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Few FCC issues have elicited the sustained attention of the general public, public interest groups of all persuasions, the media, and the cable, telco and wireless industries as Net Neutrality.  It is one of those rare issues that can drive a united front among the major Internet services providers.

In parallel, the Commission, guided by the Chairman and with the Office of Strategic Planning & Policy Analysis doing the heavy lifting, is in the midst of significant, though less widely reported, efforts to address a far more pressing issue for many of the country’s rural communities:  For all intents and purposes, these communities do not have broadband services and find themselves on the wrong side of the “Digital Divide.”

Net Neutrality – The Political Stakes Keep Rising

The FCC’s proposal that sought to “thread the needle,” between the perceived risks of no regulation of the Internet and the D.C. Circuit’s opinion in Verizon v. FCC, has proved a lightning rod for criticism, stemming principally from the FCC’s tentative conclusion to “permit broadband providers to engage in individualized practices [to accommodate some form of “fast lane” agreements], while prohibiting those broadband provider practices that threaten to harm Internet openness.”  In an early defense of his proposal and looking to placate its critics, FCC Chairman Wheeler expressed a willingness to impose Title II regulation, if the agency’s proposal proves ineffective.

The political winds are now blowing in the direction of some form of Title II regulation.  House Minority Leader Nancy Pelosi (D-Calif.) has called for Title II regulation as have other members of the House.  In response, the cable industry recently “took the gloves off” noting that Title II regulation will inevitably lead to a “real Internet Slowdown” in contrast to the Internet Slowdown Day staged by several technology companies supporting Title II regulation.  The cable industry’s warning has not slowed the momentum toward Title II regulation.

President Obama recently issued a surprisingly strong statement on the importance of net neutrality that may drive the FCC toward a decision decidedly adverse to the positions of the major ISPs. This drama will play itself out in the coming months as the Chairman takes one cue or another and the FCC staff wades through the 3.7 million (and counting) filings.

Rural Broadband—A More Pressing Problem

In the author’s view, the shortfall in rural broadband availability is largely the result of leaving broadband deployment “to the market.” The major cable operators and the telecom conglomerates that control the price cap ILECs operate high capacity broadband networks in metropolitan areas, often in competition with each other and, sometimes, with those of aggressive start-ups, but the Nation’s rural and ex-urban broadband markets are largely ignored by these major services providers.

The cable operators have always defined their service territories, and apparently will continue to do so.  Comcast’s proposed acquisition of Time Warner contemplates an even larger, urban-based cable operator.  Neither entity has proposed extending their service territories into rural areas or acquiring smaller cable operators to enhance the downstream and upstream speeds of rural operators.

Verizon has essentially frozen its FiOS buildout and has exited the local landline business in four states: Maine, Vermont, New Hampshire and West Virginia.   AT&T has announced broadband upgrades in selected cities—often in response to Google’s fiber initiatives, which in and of themselves, has given us “fiberhoods” in light of the tech giant’s narrowly defined fiber buildouts.  Yet, AT&T is reserving the option not to proceed in any market if the municipal right-of-way policies or the economics of a planned buildout don’t meet expectations.  The “flip-side” of AT&T’s announcements is that the mega-carrier is unwilling to extend these measured commitments to the thousands of communities in which it operates the local ILEC.

To its credit, the FCC is aggressively building upon its USF and Intercarrier Compensation Transformation Order affirmed by the 10th Circuit’s recent opinion, implementing major changes in the distribution of USF monies to extend meaningful broadband connectivity to rural communities. This ongoing policy shift is grounded in the widely-held belief in the importance of the Internet, elegantly set out in the bestseller, The Second Machine Age, in which the authors emphasize not only the benefits that the Internet provides to individuals, but also value the Internet confers on society as it brings more “people into the community of potential knowledge creators, problem solvers and innovators.”

Next: Highlights of the FCC’s Rural Broadband Policies