Oops! FCC forgets national security

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The Immigration and Naturalization Service raised a storm of public criticism one year ago when the agency gave posthumous approval to the visas of three of the Sept. 11 hijackers. An angry President Bush vowed to reform the agency and workers involved in the approval were reprimanded. INS is not the only one to make a security-related mistake. Recently the Federal Bureau of Investigation had to remind the Federal Communications Commission, an agency headed by a former Army officer, that it had "reached [a] declaratory ruling...[which] could seriously weaken...public safety, law enforcement, and national security underpinnings."

The FBI was referring to the FCC's decision in dockets GN 00-185, "Internet Over Cable Declaratory Ruling," and CS 02-52, "Appropriate Regulatory Treatment for Broadband Access to the Internet Over Cable Facilities," in which the agency declared that "cable-modem service is an interstate information service." These two dockets have to be analyzed in conjunction with four other dockets—CC 01-337, CC 01-338, CC 02-33,CC 02-39—to get all the nuances, but the uniting principle is the FCC's intent to free incumbent telephone companies from their open-access obligation.

Open access means incumbents must allow their networks to be used by competitors and has been FCC policy since 1996. It has never been applied to cable companies. However, by defining cable-modem service as an interstate information service, the FCC may impose open access on cable companies, meaning their hybrid fiber/coaxial networks will be used by competitors, at the FCC's option. Cable companies want to avoid open access and are not likely to resist the FCC when it rescinds open access for incumbents, provided cable networks are treated the same. The FCC is using regulatory discretion to intimidate the cable industry, while the agency frees incumbents from open access. The reward? The two industries divvy up the entire Internet access market, and no one else gets a share. It is like a town sheriff imposing a turf settlement on two street gangs but forgetting the citizens.

The FCC justifies itself: "First and foremost, we are guided by our statutory mandates to encourage the ubiquitous availability of broadband to all Americans." No one knows what "broadband" means. The term appears only once in the 1996 Telecommunications Act, has no reasonable meaning, statutory or otherwise, and was repudiated by the FCC in August 2000, docket CC 98-146, "Inquiry Concerning the Deployment of Advanced Telecommunications...Second Report": "In light of its now common and imprecise usage, we decline to use the term 'broadband' to describe any of the categories of services on facilities that we discuss in this report." Also, in March 2001, Corning's vice president of government affairs, Tim Regan, told the Senate Commerce Subcommittee on Communications, "In the digital world, the notion of broadband really doesn't apply. The information-carrying capacity of a digital network is described as a bit transfer rate...the term 'broadband' is so imprecise, it is probably useless."

The FCC resorts to a second justification: "[B]roadband services should exist in a minimal regulatory environment that promotes investment...[W]e seek to remove regulatory uncertainty that ...may discourage investment...innovation"—a reference to the assertion by the incumbents (who have convinced Supreme Court Justice Stephen Breyer of their claim and have caused him to dissent from the majority opinions ruling against the incumbents), that open access discourages them from innovation and investing in their networks. But Charles Ferguson, writing in the Brookings Institution Policy Brief of July 2002, documents that incumbents have little interest in innovation and investment, dating back to at least 1992, long before open access was applied: "Unlike every other information technology industry, the ILECs [incumbent local-exchange carriers] engage in virtually no research and development. With the exception of 1999-2000, their network capital spending has remained flat for over a decade."

Vint Cerf, well known as a founder TCP/IP protocol and WorldCom's senior vice president of Internet architecture, told the FCC, "[T]he notion that the extension of fiber further into the network somehow creates a wholly new network that should be closed off to competitors is...without merit...should the United States government decide that it does not have the will or inclination to require that one of two dominant [Internet access] modalities—cable—create an open platform, it should not lack the wisdom to ensure that the one remaining platform—telephony—remains open." Also, nearly 100 cities, large and small, oppose the FCC, because it preempts their rights to manage rights of way, establish consumer protection, set service standards, and impose franchise fees. Many cities have appealed the FCC's ruling and expect to take the case to the Supreme Court. Comments by the city of Fairfax, VA, are typical: "The FCC's ruling...ignores the constitutional limitations on its authority...and quite simply is lacking in common sense protection for American consumers."

Teletruth, a coalition of residential and small-business Internet consumers, says the FCC ignored its obligations in the Federal Regulatory Flexibility Act of 1980, which requires "the head of the agency to ensure that proactive steps are taken to engage participation by small entities in the review of the rule during the early stages of the rulemaking." But Teletruth claims the "FCC has...eliminated the chance [of comments] from the small-business participants," because the FCC did not make its rulemaking known to the Small Business Administration and other governmental agencies used by small businesses.

Just like it forgot about small businesses and consumers, the FCC forgot about the FBI and forgot to declare cable-modem communication as subject to the Communications Assistance for Law Enforcement Act (CALEA). The FBI wrote: "[The FCC] reached its declaratory ruling without...requesting input regarding CALEA...[which was] enacted to preserve [our] eroding abilities to lawfully intercept communications...[The ruling might] be viewed as exempting cable-modem service or other broadband facilities from CALEA. We...ask that...final rules provide for [CALEA]."

Has anyone told the FBI it should not have to ask?Th 108663

Stephen N. Brown writes on public policy in telecommunications. He can be reached by e-mail at policywork@aol.com or telephone: 615-399-1239.

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