Before the
DEPARTMENT OF TELECOMMUNICATIONS
AND INFORMATION SERVICE
San Francisco, CA 94103-0948

 

In the Matter of

Request for Information
In Response to the Board of
Supervisors Resolution 718-99
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)
)
)
)

 

COMMENTS OF NETACTION

Of Counsel

Executive Director Glenn B. Manishin
Lisa Anderson
Elizabeth Braman
Blumenfeld & Cohen - Technology Law Group
1625 Massachusetts Ave, Suite 300
Washington, D.C. 20036

202.955.6300
Audrie Krause
NetAction
601 Van Ness Ave., #631
San Francisco, CA 94102

415.775.8674
415.673.3813 facsimile

Dated: October 27, 1999

Summary

The Request for Information interprets the Board of Supervisors' Resolution as definitively mandating "open access" to cable broadband networks, and purports to preclude discussion of any issues other than the technological factors of implementing open access. NetAction does not believe this should be the case. The Resolution properly rejected efforts to impose open access as a condition of transfer of the San Francisco cable franchise. By opting to study the matter further, the Board clearly has not authorized DTIS to fashion a mandatory open access regime. Moreover, there is no way to offer any real direction to the Board without discussing the full public policy implications of open access in tandem with the technological issues. There has been no federal, state or local body that has spoken to the issue of open access without, at the very least, allowing for interested parties to offer their input on a full range of issues that affect them.

Finally, it is neither necessary nor feasible to require open access to cable transport or content services. The broadband industry is currently emerging as a vibrant market. Cable providers are aggressively competing with DSL providers for broadband consumers and with monopoly local telephone companies for local exchange users. An open access requirement would only hinder this growth because it would prevent cable providers from upgrading their networks with the assurance of being able to recover those investment costs. With respect to the fear of content "discrimination," as a technological matter "caching" and other network management techniques are not only common on the Internet, but vital to the provision of advanced broadband content. Cable broadband firms offer open access to all Internet content - there are no restrictions to proprietary content as with some well-known online service providers. The very complexity of these technical issues is a stark illustration that the concept of open access to cable broadband is so unworkable that its consideration as a policy matter, at this time, is both highly premature and unwarranted.

TABLE OF CONTENTS

  1. THE BOARD OF SUPERVISORS DID NOT REQUIRE DTIS TO IMPLEMENT OPEN ACCESS
  2. THE DEPARTMENT MUST CONISDER POLICY AND TECHNOLOGY IN TANDEM TO DETERMINE THE BEST APPROACH TO OPEN ACCESS
    1. Technology and Policy Are Inextricably Linked
    2. Cable Open Access Implicates Significant Policy Decisions
    3. The Department Should Consider the Voice of Consumers and Competitors in Evaluating the Policy Implications of Cable Open Access
  3. AN ANALYSIS OF THE POLICY AND TECHNOLOGY CONSIDERATIONS INDICATE THAT IT IS NOT NECESSARY OR FEASIBLE TO REQUIRE OPEN ACCESS TO CABLE NETWORKS AT THIS TIME
    1. Open Access Is Only Good Public Policy If Such Access is Essential to Competition
    2. Open Access to Cable Networks Is Not Essential to Competition But Instead Would Hamper Competition
      1. The Competitive Broadband Market is Not in Danger of Domination by Cable Modem Providers
      2. The Cable Industry Faces Significant Technical, Operational and Financial Challenges That Preclude Their Monopolization of the Broadband Market
        1. Cable Modem Providers Face Significant Technical Challenge
        2. The Cable Industry Faces Extraordinary Financial Challenges
      3. The Cable Modem Industry Is Rising to Industry Challenges and Will Provide Fierce Broadband Competition and Respond to the Market Demands for Access
      4. An Open Access Requirement Would Counteract the Cable Industry's Efforts to Meet Market and Technical Challenges Would Reduce Competition in the Cable Market, the Broadband Industry as a Whole and in local Telephony
    3. It is Not Feasible for DTIS and the Cable Industry to Implement an Open Access Requirement
  4. REGULATION IS NOT NECESSARY TO PROTECT CONSUMERS AGAINST CONTENT DISCRIMINATION ON THE INTERNET AND WOULD HAMPER THE COMPETITION IN THE BROADBAND MARKET
    1. The Nature of the Internet Is The Medium's Own Self -Defense Against Content Discrimination
    2. Interference with the Network Management Practices Is At Odds With the Realities of Internet Infrastructure and Will Undermine the Competitiveness of Providers' Services
    3. Market Realities and the Tendency of the Technology Industry Toward Open Protocols will prevent Content Discrimination

Before the
DEPARTMENT OF TELECOMMUNICATIONS
AND INFORMATION SERVICE
San Francisco, CA 94103-0948

 

In the Matter of

Request for Information
In Response to the Board of
Supervisors Resolution 718-99
)
)
)
)
)

 

COMMENTS OF NETACTION

NetAction is a national, nonprofit organization dedicated to promoting use of the Internet for effective grassroots citizen campaigns. As a part of this effort, NetAction has sought to ensure that national and local policies impacting the Internet will enhance the growth and development of the medium as a communicative tool, and has participated in numerous technology policy dialogues, including those on cable open access, privacy and open source software. NetAction believes that the Department of Telecommunications and Information Services' ("DTIS") inquiry on open non-discriminatory access to broadband transport and content raises significant policy, technical, operational and business concerns that impact consumers' ability to access high speed services. NetAction believes these issues must be considered in tandem and hereby submits these comments.

INTRODUCTION

On July 26, 1998, the Board of Supervisors of the City of San Francisco adopted a Resolution addressing open access requirements for cable providers.[1] In that Resolution, the Board directed DTIS to issue a report by December 15, 1999 on the "legislative, regulatory, judicial and technical developments of open access" and to "recommend a course of action for the city.[2] Responding to the Resolution, DTIS has issued its RFI seeking commentary on a wide scope of technical, operational and business concerns implicated by an open access requirement. In doing so DTIS has assumed the ambitious responsibility of determining the best possible course for the City to implement an effective open access policy, and NetAction commends the Department's effort to tackle this difficult issue.

However, NetAction believes that the Department has inappropriately narrowed the dialogue in two ways. First, the Department has presumed that the Board of Supervisors has required open access and that the only matter at hand is the technical implementation of such a mandate. Second, by attempting to exclude policy dialogue by commenters in this proceeding, DTIS has incorrectly presumed that the technical and operational aspects of cable open access can be divorced from policy considerations.

DTIS does a disservice to consumers and competitors alike by presuming that open access is the governing policy for San Francisco and by not entertaining a rich and full debate on all of the public policy and technological implications of open access. Neither the Board of Supervisors nor any other authoritative body has required DTIS to implement open access. To the contrary, the FCC, states and localities, and numerous industry analysts have indicated that mandatory access to the cable network is not necessary for competition in the broadband industry, and that certainly it should not be implemented on a local level. In addition, the myriad of policy debates that have arisen as a result of technological developments shows that technical solutions and policy are inseparable. Cable open access is no different. It is just not possible to determine how to implement open access without returning to the policy underpinnings, and thus, parties commenting in this proceeding must address the policy aspects of open access.

