Summit Closing

That wraps up the insights and debate for this year – a big thankyou to all involved. This blog has been brought to you by Andrew Bennett, a recent graduate of the Fletcher School of Law and Diplomacy whose research and career focus is in international broadband policy and economics (click here for a link to my thesis on broadband policies in the OECD). Thanks to Meg Hargreaves and everyone at Pike & Fischer for letting me be a part of the Summit.

Don’t hesitate to continue the conversation here on the blog.

Closing Keynote Address – Ambassador David Gross

The International Outlook:

An introduction by Eric Loeb, Vice President, International, External & Regulatory Affairs, AT&T who describes Ambassador Gross as a diplomat in the greatest sense of the word who will share his perspective on international broadband issues.

Ambassador David Gross, U.S. Coordinator for International Communications and Information Policy, U.S. Department of State

Ambassador Gross has been keeping tabs on the conference via the blog (!) and has been very interested in the debates, most of the domestic, that have been going on. But he would like to remind the audience that in the ICT world, everyone from Asia to Africa is keeping tabs on what policy makers (and Wall Street) are saying and doing in the US. “It is also the vigor of the debate that is capturing the attention of the world.”

He notes that there was a time in the world when this was an industry without much debate, it was dominated by state owned telecoms. But the US was always different – where private enterprise led the industry. And this approach has been adopted throughout the world. Even where there are still SOEs, like Africa, they are competing with private enterprise, following the lead of the US. During the Ambassador’s tenure, the impact of these changes has been profound.

Now, in the 21st Century, Mr. Gross marvels at the competition we have as a result of the Internet and Wireless and the growth of these industries, particularly wireless, in the developing world. “We now live ina world where virtually one out of two people are subscribers to mobile phones.” He stresses the impact these technologies has had on the bottom of the pyramid. This has lead to a tremendous shift to the way the poor are able to find work and receive benefits.

So where are the fastest growing markets for wireless and the Internet? According to the Ambassador, it’s Africa and India. India is connecting “2 Finlands” per month in terms of mobile subscribers. He also cites the growth in telecom in China and Pakistan, where the move to creating an independent regulator and facilitating competition have spurred connectivity. Afghanistan has seen vigorous growth as well and this has enhanced the political freedoms of the people in that country.

When it comes to technology, what people want is to connect to each other and to have access to information. And this is happening to day on an unprecedented scale. You no longer need wealth and proximity to a major city to have this kind of access. In this age, limits have been broken. While there is still work to be done, there is reason to be optimistic and the world will look fundamentally different for our children in positive ways.

The world looks very different today than it did ten years ago and it is the marrying up of extraordinary new developments in technology with policy that allows those technologies to flourish and more people to access these technologies.

We need to think about the technologies we have here today and think of how to export them so that the rest of the world can not just accept these technologies, but can also adapt them in order to achieve the same things we have.

Eric wants Ambassador Gross to speak about the themes and topics that will be covered at the OECD ministerial meeting he’s on his way to.

Ambassador Gross: It’s a declaration on the free flow of information. This is something he will address in his next meeting with the Chinese government as well. He anticipates discussions about the broadband statistics as well. He has encouraged the OECD to look more holistically at broadband take-up – “part of the problem governments have, that our government has, is getting a hold of accurate statistics.” He cites his own son’s use of the Internet, which is not necessarily captured by current statistical methods.

In the Ambassador’s view, the more broadband around the world, the better. While we should always strive to be number one, what really matters is that we all benefit by having more people connected.

Audience Question: Has any work been done in the OECD to address the dissemination of illicit material?

Ambassador Gross: A number of International orgs are working on this. The problem we all share on these issues is to ensure that the techniques used can be controlled and cannot be used by governments to restrain access to information that’s at the heart of a democratic debate.

The Ambassador characterizes the US as a happy extremist when it comes to international debates over free speech. But he still sees a need, of course, to reign in the transmission of illicit material on the Internet, but this will be a definitive challenge for at least the next five years. The ITU Sectretary General has also convened a panel on the issue that Mr. Gross is a part of. He notes the struggle to deal with spam as well as being indicitive of the challenge the US and the world faces in Internet content policies.

