Last week it was announced that President Obama would nominate Thomas Wheeler to replace Julius Genachowski as FCC Chairman. On the surface Thomas Wheeler does not seem like a questionable choice but given the state of things in Washington one can never be sure of anything. Wheeler has been a lobbyist for the wireless and cable industries and served as the president of the National Cable Television Association and CEO of the Cellular Telecommunications and Internet Association. So, he comes into the position rather well versed about the issues facing the industry.
The FCC was established by the Communications Act of 1934 with the mission of regulating interstate and international communications by radio, television and wire. Over time satellite and cable were added to the list. However, the essence of the rules guiding the FCC remained unchanged until the Telecommunications Act of 1996. The principal purpose of the Act of 1996 was to open the telecommunications industry to a broader range of competitors to fuel innovation improving services and pricing for consumers. It has achieved the objective of accelerating innovation and new services but prices continue to rise unabated. Moreover, like so many things written decades ago, the rules governing our industry are often archaic and seldom represent the current state of technology or how services are used.
The Connect America Fund is intended to address the unserved or underserved Americans in rural areas without or inadequate broadband services. The FCC has begun the task of transforming the Universal Service Fund and InterCarrier Compensation to support expanding broadband infrastructure to rural America. While this is a noble task, it ignores that the U.S. in general lags most of the world in how it delivers broadband. Several years ago I initiated a discussion of broadband that examines three elements, Access, Price and Speed. When viewed objectively, our fragmented approach to providing telecom services leaves rural, suburban and urban America behind all of the developed nations and many developing nations.
Wheeler, if confirmed by the Senate, will face the challenge of addressing the needs of 18 million Americans living in rural areas that require broadband to participate in ever diverse online communities, expand business opportunities and meet educational challenges. However, he will also need to address the other 300 million that continue to pay higher per megabit rates than most of the world and at speeds that are embarrassingly slow. The current FCC definition of broadband is 4 Mbps downstream and 1 Mbps upstream. This was established in 2010 and is insufficient to support today’s video and data demands.
America needs an FCC that is willing and able to address the rapidly changing environment of telecommunications and IP communications. The transition to IP and wireless is affecting the direction of communications, business processes, entertainment and education to a point where most of the rules established by the Communications Act of 1996 are no longer applicable. The FCC faces a considerable number of challenges and I’m hopeful Wheeler is the guy to resolve them.