In its review of the policy and technical issues raised by this debate, DTIS must look to fundamental antitrust principles when evaluating whether an open access mandate is appropriate. NetAction believes that such an analysis will demonstrate that the realities of the broadband market do not necessitate open access, and indeed an open access requirement will stunt the explosive competitive growth in the broadband market. NetAction does not believe that it is technically, operationally, or financially feasible to implement open access at this time. Finally, NetAction believes that it is not necessary for DTIS to regulate access to cable broadband in order to ensure that consumers have access to the Internet content of their choice. The nature of the Internet and competition in the broadband market will provide sufficient protection against content bias. Moreover, interference with network management functions will undermine, not support, broadband competition.

THE BOARD OF SUPERVISORS DID NOT REQUIRE DTIS TO IMPLEMENT OPEN ACCESS

The RFI concludes that, based on the Resolution, "the perspective of this inquiry is to determine how the city can implement an effective open access policy, not to determine whether open access is the correct policy."[3] This determination presumes that open access is a foregone conclusion, closed to debate, and that the only remaining consideration is to determine how to implement this policy. Building on this presumption, DTIS then states that to comply with the resolution, DTIS will address issues affecting the "implementation" of open access as a "requirement."[4]

However, DTIS is incorrect in its presumption that the Board compelled open access. The Board instead challenged DTIS to provide it with a recommendation on open access after reviewing the regulatory, judicial, legislative and technical impacts of an open access mandate. As DTIS correctly noted, the Board encourages the DTIS to "support open non-discriminatory access by consumers to broadband access."[5] However, contrary to the presumptions in DTIS' RFI, the Board did not extend this imprimatur to require DTIS to implement an open access mandate. Instead, the Board followed the well-analyzed path of the Federal Communications Commission ("FCC") in showing regulatory restraint in the face of Internet provider market hysteria, and indeed the FCC has acknowledged the Board's restraint.[6]

Although it went far to "urge" and "support" the achievement of open access, the Board stopped short of making its Resolution an official citywide mandate. As the San Francisco Chronicle reported, "[t]he Board of Supervisors approved a resolution in support of 'open access' but did not mandate it at this time" in order that it could have "time to study the issue and see what the courts and federal regulators decide."[7] Specifically, the Resolution urges DTIS to take all possible action to implement policy "monitoring the market for broadband access services in order to gauge the necessity or feasibility of imposing an open access requirement."[8] Indeed, the Board would not have asked DTIS to consider the "necessity" and "feasibility" of an open access requirement if open access had been foreclosed as a policy consideration as the RFI suggests. Accordingly, without the Board's or any other mandate, DTIS has no basis upon which to begin its efforts of implementation, but instead has the authority to, and should engage in, a broader, well-developed discussion that includes both policy and technology implications. as well as the input of all impacted parties.

THE DEPARTMENT MUST CONSIDER POLICY AND TECHNOLOGY IN TANDEM TO DETERMINE THE BEST APPROACH TO OPEN ACCESS

The RFI states that "DTIS believes that it can obtain sufficient information concerning legislative, regulatory and judicial developments through other sources, but that it needs additional information in order to assess technical issues."[9] This suggests it is possible to comment on the considerations of open access without intertwining those issues with a policy discussion. Yet such a separation is simply impossible. Commenters cannot provide DTIS with an effective analysis of technical feasibility and technology choices without discussion how these issues impact local, state and federal policy goal of fostering competition so that consumers are able to access communications services at reasonable rates.

Technology and Policy are Inextricably Linked

Technology is not created in a bubble. One cannot discuss the broadband industry without taking into consideration all participants in the industry and their different regulatory treatment as a matter of public policy. This has been recognized both at the local and national level. The Board of Supervisors most certainly recognized this relationship. In its Resolution the Board urges DTIS to consider the "necessity" and "feasibility" of imposing an open access requirements. The Board concludes its Resolution by asking the DTIS to report back "on federal, state and local legislative, regulatory, judicial and technical developments and recommend a course of action for the city."[10] Such recognition of policy factors shows the Board's understanding of the need to link the public concerns behind open access to the possibility of actualizing its implementation. DTIS surely understands the symbiosis between technology and policy, or it would not have entered into such analysis itself.[11]

Congress demonstrated a similar recognition when it linked consideration of technology and policy in the 1996 Telecommunication's Act by calling upon both the "Commission and each State commission with regulatory jurisdiction over telecommunications services [to] encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans . . .by utilizing, in a manner consistent with the public interest, convenience, and necessity, . . .measures that promote competition in the local telecommunications market, or other regulating methods that remove barriers to infrastructure investment."[12] Section 157 of the Telecommunications Act similarly states that it is the policy of the United States to determine all new technologies in light of whether they are "in the public interest[.]"[13] Thus, it is clear that Congress also recognized the importance of analyzing technology and policy in tandem.

Each new technological development available today takes the well trodden path of regulatory consideration laden with policy based analysis. One example is the FCC's decision declining to regulate enhanced services as it has regulated basic telecommunications services in order to ensure the development of competition in enhanced services. "Seeking to regulate enhanced services, the Commission concluded would only restrict innovation in a fast-moving and competitive market."[14] Indeed, the ISPs today seeking cable open access have developed and fostered because the FCC made this policy determination.

There are also several additional examples. One example is the FCC's E911 proceeding in which the Commission addressed competing technology standards-handset-based and network-based-that would allow emergency personnel to locate with precision E911 callers on mobile phones.[15] In that proceeding, the FCC addressed how to best balance the policy goal of ensuring public safety and the goal of allowing competition between companies choosing handset solutions and those choosing network-based solutions. While both technologies met the FCC's accuracy requirements, the handset solution would take longer to deploy than the network-based solution, and thus there was an issue as to whether the FCC should delay its implementation schedule so that both technologies could compete at the same level. At the same time, the Commission did not want to unduly delay the availability of the public benefit afforded by these technologies. To balance these interests, the Commission determined that it would not designate a particular technology, and moreover, would set a deployment schedule that both handset- and network-based solutions providers could meet. In return, the Commission required providers offering hand-set based solutions to meet a higher accuracy level.

As a second example, because privacy of Internet users has been an important policy concern, the Federal Trade Commission challenged companies providing Internet applications to incorporate technology that would allow users to control access to their personal information. While these changes were not necessary to the function of the software, companies began to include them anyway as a response to a public policy concern about privacy.

As a final example, the development of regulatory policy toward DSL demonstrates the relationship between technology policy and the broadband market. Specifically, the FCC determined that incumbent LECs should conform their spectrum management polices that govern the deployment of technologies on their local loops to industry standards developed by a variety of industry participants. In reaching this decision, the FCC made a policy determination that it was more important to enable a wide variety of participants to voice their concerns regarding the impact of these standards on their ability to deploy their DSL services than to rely on the unilateral spectrum management determinations of the ILECs, which as a technical matter may have been acceptable.[16]

These examples are yet a few of the myriad where policy has intersected with technology and has shaped technology choices. As the discussion below indicates, the issue of cable open access is no different and in fact raises significant policy issues.

Cable Open Access Implicates Significant Policy Decisions

There are a number of reasons why DTIS must consider the policy ramifications of an open access requirement in San Francisco before undertaking any analysis of the technical implications of such a mandate. First, the conclusion that DTIS reaches in this proceeding will not just impact the cable industry, but the entire local services market. It is in the best-interests of consumers, ISPs, and other broadband advocates to have healthy competition in the local market. Cable modem technology in particular provides a tremendous opportunity not only to increase broadband competition by providing consumers with high-speed access at competitive prices, but also to break the bottleneck monopoly of the incumbent LECs to provide local telephony to consumers.