Meg Hargreaves presents Ambassador Gross with a gift and wishes him luck on this important upcoming trip and meeting with the OECD. A big thank you to everyone.

Final Panel: Wall Street Speaks Out

Tim McElgunn from Pike & Fischer will introduce and moderate the panel that will consider all the topics and views covered at the Summit. Tim asks the panel to put forth Wall Street’s point of view on these policy issues and to address additional topics that have not been covered.

Starting with Blair Levin, Managing Director, Stifel Nicolaus who asks us to pretend we’re in Manhattan because there seems to be quite a different way of thinking about things there, compared to DC. Some things he sees Wall Street concerned with in the broadband industry: New investments in capacity, new opportunities to increase revenue, investments in new networks – and he notes that Verizon/Alltel is not an investment in a new network but in new profit. From a Wall Street perspective, Wallstreet expects telecom to invest billions in new networks every year and the industry is currently at par for the course in terms of investment (back to historical levels after bust). He doesn’t think there’s a boom in capital expenditures right now, but Wall Street likes that – it’s nice to know there’s a high revenue stream to repay investors.

Additionally, the market structure is important to investors. With the exception of Clearwire there’s not likely to be any entrants into the broadband market:”bpl dead, muniwifi dead, overbuilders dead, satellite not quite dead.” There’s also not likely to be any new wireless entrant (no DBS, no 700 MHZ entrant) and no disruptive entrant to Cable either. From an investor perspective (not a public policy perspective) things are pretty good. But if current players fail, “wall street will think that’s a pretty big thing.”

Mr. Levin believes that fixed will continue to get faster and that wireless will continue to be a complimentary product (in broadband data, not voice). When it comes to entry from the edge, Wall Street is of the view that companies like Skype are not real threats in voice. Referring to P&F’s industry survey, he finds it interesting that broadcasters are so concerned about regulation right now. He hasn’t seen that industry worried about regulation in a long time.

Mike McCormack, Executive Director, U.S. Telecommunications Research, J.P. Morgan says that Blair hit some great points and says that from an investor standpoint it’s difficult to get investors interested in public policy these days, which is a good thing for investors. On competition: “Investors would rather see duopolies across america because it’s the only model that works.” On rural broadband: it’s hard to see how rural broadband companies are going to grow. Net Neutrality: comes up once every two months, usually in reference to Level 3 – investors don’t believe net neutrality would be good for anyone.

In voice, Mike sees SMEs as being profitable for telcos. He says there are a lot of investor concerns over pricing and the long-term health of the wireless industry.

Scott Cleland, Chief Executive Officer, Precursor on the disconnect between NY and Washington: capital markets care about short-term, Washington cares about long-term. Investors are looking at the year-end return. There’s not a whole lot happening in Washington that matters right now, but the election will shift some interest to the capital. Scott considers himself a techcom analyst and the “grand thing” is the collision between the “tech” sector and telecom. The products have already converged, but business models and regulations have not converged. Right now, both industries “want to do eachother’s business.” For example, he sees copyright issues as being one symptom of this collission and the failure for business models and regulation to converge.

Julius Genachowski, Special Advisor, General Atlantic wants to give a different point of view, focused on trends that private investors are seeing. One trend that is positive: reduced technology costs. These reductions are aiding product and company launches. Another trend: the proliferation of platforms on which businesses can be launched or expanded. Platforms on mobile look very exciting – iphone, android, wireless openness are great trends for investors in certain companies. The proliferation of platform companies themselves, with people identifying new opportunities for value creation, specifically in the development of technological platforms for personal finance. The trend in increased broadband speeds is a big plus for the companies he deals with. Additionally he sees positive trends in valuations and sees a lot of potential as consumers shift from offline to online activities.

And some negatives? Credit. Consumer uncertainty and uncertainty in predicting consumer responses. And broadband remains an uncertainty. How fast? How universal? “understanding when we’re going to be a fully broadband country…is all important.”

Question from Tim for Blair: Do you see opportunities for regional/niche players in broadband (facilities based)?

