What Is “Advanced Telecommunications Capability” And Why Does The FCC Examine It?

The FCC’s new Section 706 inquiry is more controversial then you’d guess

On August 6, the Federal Communications Commission voted on a seemingly routine notice initiating its statutorily mandated annual inquiry into the state of broadband deployment in the United States. (Actually, as explained below, it is measuring something somewhat different.) Collection and analysis of data is essential to effective policymaking, and Congress has directed that many agencies compile reports of one kind or another.

Solicitation of public comment on data collection for a wonky report might not seem to be controversial, but the issuance of the notice generated vociferous reactions from the two Republican Commissioners. Commissioner Ajit Pai dissented in part and Commissioner Michael O’Reilly reluctantly concurred, complaining that “the [Notice of Inquiry] is not designed to provide an honest assessment of broadband deployment in the U.S.”

The reason that this matters is because the FCC’s assessment of broadband deployment has important policy and regulatory consequences.

Section 706(b) of the Telecommunications Act of 1996 provides that

The Commission shall, within 30 months after February 8, 1996, and annually thereafter, initiate a notice of inquiry concerning the availability of advanced telecommunications capability to all Americans (including, in particular, elementary and secondary schools and classrooms) and shall complete the inquiry within 180 days after its initiation. In the inquiry, the Commission shall determine whether advanced telecommunications capability is being deployed to all Americans in a reasonable and timely fashion. If the Commission’s determination is negative, it shall take immediate action to accelerate deployment of such capability by removing barriers to infrastructure investment and by promoting competition in the telecommunications market.

It is the final sentence of Section 706(b) which makes this report so important. Until 2010, the FCC annually determined that “advanced telecommunications capability” was, in fact, being “deployed to all Americans in a reasonable and timely fashion.” However, in 2010, in the first inquiry conducted by an Obama-appointed FCC Chairman, the FCC concluded that deployment was not proceeding “in a reasonable and timely fashion.” This triggered the last sentence, which directs the FCC to “take immediate action to accelerate deployment of such capability....”

Each year since 2010, the FCC has made a negative determination with respect to Section 706(b). The FCC has invoked the extra powers conferred by Section 706(b) on a number of occasions, most notably in its first Open Internet (“net neutrality”) decision in 2010 and its massive 2011 overhaul of the universal service and intercarrier compensation systems. The FCC’s use of Section 706(b) was challenged in both instances, but two courts, the U.S. Court of Appeals for the Tenth Circuit and the U.S. Court of Appeals for the District of Columbia Circuit, ruled that Section 706(b), does indeed, empower the FCC to take strong regulatory steps. (The latter decision ultimately vacated much of the FCC’s Open Internet rules, but not because of problems with the FCC’s invocation of Section 706(b.)

There are several important elements of the new Section 706 inquiry. For one thing, the FCC drew an important distinction:

“[A]dvanced telecommunications capability” is a statutory term with a definition that differs from, and in fact includes, the term “broadband.” In this Inquiry, we no longer equate the term “broadband” with the statutory term “advanced telecommunications capability,” but do necessarily consider the availability of various broadband services, that contribute to advanced telecommunications capability, in our analysis under the statute.

(Citation omitted.) The effect of this revised focus is to broaden the scope of the services and practices subject to the FCC’s analysis.

Should wireless service be considered a component of "advanced telecommunications capability"?

Another major development is the FCC’s consideration of whether it should include wireless service as a component of "advanced telecommunications capability," so that the Section 706(b) standard would require access to broadband by both wired and wireless providers. This can be tricky since, as the FCC points out, “There are a number of factors that appear to indicate that mobile and fixed [wired] broadband are different services that address different consumer telecommunications needs and different components of the definition of advanced telecommunications capability.”

Broadband speed has been, and remains, central to the FCC’s inquiry. Until now, the FCC has used upload and download speed as the principal determinant of the adequacy of service. For years, the FCC was criticized for using unrealistically slow speeds to define broadband and to justify its finding that the pace of deployment was adequate. However, in its February 2015 report, the FCC significantly raised the threshold for what it will consider broadband speed from 4 Mbps download/1 Mbps upload to 25 Mbps download/3 Mbps upload. (This action was criticized from the other direction, as it facilitated the FCC in finding that deployment is not proceeding satisfactorily.) The 25/3 speed was an extremely important factor in the FCC’s review of Comcast’s unsuccessful quest to buy Time Warner Cable. Using these numbers, the FCC staff found that Comcast had a dominant position in the broadband market; Comcast argued for a lower speed which would have had the effect of minimizing its control. The FCC intends to use the 25/3 definition again this year, and proposed using a reasonably high threshold of 10 Mbps download/1 Mbps upload for wireless broadband.

Finally, and importantly, while broadband speed will surely continue to be the most important consideration, the FCC proposed for the first time to take other factors into account. By emphasizing the broader term “advanced telecommunications capability” the FCC proposed to look at a number of additional indicia of deployment, including latency and consistency of service. The FCC also asked whether it should evaluate other determinants of whether service is actually available to consumers, including pricing, data allowances and adoption. Use of those data could have a significant impact on future findings, as they relate to social and economic obstacles to broadband access and could lead to findings that the mere availability of high speed connections would not justify a finding of “reasonable and timely” deployment if the cost or terms of such access rendered access effectively unavailable.

Section 706(b) is a potent tool for an activist FCC. Chairman Tom Wheeler and his Democratic colleagues appear determined to make sure that they have the data necessary to use the power conferred by Section 706(b).

By Andrew Jay Schwartzman.