Sachs, Tauke Reject Safeguards Protecting Broadband Web Surfers


Cable and telephone industry leaders last week united behind a federal policy which deems that safeguards to protect the roaming rights of broadband consumers as they surf the Internet are unnecessary when foul play has been alleged, but not proven.

In separate speeches here Monday to a group of state regulators, National Cable & Telecommunications Association president Robert Sachs and Verizon Communications Inc. senior vice president for public policy and external affairs Tom Tauke both made clear their aversion to anticipatory regulation of broadband networks as advocated by the Coalition of Broadband Users and Innovators and the High Tech Broadband Coalition.

'Vague' response

"Their effort to impose a vague, catch-all requirement of nondiscrimination on broadband-network providers is a solution in search of a problem," Sachs told several dozen state regulators and policy analysts at a broadband forum hosted by the National Association of Regulatory Utility Commissioners and the National Exchange Carrier Association.

The CBUI includes Microsoft Corp., Inc., eBay Inc., and other Internet merchants.

The HTBC is made up of several trade groups, including the Consumer Electronics Association, the Business Software Alliance and the National Association of Manufacturers.

Addressing the same group later that day, Tauke used almost identical phrasing in expressing his opposition to regulation of broadband networks.

"We think the market is working," Tauke said. "What the [Federal Communications Commission] should not do at this stage is to solve a problem that has not yet occurred."

The CBIU is urging the FCC to ensure that cable does not frustrate consumer access to commercial Web sites that might have colliding business interests with cable companies.

The group has cited restrictions on virtual private networks (which allow calling up office computers from home) as the beginning of the slippery slope toward naked anticompetitive discrimination.

But Sachs rejected that claim. He said cable-modem subscribers are free to roam the Net, although operators reserve the right to vary access prices according to a consumer's bandwidth consumption.

"Cable operators have no desire to restrict where a customer can go or what a customer can do on the Net," Sachs said. "In our view, cable broadband Web usage should be managed solely by the broadband consumed, not by the character of its content."

Bandwidth hogs

Managing bandwidth consumption through pricing has become more apparent in the cable industry as evidence of bandwidth-hogging begins to emerge. The CBUI takes the position that cable is entitled to manage bandwidth consumption through pricing mechanisms.

To illustrate the bandwidth-hog issue, Christopher J. Lammers, executive vice president and chief operating officer of Cable Television Laboratories Inc., told the NARUC-NECA forum that 4% of the nation's broadband subscribers were responsible for generating 50% of the broadband traffic.

Over the next few months, the FCC is expected to conclude that like cable operators, phone companies that provide high-speed data service are offering an interstate information service, which the agency has largely refrained from regulating.

A broadband connection includes access not just to data files, but also to voice and video services. Regulators are concerned that broadband will gradually reduce their oversight of cable and phone companies, if the FCC insists that broadband services are shielded from regulation.

"Broadband is the shark that eats all other telecom services. It eats them whole," former FCC chairman Reed Hundt told the NARUC-NECA audience.

Similar regulations

Hundt indicated that a regulatory regime that permitted economic regulation of a Baby Bell phone company's normal dial-tone services but not of the same company's Internet-protocol telephony product was not sustainable.

"The only right technique is regulate similar service similarly. We are not anywhere close to this model. But we actually can get there and broadband is going to make us have to get there," said Hundt, a senior advisor on information industries to McKinsey & Co.

Analysts also warned that regulation of cable broadband could be lethal financially.

"The problem is going to be that if you regulate cable, the investment community is going to flee," said Legg Mason analysts Michael Balhoff.

Anna-Maria Kovacs, president of Regulatory Source Associates, advocated letting IP telephony mature without government intervention.

"If we start seeing a lot activity that indicates that the cable world is going to be regulated as opposed to the telephone world being deregulated, then I think you might very well kind of stop investment in that world and stop voice-over-IP in its tracks," Kovacs said.