Mr. Levin: Some small opportunities, yes, but nothing that will dramatically change the market structure.

Mr. McCormack agrees and is even skeptical of Clearwire. Some exceptions though are in niche application markets like broadband on airplanes.

Scott Cleland says that on a holistic level, facilities based broadband is extremely successful in this country and this limits opportunities for entrants. “we’re the only country in the world that has competing wireline infrastructures.” And robust wireless competition – lower prices than anyone other than Hong Kong. The US system is vastly superior and the competition in broadband/wireless proves it.

Tim wants to follow-up on Scott’s earlier comment about convergence and wants to know about the impact on the content industry.

Julius, speaking from the point of view of new media, believes that traditional media companies have approached regulation as ‘our content, our network, our customers.’ He cites the example of Ted Leonsis who is exploring the use of online widgets to deliver, market, and monetize content in the documentary film industry.

Mr. Levin says that emergent issues over privacy, for example, will alter the advertising industry.

Mike McCormack sees DRM as a big deal right now in terms of convergence. He also sees a disadvantage for AT&T and Verizon if they try to get into the content business. The Telco Cable environment will move to a bifurcation: You’re either a telco household or a cable offering. Whatever side you’re on as a consumer for your cable, you’re probably gonna migrate your other services to that network.

Scott Cleland sees different margins for convergence transitions depending on the type of content (print news will lose big margins, for example). Google is the now the monetizer of online content and combining with Yahoo will create a monetization bottle-neck. When it comes to copyright, a tremendous amount of wealth will be destroyed if all content companies are expected to abandon their rights when they move online.

Julius disagrees and sees just as much wealth being created when these companies move online. He sees us in a period of great shift and it’s not inevidable that the old companies are the losers and the new companies are the winners.

Audience Question – Allen Communications: What about speed? Does Wall Street think it’s viable that it’s going to increase at high rates?

Mr. McCormack: To the extent that people need higher speeds and can pay for them, Verizon and AT&T are in better position now, but that’s no guarantee that they can keep up with dramatic bandwidth demand shifts.

Mr. Levin: There’s also the public policy side that goes to the question of international competitiveness – most statistics show that there has been a decline (in speed, penetration, value…) and if there was a CEO of US broadband, Wall Street would have them fired because they’ve failed to improve their rank.

Julius agrees with this and adds that we’re heading into a period where public policy makers recognize the importance of broadband speed, penetration, price…the relationship between broadband and job growth is something that’s increasingly being focused on.

Scott Cleland: The market is telling us that it doesn’t value only speed. Silicon Valley wants speed and content subsidies. American’s care about wireless, which is the fastest growing segment. “Mobility is as important value to them as speed.” Scott does not see wireless as complimentary. Consumers are saying that it’s competing.

Tim asks if this is contradictory. Aren’t consumers switching to wireless because of its improved speed?

Scott counters that it’s both. Consumers will give up mobility for speed and visa versa.

Blair wonders if Scott’s saying the George Bush is a doofus when he presents a metric and a goal…Blair’s concerned with the strength of the American economy and says it would be “nice if the government did in Enland…and looked at the data and figured out what they’re doing right and what they’re doing wrong.”

Julius submits that there is unity on the compelling necessity on increasing capacity and speed. “The goals are getting clearer…the next phase that we’ll get in will be working through best set of policies to pursue these goals.”

Scott says broadband is happening extremely rapidly. He wants to know what exactly the government could do differently. “What policy will do better than what we have without destroying it?” Scott is concerned about the introduction of a more command and control regulatory approach.

Audience question: How do we get speed and benefits to the poor and middle class and how can we get the government to move faster on it?

Julius, an advisor to Obama, says the candidate will bring more transparency and will expedite government processes by utilizing technology as he has with changing how campaigns are conducted.

Scott Cleland: Broadband to rural areas needs to speed up, but there are lots of opportunities for free broadband and the market place is competitive enough to offer a variety of speeds and prices.

An excellent discussion – Tim looks forward to next year.

9am – 10:15 – Net Netrality: It’s Back…Again.

