FCC Could Expose Cable to Subsidy

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As part of a major overhaul of broadband regulation of local phone
companies, the Federal Communications Commission sought comment Thursday on
whether cable operators should contribute a portion of their Internet-access
revenue to the local-phone-service-subsidy pool.

Cable operators contribute to the universal-service fund to the extent that
they provide local phone service, but cable programming and Internet revenues
have never been swept into the program.

The FCC did not say whether cable contributions to universal service would
replace the franchise fees cable pays to local governments on cable-service
revenue.

More broadly, the FCC voted 3-1 to classify
broadband access provided by local phone companies as an
information service with a telecommunications component.

The agency said the classification applies whether Internet-access providers
lease or own transmission facilities.

The FCC also asked whether historic requirements -- including the mandate
that phone companies sell underlying transmission capacity to third parties --
should be modified or eliminated in the broadband context.

The commission is concerned that the funding for the universal-service
program will shrink as cable operators and phone companies deploy broadband.
Information-service providers historically have not been required to contribute
to universal service.

Republican FCC chairman Michael Powell said it was time to move on
overhauling broadband policies in order to remove investment risk induced by
regulation and to allow phone companies to fulfill consumer demand.

'As I have said on occasion and as many others have, broadband deployment is
the central communications-policy objective of the day,' he said. 'It's clearly
now time, in my opinion, for fewer words and more actions.'

However, Democratic commissioner Michael Copps said the FCC was embarking in
a new direction at odds with policy mandates handed down by Congress.

'I fear we are outdriving the range of our headlights,' Copps said.

Republican FCC member Kevin Martin -- who has spoken out recently about
subjecting cable to universal service -- dissented in part from the decision and
said he shared some of Copps' concerns.

Martin said every level of government should refrain from viewing Internet
access as 'a potential stream of revenue' to fund government programs.

'At this stage, I think it is premature to be asking
whether we should be imposing such a federal fee on top of Internet access,' he
said. 'I think the questions contained in here are too broad.'

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