It was a report that went right to the roots of United States broadband policy, so it should come as no surprise that it's getting hammered by the telecommunications industry.

Harvard's Berkman Center study of global broadband practices, produced at the FCC's request, is an "embarrassingly slanted econometric analysis that violates professional statistical standards and is insufficiently reliable to provide meaningful guidance," declares AT&T. The study does does nothing but promote the lead author's "own extreme views," warns a response from Verizon Wireless. Most importantly, it "should not be relied upon by the FCC in formulating a National Broadband Plan," concludes the United States Telecom Association.

Reviewing the slew of criticisms, Berkman's blog wryly notes that the report seems to have been "a mini stimulus act for telecommunications lawyers and consultants." (Interestingly, not everything the Berkman study observes is repugnant to the telcos—hint: big direct public subsidies.)

But the ISPs have good reason to go after Harvard scholar Yochai Benkler's survey on "Next Generation Connectivity" around the world, because if the Federal Communications Commission does endorse the study's conclusions in its impending National Broadband Plan, that document might say something like this:

FCC line-sharing policy since 2002 has taken the United States off track when it comes to broadband deployment. The agency should reverse course and require AT&T, Verizon, Qwest, Comcast, Time Warner Cable, and the other big ISPs to open their networks to smaller providers of residential broadband service at regulated wholesale rates. This will foster competition, lower prices, and more innovative broadband offerings across the country, as it has elsewhere.

That's what's at stake in this debate, and it's not a pretty prospect for Big Telecom. But first, let's recap how we got to this point.

Head-to-head

In 2005, the Supreme Court ruled in the Brand X case that the FCC had acted legally when it reclassified cable modem services three years earlier as "information" rather than "telecommunications" systems. Off the "common carrier" hook, big cable no longer had to provide network access to smaller rivals. Following the high court's decision, the FCC extended the same logic to the telcos as well, declaring that the move would allow "wireline broadband Internet access providers to respond quickly to consumer demand with efficient, innovative services and spur more vigorous head-to-head competition with broadband services provided over other platforms."

Since then, this policy has been accepted as a given; that is, until the FCC asked the Berkman Center to take a look at broadband regulation and development practices around the world to help it formulate its National Broadband Plan.

"Talking about 'unbundling,' or more broadly open access in the United States today is a bit like wearing bellbottoms or talking about a national healthcare system," the Berkman study noted. Nonetheless, the Center's report concluded that elsewhere, those policies "are almost universally understood as having played a core role in the first generation transition to broadband in most of the high-performing countries"—a class that doesn't include the US, in large part because of the "information services" decisions the FCC made between 2002 and 2005.

France, on the other hand, is a member of the high speed club. The Berkman report even argues that by opening up its main provider, France Telecom, to smaller competitors, the country overtook Germany in the broadband penetration race and put France in the "first tier of speed . . . with substantial availability of 100Mbps service." Deutschland generally offers 50Mbps to consumers, the survey says.

And Japan is definitely in the winner's circle. Why? Berkman argues that applying unbundling and open access policies to the country's dominant provider, NTT Corporation, allowed competitors like Yahoo!BB to break into the market with free DSL modems, lower prices, and innovative offerings, "most disruptive of which was bundling free VoIP with broadband access as early as 2001."

"Today Yahoo!BB has slightly over a third of the DSL market," the report notes, "NTT has another third, and the remainder is shared among other providers, mostly KDDI and eAccess."

Ditto for Britain, whose "functional separation" policies forced British Telecom to set up a division that sold open access to smaller providers. This didn't result in the level of success that France has enjoyed, but it has allowed the United Kingdom to offer consumers low prices for high speed service. Canada, on the other hand, only undertook "half-hearted efforts" in these areas. "Its results," Berkman concludes, "have been weaker than those of other countries we review here."

Decides for itself

So what are the main criticisms of the report? Verizon and AT&T argue that by coming to its own conclusions, the Berkman study deviated from its mandate to survey the existing literature on global broadband deployment and use.

The study is "merely an advocacy piece for the previously expressed policy opinions of its principal author," Verizon charges. The telco cites FCC National Broadband Plan coordinator Blair Levin's comment, when announcing that the FCC had commissioned the report, that "we don’t want to reinvent the wheel. Knowing what has already been learned will improve our ability to deliver the best possible National Broadband Plan."

But Verizon says that wheel reinventing was clearly the agenda. "Rather than perform a comprehensive review of the literature as it was tasked to do," its filing protests, "the Berkman Paper reinvents its mission." Ditto, says AT&T. The survey "purports to decide for itself" the state of global broadband, rather than conducting a neutral survey of the literature.

Both companies also say that the Berkman study tends to gloss over or ignore literature that doesn't support its main thesis. They fault Berkman for not including, among other documents, a study by Scott J. Wallsten and Stephanie Hausladen suggesting that unbundling policies tend to discourage investment in fiber connections (the report does mention earlier Wallsten writings).

But Verizon's biggest objection is to the Berkman study's characterization of the United States as a "middle-of-the-pack-performer" when it comes to providing broadband services. Based on Office for Economic Cooperation and Development data, Berkman places the United States at 15th place in penetration (per 100 people) and 19th in various high speed contests. These observations obscure the fact that Verizon has taken a leading role in fiber investment, Verizon charges, that the US leads in offering consumers broadband service from two wireline platforms, and that it's a pioneer in wireless broadband.

No cookie cutter



Ironically, while both telcos chide Berkman for coming to its own conclusions about what global broadband deployment practices work best, they also offer the FCC some conclusions of their own. In fact, AT&T draws its recommendations from the very report it criticizes.

Beyond the Berkman study's conclusions, Verizon notes, open access and unbundling would be a bad policy for the United States, largely because of the rural nature of much of the country. "The problem in these rural and low-density areas is that they have been unable to attract even a single entrant," the telco argues. "Imposing unbundling will not only fail to solve this problem, but will only make things worse: if the economics do not currently support a single provider, they are even less likely to support multiple (and potentially an unlimited number of) providers."

The answer, Verizon recommends, is to subsidize broadband deployment in those areas. "That is what other countries have done to deliver broadband to all of their citizens, and it is one of the steps the Commission should take as well."

Here, at last, is something that other countries do that Verizon appears to support. In a similar vein, AT&T sympathetically agrees with Berkman's observation that in various nations direct public investment in broadband has played a significant role, especially in South Korea, Japan, and Sweden. In the case of South Korea, the tab may have come to the equivalent of US$443 billion, AT&T notes.

This is not to say that the United States "should adopt identical programs," of course. "There are no cookie cutter solutions here," AT&T observes. But "there are lessons to be learned from the experience of other countries, and one of those lessons appears to be that direct government encouragement can facilitate deployment and drive penetration."

Good to know that there's at least one observation that Berkman can make without drawing fire from the telcos. The FCC must submit its National Broadband Plan to Congress by February 17.