Wasting no time, Nancy Victory gets right into the topic (and the panel) that won’t go away, Net Neutrality. She introduces the panelists, some of whom served last year as well, and asks what’s changed since last year.

Ben Scott thinks one change is that things are now going in the right direction. He says that we’re headed towards a baseline protection for consumers and a healthier ecosystem for the industry.

Daniel Brenner, Senior Vice President, Law & Regulatory Policy, National Cable & Telecommunications Association says that things have changed: the tenor of the debate has intensified.

Mike McCurry, Partner, Public Strategies; former White House Press Secretary says one thing that’s different is that we have a lot more data to act on now and none of it suggests that we need to move to rule making and developing cumbersome regulations.

Gigi Sohn recalls last year’s panel, when things were moving along sleepily, and sees the Comcast/Bittorrent debate as revolutionizing the debate. The argument that this is “a solution in search of a problem has gone away.” She disagrees with Commissioner Rosch and sees what Comcast did as blocking.

Kathryn C. Brown, Senior Vice President, Public Policy Development & Corporate Responsibility, Verizon sees this as an issue of capacity. The congestion issue comes up because people are doing more in this age and the market is responding. Verizon is expanding bandwidth so that this isn’t a problem: “this is a transition problem.” And if it is a transition problem, then what does that mean in terms of how regulators should deal with it?

Christopher Guttman-McCabe, Vice President, Regulatory Affairs, CTIA – The Wireless Association believes this is more than a transition problem and cites Japan, which is having similar problems despite a great deal more bandwidth. He says that legislation that would dumb the pipes

Brian Bieron, Senior Director, Federal Government Affairs, eBay, Inc.: This is a long term issue. The debate has already come a long way in two years and he hopes that we don’t focus on the false debate of dumb vs smart pipes. Instead, he thinks the debate should be about the kinds of management, management that favors certain revenue streams over others.

Nancy’s next question for the panel is, given these changes, how do we now judge what’s reasonable network management.

Daniel Brenner (NCTA) says we’re headed for a “major highway construction project to allow for greater capacity.”

Gigi (Public Knowledge) wants to return to the facts of the Comcast issue to get to where we’re headed and says that Comcast was blocking P2P services like video that they also produce. Regarding what’s reasonable: she wants it to be about who has control and she as the user should have it, not the network provider.

Mike McCurry notes that net neutrality does not allow Gigi to choose, it would be the FCC or Congress choosing.

Chris from CTIA submits that networks aren’t managed to the benefits of the operators, their managed to the benefit of the consumers. “you don’t know what reasonable is until you see it.”

Do you agree or disagree that the Comcast/Bit Torrent agreement is a win for all parties?

Ben Scott (Free Press): Don’t declare victory just because these two have decided to start talking. He also asks the audience to reflect on the fact that Comcast went from blocking and saying we won’t talk to Bittorrent to talking to them. Ben doesn’t want Comcast or Bit Torrent to have the choice over what content he receives.

Kathy posits that the consumer voice should be heard. That we don’t know it when we see it and she would caution against legislation or regulation that freezes the conversation. But to begin with transparency is vitally important, consumers need to know what they’re getting.

Brian follows-up on Ben’s points by saying that it’s possible that there’ll be another Bit Torrent tomorrow and any agreements made with Comcast will be null. Does every company adopted by the users at the edge require negotiations with the network operators?

Daniel from the NCTA says that he actually agrees and doesn’t want to see rules and regulation that would prevent the next technology from arrising on the edge.

Gigi argues that the notion that net neutrality advocates want hard and fast is a straw man.

[Sorry, some technical issues and we missed some statements from Kathy Brown and Mike McCurry]

Ben Scott does not see much certainty in the way things are going now in terms of assurances that consumers are getting what they pay for.

Question from Nancy: Does the FCC have authority to enforce current rules and can it go further in creating more rules?

Gigi says that the FCC clearly thinks it has the authority.

Nancy follows-up by asking if the network operator duopoly is part of the problem.

Brian from Ebay says that a little more competition doesn’t necessarily mean more openness, just look at the situation with wireless. It would have to be dozens in order to have competition address the openness problem.

