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Misunderstanding the fundamentals

By Scott Bradner

In mid-September the US House Energy and Commerce Commission took its first shot at trying to set the ground rules for telecommunications reform. The House Commission was apparently trying to produce a more balanced starting point than the strongly pro-carrier bill proposed by US Sen. John Ensign (R-Nev.). (See Making Verizon giddy http://www.networkworld.com/columnists/2005/080805bradner.html) The bipartisan House effort was spearheaded by three Republicans and two Democrats and does, in my opinion, succeed in being a bit less of a ILEC rescue plan than Ensign's proposal but since it gets some of the basics wrong it far too soon to tell if something helpful will come out of it.

The new document (http://energycommerce.house.gov/108/News/09152005_staff_disc.pdf) is a staff discussion draft and, I hope, will undergo significant modification before it gets formally introduced. This draft proposes federal regulation of broadband data and video providers and of VoIP providers that would preempt any state or local regulations. But the definitions in the draft are somewhat funny.

According to the draft, "broadband Internet transmission service" (BITS) is a service that offers "the transmission of information in a packet-based protocol, including TCP/IP protocol or a successor protocol, regardless of facilities used." Likewise, a "broadband video service" is a service that offers a "two-way, interactive service" offered, with or without fee, to the public "regardless of the facilities used" and "integrates, on a real -time and subscriber customizable basis, a video programming package" and "integrates the capability to access Internet content of the subscriber's choosing. The draft also defines a "VOIP service" to be a "packet-switched voice communications service ... effectively available directly to the public, regardless of the facilities used; and enables a subscriber to send or receive voice communications ... over a broadband transmission service to or from any subscriber with a telephone number ... or other identification method as designated by the commission."

The draft would require all BITS, broadband video and VOIP service providers to register with the government before they could offer service (there is a grace period for those providers already in business).

What's wrong with this picture? Note that none of the definitions require a facilities-based service provider. All of these services can be offered over any infrastructure that supports IP. In theory, they could all be provided by service providers anywhere in the world, as long as there is sufficient bandwidth in the communications path. The draft does not seem to understand this basic feature of the Internet. Also, the US has never required registration of Internet-based service providers and such a move would have a big, and negative, impact on service innovation. Based on the current wording, Apple would have to register in order to provide iChat service.

The draft does have good words about BITS providers not getting in the way of subscribers use of the Internet and to not "block, impair, or interfere with the offering of, access to, or use of" Internet content or services and specifically permits governments to offer these services to the public as long as they follow the same rules as commercial providers have to.

If the House staff ever figures out how the Internet actually works and redoes the draft to separate regulation of physical plant from regulating, where actually required, services that use that physical plant we might be getting somewhere.

disclaimer: Harvard has schools who debate the need or non-need for regulations but I did not ask them about this article so the above separation plea is my own.