FCC Chairman Wheeler bullish on broadband future and net neutrality impact

FCC Chairman Tom Wheeler at the Brookings Institution.

On Friday, June 26th, U.S. Federal Communications Commission Chairman Tom Wheeler visited the Brookings Institution for an event titled Maximizing the Benefits of Broadband. Wheeler’s speech at the event brimmed with excitement over the near future of broadband and the effects it will have on the overall economy. Noting that no other network technologies have changed the socioeconomic dynamic of America since the railroad and telegraph systems of the 1800s, Wheeler said that “we are on the cusp of when our broadband networks will prove even more transformative than the networks of the 19th century.”

The high-speed Internet access networks known collectively as broadband, which connect our homes, businesses, wireless devices and more to data services, are expected to create an incredible boon for business and industry. The United Nation’s International Telecommunications Union points out that broadband development boosts a nation’s economy in multiple ways, including investment in infrastructure, improved enterprise productivity and more valuable digital home services.

At the top of his remarks, Wheeler gave ample credit to Blair Levin, the event’s moderator and the former executive director of the National Broadband Plan. “In the first line of the National Broadband Plan, it states that broadband is the defining network of the 21st century,” Wheeler said. The development of broadband based upon the national plan has enabled the creation of successful tech-based business models which would never have been thought possible in earlier generations. Wheeler noted how Uber is the country’s largest taxi company but owns no cars, Airbnb is the largest overnight stay company in the world but owns no hotels and that Amazon.com (NASDAQ:AMZN), the country’s fastest growing retail company during 2013, owns no showrooms. As Wheeler argues, these and other companies are leveraging broadband access in such a way that resources can be assembled and delivered to customers in novel ways.

The nature of broadband has been changing in a way that Wheeler believes will spur even more robust data services in the near future. A shift from hardware networks to software-defined networks, which have given network administrations the ability to directly programming networks and dynamically adjust traffic flow, both of which are incredibly useful for enterprises which may implement bring your own device (BYOD) schemes with their employees or are just looking for ways to cost-effectively scale up their resources. “In the old days, it was necessary to add a physical circuit to increase capacity,” Wheeler said. “Today, it’s often just a function of adding a computer.” Network virtualization is being adopted by major service providers such as AT&T (NYSE:T), which is planning to transition 75 percent of its network architecture to software-defined networks by the year 2020.

[Internet-Things]

As network administration becomes more cost-effective it drives down the costs of operating those networks. Virtualization of network operation slashes real estate costs for companies that can replace central office switching systems with software. “What used to require floors and floors of can now be handled by a few racks of computers,” Wheeler said. The FCC chairman also credited the progress of Moore’s Law, the compound doubling of computing power causing greater functionality and lower cost devices every few years, for driving the current revolution in network economics. Wheeler pointed out that current advances in networking are even increasing the throughput of bandwidth-constrained network cables made of copper by breaking data transmissions into parts and determining how to send those strands in the most efficient way possible.

The FCC is taking a number of steps to try and promote competition among broadband service providers, one of the most highly anticipated of which is the incentive auction of broadcast television airwave spectrum which is currently scheduled for the first quarter of 2016. The auction is an attempt to purchase spectrum from TV broadcasters so that it can be resold in a later auction to wireless service providers. Wheeler stated that the FCC’s most tangible role in supporting network innovation and development is to make more licensed and unlicensed spectrum available. In the past, the FCC has shown a desire to increase access to unlicensed spectrum, which is utilized by wireless networks, and in March 2014 the agency issued rules that freed up 100 megahertz worth of spectrum within the 5 gigahertz band for unlicensed use in an attempt to relieve traffic congestion in WiFi hotspots.

Despite a court challenge to the incentive auction filed by the National Association of Broadcasters, which was recently rejected by the D.C. Circuit, Wheeler remarked that he had been encouraged by the response of some broadcasters to the voluntary incentive auction. He did later note, however, that the auction and the future development of wireless services would require a fundamental change in the mentality of broadcasters who own spectrum. “If you can help them see the value of parting with it or taking a new approach, it often lets the scales fall from their eyes,” Wheeler said during the moderated question session. Allocating more spectrum for wireless developers would also help the U.S. to play a strong role in the development of fifth generation, or 5G, mobile networks the way it has with 4G Long-Term Evolution (LTE) networks.

Wheeler stayed away from mentioning net neutrality by name but he did have strong words about the Title II reclassification of broadband established by those rules. He voiced his opinion that the market oversight established by the FCC’s Open Internet rules is a necessary aspect of an effective regulatory model for today’s new network realities. “It’s a simple statement of fact: broadband is the most powerful and pervasive network on the planet,” Wheeler said. “Suggestions that that kind of platform, that kind of pervasiveness, can exist without oversight are unthinkable.”

We’ve discussed the FCC’s net neutrality rules before on IPWatchdog and have pointed out how certain aspects of that order could hurt the ability of Internet service providers to innovate new services to the detriment of American consumers. Wheeler did explain that the FCC would not practice a terribly active role in enforcing net neutrality but would instead act like a referee making sure that the game was played fairly without calling the plays, according to a metaphor given by the FCC chairman. “Competitors should advocate for themselves,” Wheeler said. “Our job is not to substitute the FCC for what should be tough competition.”

Wheeler also spoke to the need to distribute broadband services to those demographics which are currently underserved by these data networks. He discussed a homework gap affecting 5 million students between the ages of 6 and 17, about 20 percent of all students in that age group, who don’t have high-speed Internet services and so are cut off from many of the same educational resources that other students’ families can afford. Wheeler discussed a need to promote rural access to broadband and brought up the FCC’s support of price cap carriers to deploy rural broadband in recent years. He also disclosed a new online capability for the FCC’s website launched by the agency last year which enables a customer support video line for those using American Sign Language to communicate.

The major takeaway from Wheeler’s appearance at the Brookings Institution seems to be that we may be nearing the end of the beginning of the Internet age. Over-the-top content providers like Netflix and Hulu are upending the traditional relationship between consumers and broadcast television. Major challenges to spectrum availability will be posed by the Internet of Things, the sector of Internet-connected objects which is expected to include 50 billion devices by the year 2050. The incentive auction being administered by the FCC will be an early proving ground for Wheeler’s vision of extensive broadband services development in the next few years.