Kathy Brown of Verizon responds that what Brian describes is a situation where there’s competition because of resale on a copper-wire. That doesn’t get us more high-speed networks. In the US, we have fierce competition to build new capacity and we don’t want to lose that…

Chris McCabe believes it’s two simple to even say there’s a duopoly. He notes that “90% of the time you’re using wireless” to check your email or go online and now we have Sprint/Clearwire, a new competitor. The market is moving forward.

Brian wants to clear up his statement and say that what’s key is that the wireless industry, despite more competition has been closed and has not bred innovation.

Chris disagrees and cites the rise of the iphone and his ability to download Google and Skype applications on his phone as being the innovation.

Brian (ebay) says that the difference is that in the consumer broadband world you’re not tied to a device that’s tied to a network.

Nancy asks if the recent anouncements about openness in wireless are signs that the market is working things out when it comes to this issue.

Gigi (Public Knowledge) is skeptical that the wireless industry will go beyond announcements about openness. She’s concerned that providers (citing Verizon wireless) will have an open and a closed network and that the closed network customers will be favored. She’s concerned that the providers have a much narrower definition of openness than she and the FCC do.

Kathy says Verizon is working to bring in stakeholders like Gigi to build confidence that in fact they do have the same definition and that the company is considering a variety of open utilities that will benefit the disabled and the environment…

Ben Scott sees the C Block conditions as an interesting corolllary to the Net Neutrality. He asks if wireless providers would be having a public “Openness contest” without the net neutrality debate and the base line principle of network management.

Daniel Brenner takes a moment to review some of the openness initiatives and innovations that the Cable industry has recently pursued. He thinks that what we’re all searching for is the right model: Ebay did not have to negotiate with Verizon or Comcast to become the leading auction website, but QVC did have to negotiate with Cable to become the leading home shopping network. Different models. Mr. Brenner would like to advocate for “regulatory humility” and allow the difficult process of determining the right model to run its course.

Ben Scott (Free Press) says that setting principles on an issue does not mean there’s going to be a chilling effect and a long regulatory fight and cites program access rules and interconnection rules as such terms that have solidified the market place and encouraged investment.

Brian Brenner disagrees

Andrew Fienberg from Communications Daily asks Kathy Brown and Chris Guttman-McCabe: “reasonable network management” is a part of the C block auction rules, does Verizaon Wireless and the industry have a problem with the term in the C-Block rules as it has when it was used in other instances?

Chris (CTIA) says that there’s no conflict in the responses to the term and Kathy (Verizon) passes on the question.

Audience Question: What about non-BitTorrent users and the potential that there service is being impacted?

Ben Scott: The question is should you block a protocol just because it’s a certain protocol? He advocates for a protocol agnostic basis.

Question, Drew Clark: Shared services and Docsis 3.0 – could you address how that deals with the shared network issue?

Daniel (NCTA): There’ll never be enough capacity that you don’t need network management.

Brian (eBay): Says “the network being fully used” can not be an excuse because then you can always have a reason to discriminate. “it’s always gonna appear to be full on the network,” the question is is there going to be a non-discrimination principle when it comes to network management?

A big thank you from Kathy – and an apology from your humble blogger who had a little trouble keeping up there and identifying everyone, but will go back and clean things up in a bit.

Day Two: Morning Keynote Address

Welcome to Day Two of Broadband Policy Summit IV – Commissioner J Thomas Rosch has just arrived and we’ll be getting underway soon.

J. Thomas Rosch
Commissioner, Federal Trade Commission

Commissioner Rosch offers a hat-tip to Dick Wiley, a big reason for the Summit itself and an important figure in telecom policy. He introduces himself not as a policy wonk or a technologist, but as a specialist in law enforcement. Don’t expect him to give an expert opinion on net neutrality (though if he had an opinion, it would be wait and see with regulation…). The Commissioner does see a role for the FTC when it comes to broadband though, particularly in its dedication to assuring competition.

