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Craig Parshall, General Counsel


Narrowing-In On National Broadband

March 24, 2010

Last week the FCC finally produced its 376-page National Broadband Plan. Commission Chairman Julius Genachowski was scheduled to testify in the Senate yesterday about the plan, but the hearing was postponed. The breadth of this plan is sweeping and the implications are not yet clear, but I have selected a few choice areas where there are significant questions that the FCC will need to explain.

Justification:  The federal plan has the goal of getting Internet broadband to the almost 100 million Americans who are not currently connected, but these numbers need to be clarified. First, in the footnotes to the “Introduction,” the Plan cites the John Horrigan study that “67% of households have broadband”; yet in the very next footnote from the same study we see the claim that “75% of families have broadband at home….” Which is it? Second, why do nearly 100 million Americans not have broadband? By choice? Because of prohibitive fees? Other factors? The plan indicates that 14 million Americans couldn’t connect even if they wanted to because their area lacks “broadband infrastructure.” However, the FCC’s plan is a “national” one; it doesn’t zero-in on just the 14 million that are left out because of lack of broadband service in their area, it seeks to also reach the other 86 million who could be connected to the web but for some reason have chosen not to.

Internet Taxes:  This will be an expensive proposition. PC World notes that this National Broadband Plan will cost some $15.5 billion of taxpayer money to deploy. The Plan recommends the possibility of a national scheme for “digital goods and services taxation.” Does that mean a federal tax on the Internet? The Plan states that such a national tax would be for the purpose of  “reduc[ing] uncertainty” created by a patchwork of state taxes. But the potential specter of a federal tax on web services and access seems undeniable.

Super-funding Public Broadcasting: The plan sings the praises of PBS and NPR, noting that they have “earned and maintained the trust of the American people.” Accordingly, the plan calls for increased funding to public broadcasting for broadband distribution of its content.

Expansion of Federal Power: The plan proposes one of two legal foundations for its jurisdiction to implement the National Broadband Plan. The first is a “Title I” approach, which as I analyze it gives the FCC a narrower jurisdiction. I called on NRB member Joseph Chautin, an attorney who spends a lot of time on FCC issues, to give me his take on this. He agrees: the Title I framework would, he says, “constrain the FCC’s authority.” The second approach is the Title II option, whereby the FCC would classify Internet broadband services as “telecommunications services.” The public policy result: a much broader exercise of federal agency power. The practical result? “No matter what choices [the FCC] makes, there will likely be legal challenges at every turn,” according to attorney Chautin.