FCC Broadband Study Argues for Open Access

FCC Broadband, broadband access, and policy

A new study commissioned by the Federal Communications Commission has identified open access networks as a key factor in spurring competition and driving down prices for broadband service.

The study, conducted by researchers at Harvard University’s Berkman Center, drew on an analysis of other industrialized nations’ broadband markets and a myriad of literature on the subject.

“Our most surprising and significant finding is that ‘open-access’ policies … are almost universally understood as having played a core role in the first-generation transition to broadband in most of the high-performing countries,” the researchers wrote.

The 232-page report (available here in PDF format) figures to inform the FCC’s work on developing a national broadband plan, which is due to be presented to Congress in February.

Overall, the study found that the United States lags behind many foreign competitors in the areas of broadband penetration, speed and price.

“Our findings confirm the widespread perception that the United States is a middle-of-the-pack performer,” the researchers wrote.

In Japan and South Korea, the two nations described as “half a generation ahead of the next-best performers,” policies requiring ISPs to open up both wireline and mobile broadband networks have improved competition and driven down prices, according to the study.

By contrast, U.S. policymakers have dismantled the regulatory framework established by a landmark 1996 statute, resulting in an under-performing broadband sector.

“While Congress adopted various open access provisions in the almost unanimously approved Telecommunications Act of 1996, the FCC decided to abandon this mode of regulation for broadband in a series of decisions in 2001 and 2002,” the researchers argued. “Open access has been largely treated as a closed issue in U.S. policy debates ever since.”

The kernel of the study’s open-access argument is that policies requiring large ISPs to allow smaller providers to ride on their networks lowers the barriers to entry and ultimately makes for a more competitive broadband marketplace.

The expense associated with creating a network, such as digging trenches and pulling fiber, are prohibitive, the researchers argued. But once the cost of the initial infrastructure is sunk, it would be a benefit to consumers to allow other providers to access the pipes in the form of leasing agreements.

Bell spinoffs AT&T, Verizon and others already have arrangements with telecom firms to share network resources in what are sometimes known as “special access” partnerships, though the arguments over the pricing of those deals have recently resurfaced on the FCC’s agenda. In response to a chorus of protests over supposedly exorbitant special access fees, the commission has opened an inquiry into the matter.

The study identified the two opposing schools of thought on open-access policies. Incumbents typically argue that regulatory enforcement will remove the incentive to make investments in their networks to improve capacity. Proponents counter that the rules create a more competitive marketplace, where providers are driven to offer faster connection speeds at lower prices.

Surveying the international landscape, the study’s authors clearly side with the latter view.

“We find that in countries where an engaged regulator enforced open-access obligations, competitors that entered using these open-access facilities provided an important catalyst for the development of robust competition which, in most cases, contributed to strong broadband performance across a range of metrics,” they wrote.

The FCC commissioned the study in July, and released the findings late Wednesday. The commission is calling for public comments on the findings.

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