Returning to the net neutrality debate, Commissioner Rosch notes how the terms and tenor of the debate have changed since the issues was first raised: from content producers vs. network operators to network managers vs. P2P technology. Reviewing the two sides of the current debate, Mr. Rosch covers the points of view of the supporters of network neutrality legislation and its opponents. Like he said, he won’t give his opinion, but instead, he’ll offer some insights into the debate through the framework of consumer protection.

To begin with, Mr. Rosch notes the need for transparency to protect consumers. “Consumers are best served when they can make informed choices about the services available to them.” The commissioner sees requiring such transparency in industry as a hallmark duty of the FTC. The Commission has a long record of prosecuting unfair and deceptive practices when it comes to customer contracts with ISPs.

But another component of the current debate is anti-trust. And here, the Commissioner does not see an issue for the FTC. To be sure, Section 7 of the Sherman Act could be invoked to block or taylor mergers between ISPs and content producers (AOL/Timewarner). The Commissioner also cites the FCC decision in Vonage/Madison River case but says that Madison River does not meet anti-trust claims that would invoke Section 2 of the Sherman Act. Likewise, he does not see Comcast/Bit Torrent as being relevant to Section 2 of the Sherman Act.

The Commissioner submits that anti-trust today is focused on economic efficiency and struggles when there are conflicts with other public policy goals. For Mr. Rosch, if there is consensus that this behavior (of Comcast) is problematic, then anti-trust can’t be of assistance in reforming the behavior. However, he admits these are thorny issues and reviews other anti-trust telecom cases, including Trinko and Linkline. He stresses that there are no easy answers to these difficult cases. Some may believe that that Robinson Patman Act could be useful in deciding similar cases in the future, but the Commissioner does not see any utility in the R-P act in these cases.

One development the Commissioner does see in anti-trust law that could be relevant to online cases like net neutrality might arrise through new applications of Section 5 of the Sherman Act. But for the moment, Commissioner Rosch believes, perhaps the best course is rigourous enforcement of our consumer protection laws.

Thursday Closing

A thank you from Meg and everyone from Pike & Fischer to all the speakers and all the sponsors and invites you to join us tomorrow at the Westin Embassy Row or here on the blog for the online discussion.

3:45 to 5pm – Video: Broadband Driver?

About the panel:

The growth and popularity of YouTube and other internet video sites has been nothing short of spectacular. Increasingly, Netflix and others are looking at broadband as an effective video delivery system. Today, video is available not just from traditional media sources, but increasingly from Internet, telephony and wireless providers. Our panel of experts debates key issues affecting the competitive landscape for delivery of broadband video, the extent to which video drives broadband penetration and deployment, and what the future may bring.

Moderator:

Stephanie M. Phillipps
Partner
Arnold & Porter LLP

Stephanie wants to go with the open forum approach with the last panel and asks Christina Chou about FCC decisions that could impact broadband delivery services.

Christina, who is a legal adviser to Commissioner McDowell on media issues, stresses the success of the recent wireless spectrum issue and of wireless competition in general. She looks forward to actions on White Spaces spectrum for further progress in wireless. The Commission has entered a second round of testing with White Spaces technologies and Christina sees great potential.

Stephanie asks Bob Quinn from AT&T what the prospects are for Uverse deployment. He says the company is a third of the way towards its initial footprint goal of passing 30 million living units and sees Uverse as being a distinct technology from what other telcos and Cables are sending to market.

Next, John Raposa from Verizon gets a chance to outline the future of its Fios technology. John believes the company is on pace to pass 12 million houses this year, 15 million the next and will proabably exceed the 18 million it expects to pass in 2010. He says the major action for Fios will be in its urban deployments, with approval pending for a franchise in NYC, which John, with cautious optimism, expects the New York Commission to approve soon. Also, a Fios franchise in under negotiations in the District of Columbia and Verizon expects that the issue will be taken up by the Council after the summer break. Philadelphia and Pittsburgh are next.

Messieurs Raposa and Quinn discuss their state franchising efforts, noting that these reforms are about “knocking down the barriers.” John Raposa notes the “problem children”: half a dozen communities where he’s not sure Verizon will ever obtain a franchise. In his view, these are communities that don’t care whether their citizens have competition. “They may never have fiber,” he says.

