Pai’s FCC is rebooting broadband facilities competition and 5G investment
© Greg Nash

Let the competition to build 5G broadband facilities begin!

Federal Communications Commission Chairman Ajit Pai in his early actions and speeches is returning the FCC to supporting the policies that delivered the most facilities-based broadband competition and private investment of any country in the world, and that also produced rapid deployment of at least five competitive broadband facilities to 95 percent of Americans in a little over a decade.

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Pai and Commissioner Mike O’Rielly know that promoting facilities-based broadband competition proved highly successful before, and it can be as successful again in ensuring that America’s current lead in 4G LTE broadband deployment continues with strong 5G private investment and deployment going forward.

 

Many don’t appreciate the huge 5G private sector infrastructure buildout ahead, or the tens of billions of dollars in private investment required to advance America to a 5G world that broadly will enable mobile connectivity at gigabit speeds.

That’s because 5G networks produce gigabit speeds by “densifying” infrastructure facilities with millions of new small cell antennas that in turn must each have their own individual installed backhaul facilities of fiber and/or fixed-wireless leveraging now plentiful, high-capacity, short-distance, 5G millimeter-wave spectrum.

What many may not realize is that hiding underneath the debate over Title II net neutrality over the last few years has been the FCC’s official view of competition and the market incentives it creates for private investment.

The new FCC majority clearly agrees with the bipartisan passage of the 1996 Telecom Act that voted to transition away from monopoly regulation towards competition – nearly unanimously taking the position that monopoly regulation was a problem and competition the solution for American consumers.

Pai also understands if the FCC encourages competitive broadband-facilities investment, the FCC is promoting real market competition based on competing technologies, network capabilities and business models; and on meeting different consumer needs, means, wants, and uses of broadband.

That market-driven policy is a proven recipe for an investment multiplier effect, economic growth, and job creation.

However, to get there, the Pai FCC must become the un-Wheeler FCC. (The former Democratic chairman stepped down on Jan. 20.)

That’s because the previous FCC could not have been more hostile to facilities-based broadband competition and private investment.

It ruled competition could not protect net neutrality, and that only the strongest, FCC Title II, monopoly regulations could protect net neutrality.

It treated competitive companies as if they were monopolies with no competitive pressures of losing customers if their services did not best satisfy them.

It created rules that allowed the FCC to mandate prices of zero for use of broadband providers’ backbone infrastructure with no chance for cost recovery, and concluded that sponsorship payment by an edge provider that lowered a consumer’s data bill was somehow bad for consumers.

It tried to force content creators and pay-TV providers to provide $200b worth of contractual copyrighted content for free to OTT edge providers like Google-YouTube, Amazon, and Facebook.

And the Wheeler FCC created incalculable investment risk overhang by: anticompetitively promoting the construction of municipal Government Owned Networks to supplant private broadband networks; by asserting unlimited regulatory power; and imposing an open-ended “gotcha” enforcement standard that meant most any broadband practice could have become illegal in the future after the fact.

In sum, Pai is flipping the FCC’s previous policy of de facto discouraging facilities-based broadband competition and investment, towards a much more encouraging one.

This profound improvement in overall FCC policy will spur a multi-year surge in new and additional 5G private investment, much more and faster than originally was planned prior to November.

Finally, if the Trump administration and Congress pass tax reform that lowers America’s corporate tax rate from 35 percent to 15-20 percent in this Congress, that would provide yet another surge in 5G private investment in America’s digital infrastructure.

America’s 5G future is looking much brighter.

Scott Cleland served as deputy U.S. coordinator for international communications and information policy in the George H. W. Bush administration. He is president of Precursor LLC, an internetization consultancy for Fortune 500 companies, and chairman of NetCompetition, a pro-competition e-forum supported by broadband interests.


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