Subject: Regulatory Reform for Convergent Media (fwd)

From: Miles R Fidelman <[email-masked]>
Date: Sat, 16 Oct 1993 14:15:29 -0700

---------- Forwarded message ----------
Date: Thu, 14 Oct 1993 13:28:48 -0400 (EDT)
From: Miles R Fidelman <[email-masked]>
To: [email-masked], [email-masked], [email-masked],
     [email-masked], [email-masked]
Subject: Regulatory Reform for Convergent Media

Hi Folks,

With all the talk about convergent media and networks, the
reality seems that the major corporate players are converging
first -- the impending Bell-Atlantic / TCI merger being the most
recent case in point.  The convergence of networks will probably
happen a lot later.

It strikes me that if we (the public) are going to have any say
at all in what the new network environment looks like, we have a
narrow window to think about developing a regulatory regime to
govern the transition to a convergent network.  Otherwise we will
simply be spectators to a battle of titans.

So.... I suggest a new topic of discussion:  What would a
"convergent regulatory regime" look like - short of the lowest
common denominator of total deregulation?  What principles should
we retain from existing regulatory regimes for telephone, cable,
utilities, etc.?  How can we integrate those into a common
regulatory regime that balances the interests of users and
vendors, and of Federal, State, and Local jurisdictions (some
term this "symmetric regulation")?  How do we insure that
electronic networks - which have the nature of quasi-public
spaces where we conduct civic and commercial life - do not become
totally controlled by private interests?

[note: if you've looked at our just-released vision paper "A
National Strategy for Civic Networking: A Vision of Change,"
you'll see a strong call for just this kind of regulatory reform,
and a call for Congressional and State resolutions establishing
symmetric regulation as a basis for rewriting the Communications
Act of 1934]

---------------
As a starter, I suggest that there are several key overarching
issues to be considered:

i. who pays  for it all -- including the question of how do we
retain the benefit of public and private investment in existing
infrastructure?

ii. how do we achieve universal service? [note: universal service
also includes the notion of ability to originate material -- a
given in the telephone world, but requiring support in the
television, cable and possibly data worlds]

iii. how do we maintain freedom-of-speech and privacy
protections?  prior-restraint and intellectual property issues
also factor in here.

iv. how do we ensure universal interconnectivity and
interoperability?

---------------
I also point to some historical and current models for different
sectors that we can draw upon for answering these questions:

The airlines:

     i.the aircraft industry was largely fueled by World War II,
       while the airline industry was seeded by Federal air mail
       contracts -- priming the pump for a privately financed
       and self-supporting industry
     
     ii.    for many years, regulation and subsidies supported
       air service for rural communities -- with most of this
       now supplanted by the deregulated, competitive
       environment (with arguable results)
     
     iii.   n/a
     
     iv.    the Federal government remains responsible for
       overall management of the air traffic system and aircraft
       safety
     
The Interstate highway system:

     i.built with Federal and State money, supported by gasoline
       taxes and other fee-like mechanisms
     
     ii.    largely a non-issue, though pedestrians and horse
       owners might argue
     
     iii.   n/a
     
     iv.    largely a non-issue except that the placement of
       on/off-ramps remains a major issue at the local issue
     
Electric and other Utilities:

     i.mixed financing:  private utilities, municipal utility
       companies, Federally funded rural electrification, etc.
     
     ii.    mostly an issue of financing and distance-
       insensitive rate structures (though companies often have
       to pay for building access facilities)
     
     iii.   n/a
     
     iv.    <anybody have information about how the national
       power grid is managed?>
     
Telephone Network:

     i.almost all private funding
     
     ii.    a long history of Federal and State regulation, and
       cross subsidies to provide universal service at lifeline
       rates for residential customers and cross-subsidies to
       keep rural rates the same as city rates
     
     iii.   common carriage is the key concept here
     
     iv.    the early phone "system" did not have the concept of
       universal interconnection and interoperability, and it
       was a long journey to the system we have today where we
       expect every phone to be able to reach every other phone
       despite there being 100s of phone companies operating
       different parts of the system (and millions of owners of
       telephones, PBXs, private networks, etc.) -- first, it
       took the "Kingsbury Commitments of 1913," creating the
       regulated AT&T monopoly, to allow a major player to buy
       up and integrate most of the then-separate phone
       companies and systems -- then, as we split up the
       monopoly (the Carterphone decision, the MCI battles,
       Telenet and the other Value Added Networks, and then the
       Bell System split-up), we created a regulatory regime
       that mandates a level playing field for inter-network
       interconnections, defines interconnection standards,
       defines how to distribute charges, etc.
     