As a result, any policy decisions on cable modem access cannot just narrowly focus on the cable modem industry. Rather, policy decision-makers must focus on the impact on the broadband market as a whole as well as the local telephony market. More than 95% of consumers (including most residents of San Francisco) are still denied a choice of local phone service providers, despite the clear mandate from Congress and the FCC that local telephony be opened to competition. However, now, cable providers have begun to offer local phone service in conjunction with broadband Internet access.

This is the first serious challenge to the local phone monopoly, and indeed this threat to the local phone monopoly is largely what motivates SBC, GTE, and the other Bell monopolies to advocate open access. It is no surprise that GTE has pledged to cover the litigation costs associated with a cable open access mandate for one Florida county.[17] Similarly, just recently, GTE filed an antitrust suit in federal court in Pittsburgh, Pennsylvania against AT&T, TCI and Excite@home under the auspices of supporting competition. Ironically, a recent report on broadband in Pennsylvania concluded that "Pennsylvania's cable TV operators are far ahead of Bell [Atlantic, which has purchased GTE], in bringing high-speed Internet to fruition."[18] The result of ILEC efforts like these is the thwarting of the goals of cable operators to use cable plant to compete in local telephony as open access will prohibit the ability of cable operators to cover the costs of infrastructure development. In fact, cable operators have had to delay deployment of broadband in communities that mandate open access, which will lead to a delay in the introduction of competitive local phone service, which increases benefits to the ILECs and reduces benefits to consumers.

Second, the policy ramification that DTIS must consider is that the decisions made by DTIS on cable open access are not isolated but will need to coincide with a larger national framework on the issue. To date, due to the uncertainty in broadband development, the FCC has taken a position of regulatory forbearance. Earlier this year in its 706 Report, the FCC held that there "is no reason to take action on this issue at this time. [The FCC] will, however, continue to monitor broadband deployment closely to see whether there are developments that could affect our goal of encouraging deployment of broadband capabilities pursuant to the requirements of Section 706."[19] Recently, the FCC issued a report on broadband reiterating its policy of "vigilant restraint, refraining from mandating 'open access' at this time, while closely monitoring for anticompetitive developments that may require intervention."[20] The Commission's rationale for this position is that "by limiting regulatory burdens. . . [c]ompetition from multiple broadband providers is seen as the best way to prevent a monopoly by one provider."[21] Given these conclusions, a determination by DTIS to support cable open access would run counter to the FCC's conclusions and would raise policy concerns about the viability of federal and local positions coexisting on this issue.

Third, there are policy considerations regarding implementing cable open access when there is great uncertainty about whether implementation of such a mandate is technically and financially feasible. While cable modem platforms are capable of connecting to multiple ISPs, the existing standardized cable modems do not have that functionality.[22] As the FCC has recognized, even after assembling a wide spectrum of industry experts, analysts and participants, there is not consensus as to how to implement cable open access from a technical perspective.[23] Thus open access would require in many instances for the existing provider to create a completely new infrastructures to comply with regulations.

The Department Should Consider the Voice of Consumers and Competitors in Evaluating the Policy Implications of Cable Open Access.

With the recognition that technology and policy are inextricably linked, the Department cannot expect the parties to comment on only technical issues outside of the context of policy concerns. However, this is exactly what DTIS has asked commenters to do. Refusing to entertain a discussion of policy implications impermissibly excludes the concerns of the participants this issue affects the most. Consumers and competitors need the opportunity to plead all pertinent angles of the policy debate that spurs the broadband industry.

DTIS notes that the purpose of requiring "non-discriminatory access to the broadband platform is intended to allow consumers to choose their ISP to the broadband platform much as they do today when they purchase dial-up Internet access."[24] The consumer is no doubt intended to be one of the primary beneficiaries of mandated open access, and therefore it is appropriate that they have an opportunity to submit written comments. However, consumers are not involved in the purely technological implementation of broadband. Thus, DTIS' limitation of written comments to a technical discussion impinges on the ability of consumers to participate effectively.

Competitors in the broadband market should also be given the opportunity to address the policy considerations behind open access through the RFI. As many participants in the broadband debate have concluded, open access is not the best policy for the market.[25] While there is no doubt that DTIS is planning on entering a thorough analysis of the all pertinant issues, many of the technical and business experiences that an industry participant faces could have severe policy implications that need to be addressed as well. Only by factoring these public policy concerns can an ultimate determination be reached that is fair for incumbent and competitive local exchange carriers and the consumers they serve.

Accordingly, DTIS should take into consideration the written comments of consumers and their advocates, as well as competitors on the policy and technology factors impacting the open access debate. Without receiving thorough participation and weighted debate on all aspects of open access, it is inadvisable for DTIS to mandate open access at this time.

AN ANALYSIS OF THE POLICY AND TECHNOLGY CONSIDERATIONS INDICATE THAT IT IS NOT NECESSARY OR FEASIBLE TO REQUIRE OPEN ACCESS TO CABLE NETWORKS AT THIS TIME.

In its RFI, the Department proposes to require the cable operators to provide nondiscriminatory access to their networks in such a way that would allow unaffiliated ISPs to transport data on those networks at the same rates, terms and conditions that are at least as favorable as those which the cable operator provides to its own ISP affiliated utilizing its network.[26] In proposing to implement this open access requirement, the Department cites as justification the "immediate, tangible consumer benefits of . . . prevent[ing] consumers from having to pay twice if: (1) they wish to keep their existing e-mail address with a provider that includes an e-mail address as a part of its ISP service; and (2) they wish to have access to proprietary content provided by an ISP."[27]

The problem with DTIS's proposal for open access is that it is not based on analysis guided by the fundamental antitrust principles that have long been the basis for determining in what instances market limitations justify an open access requirement. While the tangible benefits that DTIS has identified are laudable, these are irrelevant to an analysis of whether it is good public policy to impose an open access requirement. These particular outcomes are merely symptomatic of what is going on in the marketplace and are not determiners of how the market should be governed.

However, DTIS is not alone in failing to hinge its positions regarding open access on fundamental economic principles. The incumbent local exchange carriers ("ILECs") have similarly championed cable open access on arguments unrelated to these fundamental principles. Specifically, the ILECs have argued that because Congress and the FCC have required ILECs to open their telephony networks, there should be a similar requirement for cable companies to open their network.[28] If open access to cable networks is a procompetitive necessity, as it was with telephony networks, then and only then, would it make sense to impose the same requirements on cable operators as on telephony providers. However, instead of addressing this issue, the ILECs have touted an "I will if you will" position that is regulation just for regulation's sake and is hardly a sound basis for public policy decisions.

Not only does this position do little to address the fundamental market issues, it unclothes the real motivation for the ILECs to weigh-in on this debate; the ILECs are mortified that new market entrants, stymied by ILEC tactics aimed at minimizing required network access, have now found a way to circumvent the ILEC local loops. "With its cable lines into millions of homes, AT&T has now become the biggest threat to the regional Bell's dominance in local consumer phone service."[29] In fact, AT&T's deals with Time Warner and Comcast focus exclusively on telephone service in competition with the Bells, which is a "cornerstone of its strategy." Indeed, despite the fact that ILECs have known about DSL technologies for quite some time, they only really entered the DSL market when upstart cable modem and DSL competitors threatened their monopoly services, and in particular expensive T-1 service.[30] As the FCC has stated, "[a]lthough the ILECs have possessed DSL technology since the late 1980s, they did not offer the service, for concern that it would negatively impact their other line of businesses."[31] Thus, DTIS should view as suspect ILECs' open access arguments that are not based on a principled policy approach.

