuvering, the FCC has added two additional principles to the original four. They are:

5)      Internet access providers are prevented from discriminating against particular Internet content or applications,

6)      Internet access providers must be transparent about their network management practices.

This coming Thursday they’re proposing to start the process of turning these “principles” into formal law, with penalties and fines for non-compliance.

This meeting promises to be interesting. The carriers and service providers are going to make a lot of noise. We should hear plenty of discussion over which network management practices are reasonable, what service providers must divulge about their network management plans, and how the proposed rules will apply to both wireline and mobile Internet access services.

It’s no secret that GIPS is focused on real-time IP voice and video communications. We are always watching market trends. This morning was no exception. I was going through the latest Cisco Visual Networking Index (CVNI) and noted with interest that, among other things, IP traffic in the Middle East and Africa will reach 1 exabyte per month by 2013.

According to the CVNI, at a CAGR of 51 percent from 2008 to 2013, Africa and the Middle East will exhibit the highest growth of any market in the world. The next highest growth will be in Latin America at 50 percent, Central Eastern Europe at 49 percent, and in fourth place, Asia Pacific at 42%.

I poured a cup of coffee and sat back to consider these market statistics for a moment.

Then it happened. An article on my news feed grabbed my attention. The headline was: “Pigeon transfers data faster than South Africa’s Telkom”.

For those of you who care, Telkom is South Africa’s leading Internet Service Provider (ISP) with annual revenues of almost $1.0 Billion USD and about 1.8 million subscribers. The economy of South Africa is Africa’s largest. Internet speed and connectivity are poor because of a bandwidth shortage. It is also prohibitively expensive.

The test was performed by Unlimited IT, a call center operator that has grown increasingly frustrated with the speed and capacity of the Telkom internet infrastructure.

You’ll be pleased to know that the 11-month-old pigeon, “Winston”, took one hour and eight minutes to fly the 80 km (50 miles) from Unlimited IT’s offices near Pietermaritzburg to the coastal city of Durban. He had a data card strapped to his leg. When he got there, his handlers leisurely downloaded the data and accomplished the entire file transfer in two hours, six minutes, and fifty-seven seconds.

The article goes on to say that Unlimited IT had transferred only four percent (4%) of the data over the Telkom network in the same period of time. Presumably this means that if everything stays linear, “Winston” was 25 times faster than the Telkom network. Let’s give a shout out to “Winston”.

Incidentally, the article also mentions that “Telkom could not immediately be reached for comment.”

I think it’s time for Winston to carry another message. Naturally it will be addressed to Telkom management.

I was intrigued to read the front page banner headline of the July 7th issue of The Wall Street Journal. “Telecoms Face Antitrust Threat“. 

Apparently the Obama administration has taken an aggressive position on antitrust enforcement in a variety of industries, but the focus of this article is the telecom industry. 

The two dominant carriers in the US are AT&T and Verizon. As such, they are the primary subject of scrutiny by the Department of Justice.  That’s not surprising. Taken together, they hold about 60% of the US wireless market with 164.8M subscribers.  They also control large portions of the Internet backbone and have about 90 Million land-line subscribers. 

The DoJ is exploring whether these companies are abusing their market power in the wireless handset market. The issue at question is the practice of locking up popular smartphones through exclusivity agreements with the handset manufacturers; a practice that was wildly successful with the iPhone. You’ve got to admit, AT&T and Apple really hit one out of the park with that deal. 

The big carriers say their industry is extremely competitive and that regulating these exclusive handset deals would “harm innovation”. They go on to say that these exclusive deals enable them to take risks on these new phones and bring them to market at discounted prices.  Meanwhile, smaller carriers are complaining that they are being shut-out of the market for these hot new phones. 

Jon Muleta, a former FCC bureau chief, said that the government will have a hard time pursuing antitrust charges on these exclusive deals unless the handset manufacturers say they’re being forced into these deals.  “The equipment providers enter into these deals willingly.” Mr. Muleta said. 

Wireless industry analysts say that the handset manufacturers benefit from these exclusive agreements. Partnering with a Tier 1 carrier gives the manufacturers high visibility and a first-class marketing campaign. 

It was interesting to note that the WSJ article didn’t interview any of the handset manufacturers. I guess nobody from Apple, RIM, LG, Samsung, or Palm was near a phone on July 7^th, 2009.

Videoconferencing has been around for a long time, but general adoption by the corporate enterprise has been elusive. There are many who say it will never realize its full promise and will forever remain a novelty. That statement is, of course, nonsense.

The economic drivers and collaborative benefits are well-known to everyone. I’m pleased to hear that many recent videoconferencing projects have been funded from the corporate travel budget. You can buy a lot of videoconferencing for the price of the last plane flight I endured. The annual lease and maintenance of a Gulfstream G650 must yield a particularly poignant ROI.

There have also been qualitative problems that have contributed to the slow adoption curve. Many of these problems have been solved, and there are a few others that are still pending. However another hurdle to general adoption has been cleared: HD Voice and HD Video are helping to dramatically improve the quality of a videoconference and deliver the user experience we have all waited to see.

Unfortunately, from a networking and IT perspective, HD videoconferencing can still be difficult to swallow. The bitter pill is about bandwidth. A full-boat HD videoconference can consume a lot of bandwidth.  I know, 1 or 2 Mbps per user doesn’t sound like much. For the LAN it’s not a big deal. IT professionals know what to do. They have been doing it for years: monitor and manage the LAN traffic, make sure there is adequate congestion control, and ensure quality of service (QoS).

Then there is the WAN. The most common connection to corporate branch offices is still T1 (1.544Mbps). This is usually sufficient to support the data and voice demands. But a single videoconference could potentially use ALL of the effective WAN bandwidth at a given branch office.

This is where migration to an MPLS network makes sense. MPLS will deliver the required bandwidth and ensure appropriate QoS for data, voice, and video traffic. Of course, all of this comes with a price tag. Just call your local service provider for details. Operators are standing by.

Clearly, IT professionals and their system integrator partners need to manage and monitor all LAN and WAN traffic. They also need to design and deploy videoconferencing solutions that offer the highest quality user experience. Make sure the bandwidth is there to support all of these services. Oh, and get ready to send the Gulfstream back to the leasing company.

In a recent GIPS blog post, John Hermansen correctly pointed out that we should be skeptical of the current crop of market predictions of the latest “hot new consumer device”, the media phone. 

One thing is certain though, the release of new media phone contenders, and the inexorable movement of video to all kinds of consumer electronic devices continues. Internet video is going to be enabled on lots of stuff, including the next generation multimedia-rich mobile phones, mobile computing devices, set-top boxes, Internet-connected TVs, and media phones. 

As evidence of this, consider the following two news releases on June 2^nd: 

1) Sorensen Media announced “a significant expansion of its Spark licensing program as a result of accelerating market demand and proliferation of Internet video.” The announcement goes on to say that “Spark is the Internet’s most widely deployed video codec, powering hundreds of millions of Internet videos, including those on YouTube, the volume leader in online video streaming.”

2) Also on June 2^nd, ARC announced “its latest Sound-to-Silicon solution aimed at the new category of broadband-based multimedia device, the Media Phone”. The ARC solution is designed to provide partners and OEMs with a  reference platform for “quickly entering and gaining share of the fast-growing Media Phone market.”

There are going to be a lot of new Internet video enabled consumer electronics devices in our future. I hope some of them will actually be useful to consumers, and by extension, successful in the market place. Stay tuned.