Telecommunications Law
Telecommunications Policy in an
IP World
TCCFUI Seminar
Houston, TX
October 18, 2013

PRESENTED BY

Nicholas Miller
Partne...
Outline
•What Principles Apply?
•The Traditional “Social Compact” in
Telecommunications
•Does IP Technology Change the Ana...
Principles for Local Governments in
IP World
• Consumer protection
 Protection Against Market Abuses
 Minimal Externalit...
Principles for Local Governments in
IP World
• Local Government as landlord/trustee
 Largest landlord to industry
 Right...
Some Basic Economics
•Government should support “efficient
markets”--prices = costs + reasonable return
:

 Test is ease ...
Some Lessons from History
• Telecommunications infrastructure creates substantial barriers
to entry
• Wireline: economies ...
The Traditional “Social Compact”
•Essential (voice) services available to all
• Universal availability
• Long distance ave...
The traditional “Social Compact”
• Competition Where Possible—”Information Services”
• Regulation Where Needed—”Telecommun...
•Does New Technology Change the Analysis?
• Analog to Digital Transmission Format
• Switchboards to Computer Switches
• Co...
Short Answer: Same Principles;
Same Problems
• Principles Don’t Change with Technology Change
• Technology does change “co...
Fiber and Digital Cost Disruptions
• Fiber
 reduces initial cost of construction, but only enough to
support high density...
The Policy Struggle Today
• Propaganda vs. facts—
 IP technology does not eliminate monopoly power;
 Unrestrained monopo...
Role for Local Governments
Local Government Interests
• Consumer Protection

Strategy
•
•
•
•

Oppose Data Caps
Impose Bui...
Role for Local Government
Local Government Interests
• Landlord/Trustee

Strategy
• Fair rent paid by all users
• Authorit...
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Telecommunications Policy in an IP World

  1. 1. Telecommunications Law
  2. 2. Telecommunications Policy in an IP World TCCFUI Seminar Houston, TX October 18, 2013 PRESENTED BY Nicholas Miller Partner, Best Best & Krieger, LLP Telecommunications Law
  3. 3. Outline •What Principles Apply? •The Traditional “Social Compact” in Telecommunications •Does IP Technology Change the Analysis? •The Issues and Local Governments Telecommunications Law
  4. 4. Principles for Local Governments in IP World • Consumer protection  Protection Against Market Abuses  Minimal Externalities injuring third parties  monopoly power—unfair prices; unfair availability of services  Quality of Life of Community • Economic Development  Balanced tax burden  Efficient use of community resources  Promote innovation  “Server of last resort” Telecommunications Law
  5. 5. Principles for Local Governments in IP World • Local Government as landlord/trustee  Largest landlord to industry  Right of Way is the most valuable resource held in public trust • Local Government as user  “Anchor tenant”  Bulk Purchase--More with Less  Fair prices and services to reduce taxpayer burden Telecommunications Law
  6. 6. Some Basic Economics •Government should support “efficient markets”--prices = costs + reasonable return :  Test is ease of market entry  Best evidence of problems is “value of service” pricing: vendor has power to segment market, charging discriminatory prices based on each consumer group’s value of service Telecommunications Law
  7. 7. Some Lessons from History • Telecommunications infrastructure creates substantial barriers to entry • Wireline: economies of scale  no competitive “last mile” infrastructure • Wireless: artificial scarcity  Limited spectrum  limited number of providers  Telcos and Cable Operators behave like railroads: discriminate in prices, services, and areas served Telecommunications Law
  8. 8. The Traditional “Social Compact” •Essential (voice) services available to all • Universal availability • Long distance averaged within and between states • Subsidize where needed  REA loans  Operating subsidies to rural providers  Rate subsidies for low income households Telecommunications Law
  9. 9. The traditional “Social Compact” • Competition Where Possible—”Information Services” • Regulation Where Needed—”Telecommunications Common Carriage” • Computer II: regulate transmission facilities (natural monopoly), not software and information services (competitive) • 1982 breakup of Bell System—ownership and control of local monopolies separated from competitive long distance and manufacturing businesses • 1996 Telecomm Act  As local facilities become competitive, forbear regulation; until then, competitive carriers must have access at regulated prices  “Information Services” (over last-mile facilities) are competitive Telecommunications Law
  10. 10. •Does New Technology Change the Analysis? • Analog to Digital Transmission Format • Switchboards to Computer Switches • Copper to Fiber Lines • NPSTN to Internet Protocol Networks Telecommunications Law
  11. 11. Short Answer: Same Principles; Same Problems • Principles Don’t Change with Technology Change • Technology does change “cost structures”—so monopoly power may be  disrupted or  relocated within the supply chain Telecommunications Law
  12. 12. Fiber and Digital Cost Disruptions • Fiber  reduces initial cost of construction, but only enough to support high density overbuilds  Increases scale economies--costs decline with increased data volume—increasing monopoly power of first builder  Artificial Data Caps • Digitalization and Packet Switching  reduces costs of switching  allows multiple routing within and between networks—if interconnected Telecommunications Law
  13. 13. The Policy Struggle Today • Propaganda vs. facts—  IP technology does not eliminate monopoly power;  Unrestrained monopoly power will harm your community • Providers using 3 step strategy:  Use fiber/coax capacity to prevent overbuilds  Create artificial scarcity to drive discriminatory prices: data caps; refusal to serve  Claim “effective competition” to eliminate carrier obligations Telecommunications Law
  14. 14. Role for Local Governments Local Government Interests • Consumer Protection Strategy • • • • Oppose Data Caps Impose Build outs Universal Service Carrier of Last Resort • Economic Development • • • • Non Discrimination Joint Trenching Right of Way Management Regulator-Zoning Telecommunications Law
  15. 15. Role for Local Government Local Government Interests • Landlord/Trustee Strategy • Fair rent paid by all users • Authority to control siting • User • Use Bulk Purchase Power • Authority to Self-Provision • Monitor FirstNet Telecommunications Law

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