Given the inability of these rationales to guide a productive policy inquiry, it is important that DTIS reset this open access inquiry as a dialogue based on fundamental economic principles. As discussed below, at the heart of, and indeed the justification of, any open access requirement are antitrust principles that have dictated such access. The antitrust laws do not presume that open access is always appropriate, but rather they indicate that open access requirements are only useful to ensure a competitive market in very limited circumstances.[32] In a concurring opinion in AT&T v. Iowa Utilities, Supreme Court Justice Breyer stated that "[r]ules that force firms to share every resource or element of a business would create, not competition, but pervasive regulation, for the regulators, not the marketplace, would set the relevant terms."[33] Specifically, as also discussed below, an open access requirement is only sound public policy if it is essential or necessary to enhance competition, and not if it just has the appearance of providing some benefits to consumers. This is the principle that should be at the center of any debate on open access, and each and every argument in the debate should relate back to this standard.

Open Access Is Only Good Public Policy If Such Access is Essential to Competition.

The Department cannot divorce cable open access as a public policy consideration from its antitrust roots, which are the foundation of the open access requirement. As a historical matter, open access requirements have always been wed to the inquiry of whether under antitrust principles such a requirement is essential or necessary to competition.

Open access requirements date back to 1912 in United States v. Terminal Railroad Association,[34] where the Supreme Court determined that it was necessary for competition to require a group of railroads that owned a railroad terminal to allow competing railroads access to that terminal because the terminal was the only thoroughfare to enter St. Louis from the west to east direction. In 1984, the 10th Circuit imposed an open access requirement on a ski resort operator because the operator controlled three out of four ski mountains in a resort area, issued multi-day passes for only those three mountains, and refused to include the operator of the fourth mountain in the multi-day pass, effectively prohibiting market viability by the operator of the fourth mountain. The most notable modern incantation of an open access requirement of course is the imposition of the essential facilities principle on telephone networks in MCI Communications v. AT&T[35] and under the Telecommunications Act of 1996. Again, here the rational for imposing on telephone companies the access requirement to open their networks was the finding that without access to these facilities, competition would not occur.

Throughout all of these instances, the decision to impose an open access requirement hinged on whether competition would be absent in the market in question without open access. Indeed, open access had to be "not merely helpful but vital to the claimant's competitive viability."[36] Otherwise stated, a facility can only be essential to competition if "the facility in question was more than dominant, [but]was effectively the only one in town."[37][38] Finally, the analysis of the necessity of open access has also included whether access iss feasible from a technical, economic, and regulatory standpoint.[39]

The open access inquiry should be no less different for cable networks than it has been for railroad terminals, ski mountains and telephone networks. Any evaluation of whether to impose an open access requirement must come back to the essential facilities doctrine as a guide, and no decision to require open access or any imposition of rates, terms and conditions of such access is appropriate unless that decision is grounded by the demonstration that such actions are essential to enhance local competition.

Thus, DTIS should only recommend an open access requirement to the Board if DTIS determines that open access to cable is essential to competition in the broadband market. However, if competition in broadband access to the Internet will continue to flourish without open access to cable, then it is not consistent with antitrust principles, and thus not sound public policy to impose an open access requirement on cable operators. Moreover, DTIS's evaluation of necessity must consider whether it is feasible from a technical, economic and regulatory standpoint to impose an open access requirement. As has been discussed earlier and shown under the essential facilities doctrine, open access as a policy consideration cannot be separate from the evaluation of the technical, economic, regulatory and other feasibility considerations.

NetAction believes that upon conducting such an analysis, DTIS must reach the conclusion that the realities of the broadband market and the cable industry's participation in that market do not require open access. As discussed below, it is not necessary or essential to require open access to cable networks in order to ensure the ability of ISPs to provide their customers with broadband access and a variety of content. In fact, the reverse is true. Open access to cable networks at this time would stunt the growth in the cable-modem market as a part of the broadband explosion. Moreover, it is not currently feasible from a regulatory, operational, economic or technical perspective to impose an open access requirement.

Open Access to Cable Networks Is Not Essential to Competition But Instead Would Hamper Competition.

There are several reasons why open access is not necessary to ensuring competition in the broadband market, and in fact would hamper competition that is already emerging in that area. First, cable modem operators are in no position to dominate the broadband market. Second, the industry faces significant technical, operational and financial challenges. Third, an open access requirement would counter the significant competitive development currently occurring in the cable modem industry.

The Competitive Broadband Market is Not In Danger of Domination by Cable Modem Providers.

By all accounts, the broadband market is emerging as the most vital and competitive communications sector. "The rapid pace of change and the dynamic developments in broadband communications present great opportunities for both American consumers and the communications industry."[40] Accordingly, NetAction believes that the Department should be very wary of accepting the argument of open access proponents that if cable operators do not open their networks, consumers will not have high-speed access to the content and services they choose and will be on the wrong side of the digital divide. As discussed below, the broadband market is far too vital for this to occur at any time in the near future. In fact, after evaluating competition in the broadband market, the FCC concluded that it has not been "not persuaded that consumers are at risk of cable establishing a bottle neck monopoly in broadband services in the absence of immediate regulatory action. . . . [and that] the emergence of alternative broadband providers, with their competitive service offerings, features, and prices, mitigates the risk that cable will become the gatekeeper of the Internet."[41] The DTIS should be similarly skeptical of alarmist claims of impending monopoly doom.

The reality is that cable modem providers cannot dominate broadband because they are just one part of the market. The broadband market also includes DSL, wireless and satellite operations. Moreover, "these alternative technologies are attracting new subscribers at an exponential rate, and that prices for these new services are falling."[42] DSL service providers are currently leading the vanguard in terms of broadband deployment growth, and in doing so, they are ensuring that the broadband market will remain competitive. During the past few years, numerous companies have been focusing on DSL services. In the first half of 1999 alone, the installation of DSL lines surged 300 percent.[43] As a means of comparison to the cable-modem market, during that same period of time, cable-modem installations only grew 60 percent. In addition, DSL providers have provided the conduit for numerous ISPs to provide broadband services to their customers. While cable modem subscription currently is larger than DSL, it is widely expected that DSL will significantly rival cable in the very near future.[44]

Particularly important is that a significant part of the DSL challenge will come from incumbent LECs. For example, SBC, the parent company for Pacific Bell, recently announced its plans to spend $6 billion on broadband initiatives, which include an aggressive plan to offer DSL services to 77 million of its customers within 36 months.[45] In fact, an SBC executive pledged to deploy DSL in California at a rate that is twice as fast cable modems have rolled out.[46]

Other broadband technologies are poised to bring similar benefits, and indeed providers of broadband alternatives have been spurred by cable modem providers. For example, in direct response to the cable industry's provision of high-speed services, MCI WorldCom and Sprint spent $1 billion to acquire companies with wireless licensees.[47] In just 1999, several competitors have invested over $2 billion in broadband wireless.[48] Currently, at least 20,000 lines are serviced by the broadband wireless facilities of the companies leading wireless broadband deployment.[49] Just recently, Cisco announced its broadband wireless standard,[50] which is expected to propel the industry's ability to offer high-speed access over mobile units.[51] Satellite providers are planning significant broadband launches. For example, Teledesic plans to launch 288 satellites that will provide significant broadband capability to over 90% of the plant's surface and nearly 100% of the Earth's population.[52]

The Cable Industry Faces Significant Technical, Operational and Financial Challenges That Preclude Their Monopolization of the Broadband Market.