Stephanie asks if there is any reason for national franchising now and John says that that was something that Verizon once would have kicked down the doors for but now see very favorable models developing at the state level. In the final analysis, these models, despite less favorable models (he mentions Illinois), are less costly than the attachments to a national franchise would have been. Bob Quinn seconds this point of view, noting that a national franchise would have been preffered.

The next question is for Bill Hunt regarding the progress of Level 3 in broadband video delivery. Bill refers to Level 3 as “what you get when a bunch of engineers start a company without consulting a marketing department.” Level 3 are shippers and enablers, the transport merchants. Whether you’re on Fios or Uverse, Level 3 is involved somewhere in the transport of your Netflix download. Regarding video franchising, Bill doesn’t think Level 3 is a company that needs a franchise, but he’s glad that things have improved for CLECs since the days when Level 3 had to negotiate 35,000 different contracts across the country.

On the content side, Stephanie turns to Rick Cotton from NBC Universal regarding the type of content and content packages that will be deliverd. Rick sees changing audience preferences as a major driver, specifically content on demand. Additionally, Video is the ascendant content of choice over the Internet. NBC and Fox have teamed to start Hulu in order to meet these demands and to offer “professional video services” – Hulu has exceeded NBC’s expectation.

One question Rick has going forward: as legitimate video expands, there will have to be an effort to address illegitimate video that consumes bandwidth. “We all know that 90% of P2P is illegal content,” he says.

Stephanie: So what should be done?

Mr. Cotton sees the network operators struggling with their historic role as, well, operators, as opposed to managers. During the telephone era 1 in 10 million calls was illegal, now 50 to 60% of bandwidth is taken up by illegal content. He thinks there are cooperative discussions underway over how to deal with these problems and software is being developed to deal with these problems (citing content identification software being built by YouTube for example) and sees technology, cooperation, and user education as being keys to developing a solution.

Stephanie wants to know how the operators feel about the new pressures on them to be managers and not just operators. Bob Quinn sees issues for providers in two realms. One is in P2P where they need to be involved in the development of the next generation of P2P software. Piracy, Bob says, is a separate realm where the network owner has to engage the issue and get more education to customers. The attitude in the past has been that “wer’re not gonna get in the middle of all that (referring to subpoenas between content owners and consumers),” but Bob says that has to change and network owners have to be involved.

Bill Hunt warns against forcing network operators to get involved as content police. “As a content hoster we work with our customers to develop technological security solutions, but when it comes to cars on the highway we can’t be stopping every one.” He advocates for a technical solution like we’re achieving with spam to address the issue.

John Raposa sees this as a “spectrum problem” and understands that network owners can not have a hands off approach but they have no desire to be the censors of the Internet.

A new question from Stephanie for the entire panel: “Just how much is video demand going to take-off and what’s the timeline you see?”

John Raposa of Verizon already sees a need for 4G investments and cites his company’s partnership with Alltel as a first step to meet demand.

Bill Hunt sees it as generational driven and believes that the role out may be slower than expected.

Christina Chou from the FCC reminds the audience that it’s not just mobile broadband but also broadband for television. But for all the people who do a lot of waiting around in airports or driving around with kids, mobile video might role out very quickly.

Rick Cotton of NBC Universal agrees with Christina and says that the content providers are well aware of “out of the home demand.”

Stephanie follows-up by asking if the content needs to be altered for these new uses, new screens.

Rick says that there is a learning curve for TV producers who need to produce new content for the mobile screen and you do make the programming in a different way.

Bob Quinn cites the data use explosion that came with the release of the iphone and says that AT&T saw first-hand the impact products can have in driving video demand.

Audience Quesion: Rob Minder from Frontier Communication asks John Raposa about the recent decision to allow providers to block 3rd party cites for producing child pornography.

This is beyond John’s purview, saying that Verizon’s online unit deals with that. But Rick Cotton follows-up with a comment saying that the child pornography issue does speak to the responsibility that a provider has when it comes to content and it’s indicative of the challenges the industry will face when it comes to broadband content.

