Ferree: Broadband Dereg, for Now

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In a wide-ranging speech Sunday to local regulators meeting in Miami, federal
cable regulator W. Kenneth Ferree promoted broadband deregulation over
regulation mainly because consumer adoption of high-speed services is trailing
the whiz-bang hype associated with the technology.

Ferree, chief of the Federal Communications Commission's Cable Services
Bureau since May, said that because the broadband market is evolving gradually
as a replacement technology to dial-up Internet access, regulators should show
restraint unless market failures surface.

'I think I can say with a high-degree of confidence that our restrained
approach thus far has been successful and that the rapid deployment we are
already seeing of broadband capacity, in part, has resulted from this approach,'
Ferree said in prepared remarks to the National Association of
Telecommunications Officers and Advisors.

But Ferree added that the FCC's policy would change if circumstances warrant
in order to ensure that 'consumers are not left out in the cold.'

Ferree cited statistics showing that by the end of the year, 77 percent of
cable households will have cable-modem service available and 50 percent of
qualified digital-subscriber-line homes will have that competing service
available.

Given that level of deployment, he added, blame should not be laid at the
doorstep of 'narrowband' regulators for the fact that only 8 million homes
subscribe to broadband today. Consumer adoption, he predicted, would start to
take off when broadband-content services whet the appetite of subscribers.

'It baffles me that anyone would expect consumers to flock to broadband
connectivity on the hope that someday there will be broadband applications and
content that are worthwhile,' Ferree said, apparently joining the ranks of those
who believe that always-on high-speed access is not a broadband killer
application.

While Ferree made plain his desire to distance regulators from any failure in
the broadband market, he didn't promise to shut down the FCC's examination of
the cable broadband market or cable's interactive-television plans, as Comcast
Corp. urged the commission to do in comments filed last week.

As an example that regulators can mess up, Ferree said cable regulation in
the early 1990s hurt the industry and stalled investment in new technology -- a
point FCC chairman Michael Powell has made.

'It has been said that the cable industry missed an entire upgrade cycle in
the mid-90s because of rate regulation,' Ferree said. 'We might, in fact, be
further down the road to the broadband world if market forces had been allowed
freer rein in the past decade.'

In other positive news for the cable industry, Ferree said cable-rate
increases should not be viewed in isolation, but instead in the context of cable
operators using that money to invest in technology.

Regulators, he added, can't impose policies that require stable cable prices
on the one hand and increased cable investment in broadband on the other.

'As regulators, we should not delude ourselves into thinking that we serve
the public interest by sacrificing either goal to the other,' he said.

Lastly, while recognizing cable's traditional dominance, he said
technological primacy is not a guarantee, noting that the telephone overtook the
telegraph, off-air television overtook radio, cable TV encroached on free TV and
cellular phones are pressuring the landline-phone market.

'Will another technology displace cable anytime soon? Maybe, maybe not. From
a consumer standpoint, DBS [direct-broadcast satellite] is looking more and more
like a mass-market solution,' Ferree said.

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