Another reason why cable modem providers cannot monopolize the broadband market is that cable providers face numerous competitive challenges that are not faced by other broadband competitors, and in particular, not faced by DSL, the most aggressive challenger to cable modem providers. These challenges stem from the fact that the current cable architecture is adequate to support the broadband services demanded by consumers, as well as from the significantly different regulatory history and financial experiences of cable providers.

Cable Modem Providers Face Significant Technical Challenges

The current cable infrastructure only supports significant speeds in one direction-the download direction-because cable networks have been used to send video to consumers and not vice-versa. In fact, most of the cable modem subscribers are being serviced by systems with only one-way Internet access. To date, only 25% of cable modem subscribers have access to two-way broadband speeds. In addition, these customers must also either tie up their phone lines or take on the cost of a second phone line, since unlike some forms of DSL, older cable infrastructure does not accommodate voice calls and data simultaneously. Thus, unlike with DSL, major infrastructure investment must occur before cable companies will have the ability to offer the two-way broadband services that consumers want.

In addition, unlike DSL services, cable modem service is a "shared" service, which means that while cable modem service can produce speeds faster than DSL, this speed varies with how many people are using the system. The greater the number of people receiving service from the same node the lower the speed capabilities, and with nodes serving 500 to 2000 homes in the modern cable plant,[53] this is a significant issue. Thus, cable providers must also reconfigure their networks to address the "shared" service problem mentioned earlier. In order to ensure that consumers can access the types of speeds that they need to offer services, cable providers may have to perform node segmentation, which limits the number of homes that are utilizing frequency channels providing cable modem service.[54]

Another technical challenge that cable modem providers face is that the cable industry is in an early stage of its standards development, which plays a significant role in broadband providers' ability to compete. Finally, cable modem providers face significant operational challenges in just converting their current internal management to a process that can manage " a complex new network replete with its own equipment, software, billing systems, and data storage concerns."[55]

The Cable Industry Faces Extraordinary Financial Challenges

In order to address these challenges, cable providers must commit significant capital outlays to infrastructure and operational development. As a result, cable providers face significant financial challenges as they enter the broadband market.

Cable modem providers will have to dedicate an extraordinary amount of up front capital to fix their networks. Currently, the cable industry is embarking on a major network overhaul, which is estimated to cost the industry in excess of $100 billion dollars.[56] To relate the costs to the local county level, the cable companies in one Florida county alone plan to spend $900 million to upgrade the facilities just in that county.[57] To make matters worse, the cable industry is just on the heels of $15 billion of infrastructure development that the companies undertook in the 1980s following deregulation under the 1984 Cable Act.[58] Moreover, when these figures are compared with, indeed are compounded by, the price that cable-modem providers like AT&T have just recently paid for their cable networks and content to place on those networks, it is little wonder that they are in a quandary over how to fund the costs of the network purchases and upgrades, and at the same time generate a profit. For example, on April 22, AT&T offered $62 billion for MediaOne,[59] not even a year after the company announced a $48 billion merger with TCI.[60]

These financial commitments are further compounded by another critical difference between the cable and telephony industries. As the statistics above indicate, cable companies, particularly the ones offering cable modem services, are fairly new conglomerates. The cable industry has had much less time to recoup costs and infrastructure development. In contrast, incumbent LECs have been upgrading their networks for some time, and have recouped, and in some instances more than accounted for,[61] the costs of those upgrades in ratemaking processes and decades of monopoly rent. Moreover, for a service like DSL, providers have no need to conduct a major network overhaul to make the network DSL-ready. Rather,changes and adjustments have occurred on a comparatively less grand scale. For comparison, while SBC will be spending $6 billion on loop plant and backbone upgrades, cable companies must spend a collective $100 billion to upgrade their infrastructure.[62] Another point of comparison is the traditional rate base that has supported these industries. At present, the cable industry's revenues from basic cable service are $34 billion (far from the $100 billion it plans to spend on network upgrades).[63]

The Cable Modem Industry Is Rising to Industry Challenges and Will Provide Fierce Broadband Competition and Respond to the Market Demands for Access.

Cable Internet providers have met these challenges with determination and vigor, and have been aggressively upgrading their network and services to remain a competitive broadband force. Indeed, the cable broadband providers are emerging at a time in the communications revolution where there are compelling market challenges and incentives to remain competitive, rather than monopolistic.

Currently, North American cable companies are adding more than 25, 000 cable subscribers per day, and at this rate, it is expected that between 1998 and 1999, cable modem subscribers will increase from 300,000 to 1.5 million.[64] Other projections place cable modem deployment at 4 to 6 million by 2002 and over 11 million by 2005.[65] This projected increase is due not only to broadband frenzy, but also to the fact that as cable modem providers increase their investment outlays to improve their infrastructure, their market share has increased. As indicated earlier, cable providers have committed significant investment dollars to plant upgrades and are completing these upgrades at an aggressive pace. Between 1997 and 1999 the number of homes that are passed by two-way ready systems has surged from 3% to 4% to 25%.[66] AT&T has indicated that plant upgrades should past 60% of the homes passed by its network by the end of 1999 and 90% by the end of 2000.[67] MediaOne's plant upgrades will reach 70% of the homes passed by its network at the end of 1999 and 90% by the end of 2000. There is some empirical evidence to suggest that as infrastructure improves, cable modem use will increase. For example, roughly 20% to 25% of cable plant is two-way capable, while more than 90% of cable modem users subscribe to two-way systems, suggesting that this is a significant factor in consumers' decisions to utilize cable modem service.[68]

Quite unlike the markets faced by incumbent local exchange providers and predecessor cable video services providers, the current communications market is extraordinarily competitive and for companies like AT&T, the reward of amassing significant cable infrastructure is not to ensure decades of monopoly, but rather to maintain a competitive edge in a fierce, and often anticompetitive local services market where access to the local loop to customers homes is difficult.

Moreover, quite unlike the incumbent LECs that will be significant DSL providers, there is no indication that cable modem providers have used their cable system control to behave anticompetitively in the broadband market. As the FCC stated, "[p]erhaps most significant, our monitoring efforts have not revealed any monopolistic practices by cable operators that presumably would be the predicate for any type of 'open access' requirements."[69] Nor is there evidence that the cable industry has ruled out open access in the future. Contrary to the alarmist allegations of open access advocates, the FCC noted, "the general consensus" is that "cable architecture is not irreversibly closed," and "we have seen no credible evidence that cable network architecture precludes future modifications to allow such access."[70] Indeed, as the FCC also recognized, it is likely that market forces will change the nature of the broadband industry such that cable providers will want to allow ISPs open access.[71] As ISPs continue to team up with DSL providers for broadband services, it will become much more financially feasible and attractive for cable providers to allow ISPs open access to cable networks.

An Open Access Requirement Would Counteract the Cable Industry's Efforts to Meet Market and Technical Challenges and Would Reduce Competition in the Cable Market, the Broadband Industry as a Whole and Local Telephony.