Cable TV:

     i.almost all private funding
     
     ii.    Federal and Local regulation that both provide
       access to telephone and utility rights-of-way, and
       provide local governments with both control over rights
       of way and the ability to negotiate funding for PEG
       (public, education, government) services out of the
       revenue stream; also the cable act mandates resale of
       some portion of cable capacity
     
     iii.   protection for 1st amendment rights apply to public
       access programming, though pending legislation may make
       cable operators liable for programming (e.g. obscenity)
       which could lead to the ability to censure public access
       programming and programming on leased channels
     
     iv.    very limited inter-connection and interoperability
       of cable systems; industry mechanisms only (e.g. Cable
       Labs) -- could be a very big issue
     
COMSAT and Corporation for Public Broadcasting:

     i.government-created private organizations -- COMSAT as for-
       profit, CPB as non-profit
     
     ii.    address the needs for quasi-public support of a
       variety of activities -- in the case of CPB, there is a
       recognition that there is a public interest need to
       support classes of pre-competitive and non-competitive
       content producers -- this need is likely to continue even
       when network access costs get cheap -- the cost of
       production goes well beyond just air/network time
     
     iii.   ????
     
     iv.    ????
     
The Internet:

     i.like the airlines:  the government stimulated the
       industry and the initial networks, but it has become
       mostly self-supporting -- ARPANET and MILNET were/are
       totally government funded, CSnet was government funded
       but designed to become self-funding within 5 years (and
       it did) -- of the 16,000 or so networks in the Internet,
       all but about 20 are the internal networks of
       participating organizations, while of the 20 or so "glue"
       networks that tie the others together, they are largely
       self-supporting based on user charges -- over 50% of
       networks/users are commercial, most of the backbones are
       operated privately, and most new users are private -- a
       good example of a small government investment stimulating
       both an industry and major infrastructure development
     
     ii.    a big problem -- access is close to universal and
       comparatively cheap for major institutions (cost per
       desktop at MIT is around $20/month, of which $19 goes for
       internal infrastructure) -- but comparable small user
       access (24-hour, IP, high speed) is around $1000/desktop
       for a single-desktop site
     
     iii.   no formal models, largely a matter of custom and
       community pressure
     
     iv.    key to the Internet from the beginning has been the
       notion of universal interconnectivity and
       interoperability in an environment of large numbers of
       independent operating entities -- semi-formal
       coordinating bodies (FNC, IAB, IETF)
     
     -----------------
Drawing on the best points of these historical precedents, I
suggest the following as a starting point for a convergent
regulatory regime:

     i.     who pays:  I would suggest that the airlines and
       Internet are good models to build on -- government
       stimulation followed by privatization and private
       investment -- key issue:  there are billions of dollars
       now invested in the Internet (most of it private dollars
       invested in internal networks and computers), how do we
       insure that this investment isn't flushed down the toilet
       in a world dominated by telco and cable giants who seem
       to want to rebuild a national infrastructure from
       scratch?  We're also likely to need some equivalent of
       the rural electrification program to serve rural areas.

     ii.    universal service:  I suggest that this must be
       affirmed as a key requirement.  Telecom. are becoming
       increasingly central to daily life.  There is a critical
       equity issue associated with universal service.  Cross-
       subsidies, universal service funds, cable PEG
       regulations, CPB, provide some good models to draw on.  I
       suggest that this could best be handled by a national
       requirement with state/local selection of mechanisms (as
       suggested in S.1086) -- reaffirming municipal sovereignty
       over rights-of-way, and building on current cable
       contract models might be an approach here.  Another key
       issue here is focusing on equity in data network access -
       - notably by focusing some attention on how to link the
       existing Internet to local loop carriers in ways that
       provide equitable Internet access for smaller users.

     iii. freedom-of-speech, etc:  Common Carriage is a great
       starting point.  There are also issues of copyright in
       the network environment.

     iv. interconnectivity and interoperability:  I suggest that
       we should affirm the model of universal interconnectivity
       and interoperability in a multi-vendor environment (a
       first principle of the Internet, and a hard-one situation
       for the telephone system).  Internet practice, and telco
       regulations seems like good starting points.  If at all
       possible, we should avoid repeating the chaos of the
       early telephone years (multiple phone companies in each
       city, no interconnection).  The telephone network for
       voice, and the Internet for data seem like good
       operational cores to build on.  There seems to be a need
       for some form of regulatory/coordinating authority that
       is a cross between the FCC and the IAB.

------------------
So..... comments, additions, alternate models??

Anybody out there want to collaborate on an article that
summarizes the results (Marvin Sirbu maybe)?

Miles

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Miles R. Fidelman                   [email-masked]
Executive Director                  91 Baldwin St. Charlestown MA 02129 
The Center for Civic Networking     617-241-9205 fax: 617-241-5064

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