As discussed earlier, it is imperative that DTIS, as an important voice in protecting the availability of a variety of communications services in San Francisco, not take actions that would in any way squelch competition in the cable modem industry, the broadband market as a whole or the local telephony market. Right now, cable open access does not support both of these goals, but rather would undermine the efforts of the cable modem industry to compete strongly and reduce overall competition in broadband. Moreover, cable open access would undermine an incredible opportunity to provide competition in local telecommunications services that have to date been dominated by monopolies like SBC, which now has swallowed Pacific Bell, Nevada Bell, SNET and now Ameritech. With the competitive developments in the broadband arena, the challenges faced by cable modem providers, and the variety of companies and technologies that are involved in this race, it is very premature to treat cable operators as a monopolistic threat to the broadband market, and thus premature to consider imposing open access regulation. The FCC notes "[w]e are in the early stages of the broadband revolution, and although cable has an early lead, its telephone satellite, and wireless competitors are rushing to close the gap. Against this backdrop, it would be premature . . . to establish a national 'open access' requirement."[72] Indeed, the competition that open access advocates purport will occur as a result of this requirement is already occurring. Moreover, competition from these other participants in the broadband sector, as well as competition in the overall local telephony market will continue to prompt rapid development in the cable industry, and likely, eventual open access to the cable system.

These significant industry initiatives notwithstanding, an open access requirement would hinder rather than enhance this process. Unless cable operators can have the assurance that they can spread the costs of these purchases and upgrades over a sufficient market base, they will not have the incentive to upgrade their networks. "Indeed, the investment community has indicated that it has significant concerns about open access requirements."[73] "[T]here was near unanimous agreement among the cable and investment panelists that government regulation of the terms and conditions of third-party access to cable systems would cast a cloud over investment in both cable and telephony applications."[74] Further, this loss of investment from the capital markets reduces the resources that cable providers have to fund their infrastructure upgrades.[75] This in turn would reduce the competitive incentive for ILECs to deploy DSL and would lower the overall availability of broadband choices to consumers.[76]

Finally, the make-up of the cable modem customer pool increases the pressure on providers to ensure that they can utilize revenues to cover infrastructure outlays. Specifically, while DSL providers have been able to market their services to both residential and business consumers, currently cable modem providers can only look to the residential market for sales, as 95% of cable plant is in residential neighborhoods.[77] Given that business customers are less price sensitive and often provide the initial revenue support for a new offering, it is particularly important that cable providers find other assurances that they will recoup their investment costs.

Thus, for all of these reasons, it is imperative that DTIS and other local authorities refrain from recommending or imposing open access mandates. Such requirements will only further delay the ability of cable providers to recoup their cable infrastructure investments and provide a broadband alternative, thus undermining broadband market competition that open access is alleged to provide. Moreover, the splintering nature in which localities have begun addressing the open access question will further exacerbate the lack of incentive to upgrade in areas where open access is required. If a cable operator does not have to comply with open access requirements in Miami-Dade, but has to comply with those requirements in San Francisco or Fairfax City, VA, then a cable operator may likely just focus its deployment and upgrade efforts and service offerings in Miami-Dade, where it knows it can recoup its investment, instead of in San Francisco. For example, some cable providers have already indicated a reluctance to upgrade infrastructure in Broward County, Fla. following that county's open access mandate.[78] Thus, in a twist of fate, open access localities could face the exact same digital divide that they thought they were avoiding by imposing open access.

It is Not Feasible for DTIS and the Cable Industry to Implement an Open Access Requirement

There are several reasons why it is not feasible for the DTIS or the cable industry to implement an open access requirement at this time. First, DTIS, like many local institutions, is not equipped to implement an open access requirement. The regulatory, technical, and operational implications of an open access requirement are far beyond the scope, expertise, resources, and some would argue authority, of localities. In fact recently, before the FCC, "local governments tacitly acknowledged that they did not have the resources or expertise in some cases to develop a comprehensive scheme for broadband access."[79] In fact, it is for this reason that courts are reluctant to impose open access requirements under the essential facilities doctrine unless there is an administrative agency with the authority and expertise to regulate the prices and terms under which a monopolist operates.[80]

The cable debate, particularly as undertaken by the DTIS, clearly poses significant issues that should be handled by a national administrative agency that has the resources and expertise to investigate and implement such a mandate. In the RFI, DTIS asks for commenters to address the pricing, business processes (including operational support systems), network management, technical arrangements and interconnection implications of an open access mandate.[81] Specifically, DTIS asks commenters to address: (1) whether it is appropriate to set the prices for third party access at the same price a cable provider offers to its own ISP;[82] (2) the scope of the city's role in enforcing non-discriminatory prices and resolving disputes between ISPs and cable providers;[83] (3) whether and to what extent the City should intervene in ensuring the creation of standards governing how ISPs interact with providers operations systems;[84] (4) how to respond to network management and capacity needs imposed by ISPs on providers' systems;[85] (5) how to best accommodate the development of efficient technical solutions for interconnection;[86] and finally (6) how and where ISPs should interconnect to and collocate with the cable infrastructure.[87]

Without considering whether or not DTIS has fully identified the scope of issues that will be implicated by an open access mandate, it is clear that even these issues are gargantuan and beyond the resources and scope of local government. These issues cannot just be tackled in a simple comment proceeding as this one in which NetAction comments. To the contrary, this proceeding could only begin to touch the surface of the myriad of issues that would come to bear as each of these issues is considered. As a point of comparison, during the three years following the 1996 Act, the FCC, with its hundreds of employees, engaged in a massive undertaking to address these same types of issues with respect to the telephone networks. In doing so, the FCC opened numerous dockets containing an untold number of proceedings to handle these issues, with each issue often being resolved in multiple proceedings. Many of these issues are still not completely resolved, even after the FCC's great progress. In fact, the very first docket that the Commission issued after passage of the 1996 Act is still not complete. After the FCC issued a mammoth Local Competition Order (containing over 660 pages and over 1400 paragraphs), legal and political battles forced the FCC to again revisit these initial issues. Even today, a final order has not yet been released to delineate the conclusions of this second review. Moreover, this is only one proceeding. Still ongoing are many others that continue to address interconnection, pricing, technical, and operational issues raised by open access. There have been multiple proceedings on DSL issues alone. Further, this has all occurred under the auspices of a regulatory institution that is federally funded, fully staffed with hundreds of employees, decades of experience investigating, analyzing and regulating the telephone industry, and had the secondary support of state regulatory commissions in every single state. As yet another indicator, when the Canadian Radio Television and Telecommunications Commission ("CRTC")(which this Department has looked to as a guide)[88] issued a cable open access requirement in 1996, it took CRTC three years to require incumbent cable providers to file tariffs, as well as establish interconnection and resale conditions.[89] Given the challenges that the FCC, state agencies and others have faced, it seems unfathomable that localities can meet this undertaking. As one locality commissioner stated after rejecting an open access mandate, "This is not our battle."[90]

Moreover, in addition to these concerns, there is a serious question as to the wisdom of having every single locality that handles cable franchises address the question of open access. Localities cannot even agree on what broadband is,[91] much less agree on the definition, scope and implementation of open access. The opportunity for fractionalization, confusion and near mayhem in cable policy is utterly inconsistent with the direction of regulatory treatment of the broadband industry and is counterproductive to the goal of increasing broadband access to consumers. As the FCC has noted, "[t]here seemed to be wide agreement . . .that consumers would be poorly served by a fractured broadband landscape wherein each locality devises its own set of cable Internet Regulations."[92] Indeed, the FCC further stated that "[i]nconsistent local regulation potentially can disrupt the Commission's national broadband policy and keep broadband technologies out of the hands of many Americans."[93]

Second, even if it were feasible for a locality to implement a local access requirement, it is not feasible for the cable industry to implement such a requirement in the near future. As discussed earlier, the cost of undertaking the upgrading of the cable system would significantly impinge on cable providers' financial ability to deploy competitive cable modem services. As also indicated above, cable modem providers are in the process of revamping their operational systems just to accommodate their own ISP, and are not yet ready to undertake the challenge of addressing the operational implications of dealing with an untold number of ISPs. Moreover, as a technical matter, it is not clear that the cable infrastructure can effectively manage the kind of capacity and other network demands that would arise under an open access mandate.

REGULATION IS NOT NECESSARY TO PROTECT CONSUMERS AGAINST CONTENT DISCRIMINATION ON THE INTERNET AND WOULD HAMPER THE COMPETITION IN THE BROADBAND MARKET.

In the RFI, the Department states that the Board's Resolution "establishes City policy supporting 'open, non-discriminatory access by consumers to all content on the Internet."[94] The Department further states that the Resolution "further urges the [Department] to 'require cable companies and other providers of high-speed Internet access services to permit unrestricted access to all content on the Internet in addition to allowing customers a single 'click through' directly to such content."[95] The Department also expresses concern that the practice of caching posed the opportunity for cable providers to discriminate against the content provided by some ISPs.[96] In addition, the Department raises concerns about the limitations that cable providers may place on video downloads and other data traffic. Thus, the Department proposes to require cable modem providers to allow nondiscriminatory access to their content, and in doing so considers the appropriateness of a "single click through" requirement and the ability of cable providers to alter their network management practices to accommodate concerns over content bias.[97] Finally, DTIS considers whether requirements are necessary to ensure that the Internet protocols used by cable providers allow interoperability with ISPs applications.[98]

The Nature of the Internet Is The Medium's Own Self-Defense Against Content Discrimination

It is not necessary to mandate "single click through" requirements in order to ensure that consumers have access to the content they want or that content providers will have the opportunity to put forth their own content.. The reality is that the Internet itself will protect against content discrimination and bias. The most touted benefit of the Internet is the information access that it has placed in the hands of consumers because of its mere vastness. While consumers may or may not begin to rely more on portals and other mechanisms to filter through this information for them, consumers will have a multitude of filters to choose from if they chose to use portals. It is simply inconceivable that an ISPs' inability to serve as a particular cable operator's portal would prevent a consumer from having access to that ISP's content. ISPs have the option of using numerous DSL providers if they wish to establish a portal from which to offer their services and content. Moreover, Internet users are becoming more and more savvy and realize that they do not need to stay cocooned in the content world presented to them by their ISP. They all know that they can point their browsers to another site.[99] Further, just as ISPs can choose another broadband delivery mechanism, so can consumers. If cable providers determined to engage in content discrimination, consumers could choose another means of broadband access. The bottom line is that the only restrictions on access to content are those imposed by the ISPs or content providers themselves when they chose to charge for access to their sites, or by consumers themselves who chose to install software filters on their personal computers.

Interference with the Network Management Practices Is At Odds With the Realities of Internet Infrastructure and Would Undermine the Competitiveness of Providers' Services.

It would actually undermine the ability of cable modem providers to compete if they are not able to perform network management. Network management is a significant part of product differentiation, and in fact, a whole industry has developed around meeting this need. The whole point of these network management techniques is to respond to a significant congestion problem on the Internet. Because an Internet connection is only as fast as the slowest part of the connection, it has been necessary to "cache" or copy content from servers that sit on the slow lanes of the Internet and put that content on servers that sit on the fast lane of the Internet. As a result, the content of ISPs that have been "cached" is much more readily accessible than the content of ISPs that have not been cached. In the instances where content has been cached, there is less back-up on the Internet and thus congestion is reduced. This has nothing to do with any underhanded plot to limit consumers access to content. Virtually all ISPs have been caching for quite some time, and there is no sign that this practice has preventing consumers from accessing content, or providers from presenting their content.

Market Realities and the Tendency of the Technology Industry Toward Open Protocols will prevent Content Discrimination.

Recent events in the software and other Internet related sectors indicate that the Internet space will continue to demand open source codes and interoperability. In recent months, several industry giants have announced there commitment to the interoperability allowed by open source code. For instance, IBM, several start-ups and the capital markets have embraced Linux, which is a open source code computer operating system that has been pitched as a competitor to Microsoft's OS. More recently, in a more direct attack on Microsoft and the closed protocols it embraces, Sun Microsystems launched a new open software application that it intends to compete with Microsoft Office. In response, even Microsoft has been flirting with the idea of opening the source code for some of its applications.

There is no indication that cable providers will behave differently from the industry trend towards interoperability. As a part of its review of the AT&T/TCI merger, the FCC recognized that control over the cable system would not deprive broadband consumers of their choice in Internet content.[100] Moreover, as mentioned earlier, the FCC has already noted that cable providers have not anticompetitively designed their networks to preclude ISP access.[101] Moreover, given the likelihood that the market will eventually compel cable providers to open their networks,[102] it is also likely that providers will ensure that applications of ISPs can interoperate with cable networks. It seems inconsistent with the likely direction of the broadband market, and indeed the direction of the overall Internet industry, for cable providers to utilize closed protocols that would exclude ISPs from offering content.

CONCLUSION

DTIS has a taken on an auspicious responsibility of reviewing the cable open access issue as part of its goals to ensure local competition in San Francisco. NetAction commends DTIS's efforts and recommends that DTIS take a principled approach to determining whether an open access mandate would support or hinder competition. It is NetAction's belief that a cable open access mandate would stunt the growth that is already occurring in the cable modem industry, limit broadband competition and in turn reduce competition in local telephony. Accordingly, NetAction recommends that the DTIS adopt the "wait and see" approach that has been established at the national level by the FCC, and refrain from recommending a mandatory cable open access requirement.

Respectfully submitted,
By:

Of Counsel

Executive Director Glenn B. Manishin
Lisa Anderson
Elizabeth Braman
Blumenfeld & Cohen - Technology Law Group
1625 Massachusetts Ave, Suite 300
Washington, D.C. 20036

202.955.6300
Audrie Krause
NetAction
601 Van Ness Ave., #631
San Francisco, CA 94102

415.775.8674
415.673.3813 facsimile

Dated: October 27, 1999


  1. Open Access Resolution, No. 718-99, Board of Supervisors File 990455 ("Open Access Resolution").
  2. Resolution at 6.
  3. The San Francisco Open Access Request for Information, City and County of San Francisco Department of Telecommunications and Information Services, (October 5, 1999) ("RFI").
  4. RFI at 1.0
  5. Open Access Resolution.
  6. [Deborah A. Lathen, Bureau Chief, Cable Services Bureau, "Broadband Today: A Staff Report to William E. Kennard, Chairman, Federal Communications Commission, On Industry Monitoring Sessions Convened By Cable Services Bureau", at 44 (October 1999) ("FCC Broadband Report"). The Commission makes further note of the Board's directive to the DTIS "to monitor at state and federal levels, and monitor market developments." Id.
  7. "Excite, AT&T Winners," The San Francisco Chronicle, p. B1 (July 28, 1999).
  8. Id.
  9. RFI at 1.0.
  10. Open Access Resolution.
  11. See RFP at 1.0: "DTIS believes it can obtain sufficient information concerning legislative, regulatory and judicial information."
  12. Id.
  13. 47 U.S.C. 157.
  14. In the Matter of Federal-State Joint Board on Universal Service, Report to Congress, CC Docket No. 96-45, FCC 98-67 (rel. Apr. 10. 1998).
  15. In the Matter of Revision of the Commission's Rules to Ensure Compatibility with Enhanced E911 Emergency Calling Systems, Third Report and Order, CC Docket No. 94-102, RM 8143, FCC 99-245 (rel. Sept. 15, 1999).
  16. In the Matter of Deployment of Wireline Services Offering Advanced Telecommunications Capability, First Report and Order, CC Docket No. 98-147 (rel. Mar. 31, 1999) ¶ 63.
  17. Fairfax City becomes 3rd Municipality to Mandate Open Access, Communications Daily Oct. 1, 1999 at 5.
  18. Bringing Broadband Services to Pennsylvania: Cable is winning the race to market; Bell Atlantic has had to respond, Economics and Technology, Inc. (Sept. 1999).
  19. Inquiry Concerning the Deployment of Advanced Telecommunications Capability to All Americans in a Reasonable and Timely Fashion, and Possible Steps to Accelerate Such Deployment Pursuant to Section 706 of the Telecommunications Act of 1996, Report, CC Docket No. 98-146, 14 FCC Rcd. 2398, 2449 ¶ 101 (1999) ("Section 706 Report").
  20. FCC Broadband Report at 15.
  21. Id.
  22. Broadband Access Report: Recommendations on a Policy and Implementation Plan for Open, Nondiscriminatory Access to Cable Architecture by Internet Access Providers, City of Los Angeles Information Technology Agency, at 3 (June 1999).
  23. FCC Broadband Report at 39.
  24. RFI at 3, ¶ 2.
  25. See FCC Broadband Report at 10.
  26. RFI ¶ 2.
  27. RFI ¶ 2.
  28. FCC Broadband Report at 11.
  29. Seth Schiesel, Concerns Raised as AT&T Pursues a New foothold, New York Times, May 6, 1999 at A-1.
  30. As the FCC and the investment community has recognized, the "deployment of DSL could have an adverse impact on the telephone companies' TI business." FCC Broadband Report at 53 n. 73. DSL services can provide T1 speeds at much cheaper rates than T1 services. T1 services sell for $300 to $3000 per month, in comparison to DSL at $50 to $1000 per month.
  31. FCC Broadband Report at 27.
  32. Einer Elhauge, Analysis of the Propose Internet Freedom Act, Harvard Law School.
  33. AT&T v. Iowa Utilities Board, 119 S.Ct. 721, 754 (Breyer, J., concurring and dissenting).
  34. 224 U.S. 383 (1912).
  35. 708 F.2d 1081 (7th Cir.) cert. denied, 464 U.S. 891 (1983).
  36. Monarch Entertainment Bureau v. N.J. Highway Authority, 715 F.Supp 1290 (D.NJ. 1989).
  37. Twin Laboratories inc. v. Weider Health & Fitness, 900 F.2d 566, 569 (23d. Cir, 1988).
  38. Kramer v. Polluck-Krasner foundation, 980 F. suppp. 250 (S.D.N.TY. 1995).
  39. "An inquiry into the practicality of duplicating the facility should consider economic, regulatory and other concerns." Florida Fuels, Inc. v. Belcher Oil Co., 717 F. Supp. 1528 (S.D. Fla. 1989).
  40. FCC Broadband Report at 41.
  41. FCC Broadband Report at 11.
  42. FCC Broadband Report at 11.
  43. Francis Hong, DSL vs. Cable: A Battle with Two Winners, Sept 30, 1999.
  44. FCC Broadband Report at 27.
  45. Communications Daily, Oct. 19 at 3.
  46. Communications Daily, Oct. 19 at 3.
  47. David Barboza, New Alliance Will Promote Wireless Access to Internet: Alternative Sought for Broadband, New York Times, Oct. 26, 1999 at C-2.
  48. Ferris, Baker, Watts, Bring On the Bandwidth et al., (July 1999) at 9 ("FBW Report").
  49. FBW Report at 10.
  50. Vector Orthogonal Frequency Multiplexing ("VOFDM").
  51. Duncan Martell, Cisco Announces Effort To Set Wireless Standard, http://www.zdnet.com/intweek/stories/news/0,4164,2381655,00.html
  52. FCC Broadband Report at 30.
  53. FBW Report at 79
  54. FBW Report at 82. Yet another competitive challenge that cable modem providers face is that is often necessary to dispatch one or two technicians (a cable professional and a computer professional), which is expensive and is reminiscent of an era where consumers had to wait for "the cable guy." In contrast, there are DSL providers that are now able connect customers' service from a remote location and mail to the customer simple equipment that the customer can install.
  55. FBW Report at 82.
  56. FBW at 82.
  57. Leslie Hillman, Miami-Dade Officials Sidestep Net Fight, Oct. 19, 1999. www.sun-sentinel.com
  58. Cable Communications Policy Act of 1984, Pub. L. No. 98-549, 1984 U.S. Code Cong. & Ad. News (98 Stat.) 2779; FBW at 81.
  59. AT&T News Release, AT&T offers $62 Billion in Cash, Stock, and Assumed Debt and Preferred Equity For Media One, April 22 1999.
  60. AT&T News Release, AT&T, TCI to Merger, Create New AT&T Consumer Services Unit, June 24, 1998.
  61. For instance, the FCC determined that incumbent LECs could not account for equipment, which they have been including as costs in their ratemaking proceedings. Similarly, as incumbent LECs have deployed fiber to replace copper lines, they have generally left the copper lines in the ground, but have not necessarily removed the cost of those copper lines in their depreciation studies.
  62. FBW at 82
  63. FBW at 75.
  64. FCC Broadband Report at 25.
  65. FCC Broadband Report at 26.
  66. FBW at 76.
  67. FCC Broadband Report at 53 n. 68.
  68. FCC Broadband Report at 25 (indicating percentage of two-way cable subscribers).
  69. FCC Broadband Report at 45.
  70. FCC Broadband Report at 43.
  71. FCC Broadband Report at 42, 46.
  72. FCC Broadband Report at 43.
  73. FCC Broadband Report at 34.
  74. Id.
  75. Id.
  76. Id.
  77. FBW Report at 82.
  78. Leslie Hillman, Miami-Dade Officials Sidestep Net Fight, Sun-Sentinel, Oct. 19, 1999. www.sun-sentinel.com
  79. FCC Broadband Report at 39-40.
  80. Einer Elhauge, Professor - Harvard Law School, Analysis of the Proposed Internet Freedom Act.
  81. RFI ¶ 3.3 - 3.5, 3.7 - 3.8
  82. RFI ¶ 3.3.
  83. RFI ¶ 3.3
  84. RFI ¶ 3.4
  85. RFI ¶ 3.5.
  86. RFI ¶ 3.7.
  87. RFI ¶ 3.8.
  88. RFI ¶ 3.3.
  89. FCC Broadband Report at 45.
  90. Leslie Hillman, Miami-Dade Officials Sidestep Net Fight, Sun-Sentinel, Oct. 19, 1999., www.sun-sentinel.com
  91. For example, Broward County determined broadband to be in excess of 144 kpbs, while in San Francisco county, broadband is over 200 kpbs, consistent with the FCC's determination.
  92. FCC Broadband Report at 39.
  93. FCC Broadband Report at 43-44.
  94. RFI ¶ 4.
  95. Id.
  96. RFI at 4.
  97. RFI ¶ 4.
  98. RFI ¶ 4.
  99. The research firm Odyssey L.P has found that "consumers are going directly to the Internet, rather than using an online service. Business Week, AOL Downloads New Growth Plan, October 14, 1999.
  100. FCC Broadband Report at 13.
  101. FCC Broadband Report at 43.
  102. FCC Broadband Report at 42, 46.

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