Bob Quinn agrees, but submits that there are many concerns (like customer privacy) that the Network owners need to consider. The providers get critized a lot for interfering with the openness of the Internet, but as technologies converge, the policy issues become more complex and there needs to be adapted solutions.

Bill Hunt says that Level3 has a zero-tolerance policy and shuts sites down and reports to child-services after a complaint, but he notes the challenge in blocking a site that can simply change its IP address, location and provider in order to continue to broadcast.

Question from Alcatel/Lucent for Rick Cotton: What role do you see ISP playing in giving customer the highest-class experience for viewing your content.

Rick: The next step up in terms of viewing video is going to be when it’s an easy thing for a consumer to move their video from their broadband connection (PC) to their TV. Will the quality be as crisp as it can be? Will it be easy? Rick thinks we’re still several years away from a yes answer to both questions for a mass-audience.

Stephanie presents a final, policy oriented, question: Are there any comments on what kind of public policy changes are needed to address the costs of extending broadband services to rural or under-resourced areas?

Bob Quinn sees getting broadband to everyone in the country as being a critical goal. “we reach about 85% of our customers with a wired solution – closing that gap will be critical.” He believes that universal service needs to “transfer” to Broadband.

John Rapossa notes that even urban areas present new challenges for Fios deployment but that technological solutions have emerged and will continue to emerge

Q&A: Wireless Broadband Panel

Marc Martin asks the panelists to look 5 years ahead to the future of wireless broadband.

Tom Sugrue: “This is the most exciting sector to be in.” 5 years from now, you’ll still have fixed line broadband and fiber will always have advantages, but wireless will be dominant if regulators don’t micromanage.

Terri Natoli agrees and adds that regulators should be patient and let the market work-out some of the issues in spectrum.

Steve Sharkey sees opportunities for embedded wireless (and hopefully Wimax) technologies in everything from consumer appliances to vending machines.

Terri cites the advantages of wimax as an open standard platform and says that specific equipment need not be tied in with a specific network or manufacturer. She sees this as a major enabler for connectivity and advantage for wireless broadband compared to other infrastructure.

Question from MultiChannel News over whether all the filings for Sprint/Clearwire network are at the FCC?

Ross: They’re there.

Question from MultiChannel News: and does Google’s involvement and the fact that it will be default content for the network violate network neutrality?

Terri: No, Google is just the default, “every ISP has a default homepage,” and this can be changed based on the user’s preference.

Question: The new Sprint/Clearwire company will sell both retail and wholesale services – how will it work with investors buying wholesale services and, presumably, competing with the new entity?

Ross: New Clearwire will offer wholesale broadband to all the entities involved in the deal (even Cable…and Google and Intel have option) who will in fact compete with New Clearwire. But this will enhance the brand name and offer opportunities for all involved.

Terri: And wholesale options are available beyond the investments and these sales will increase efficiencies and decrease the need for users to switch providers. The primary objective is getting this wimax opportunity out there to America and wholesaling enhances the opportunity.

2 – 3:15 – Wireless Broadband: Becoming a Reality?

Meg introduces Marc Martin from K&L Gates who will moderate the afternoon panel and plans to bring some issues to the panel that are beyond the scope of typical telecom policy issues.

Thomas J. Sugrue, Vice President, Government Affairs, T-Mobile USA, Inc. starts things off with a review of recent industry forays into 3G service. He sees the wireless industry on the edge of immense technological gains and the FCC on the cusp “of screwing everything up.” T-Mobile, Thomas says, is the most spectrum-constrained mobile player, but they are working to launch the AWS spectrum. Meanwhile, there is the potential for other services to interfere in this spectrum.

Mr. Sugrue urges the FCC and all providers to udnertake due dilligence and extensive testing before entrants can move into spectrum. He also fears that the unique business plans of entrants are being adopted as rules by the FCC.

Janice Obuchowski, Chairman, Freedom Technologies, Inc. begins by presenting a specific case study that she hopes will introduce key big picture concepts: the national election. Janice believes that broadband policy will be the dominant hot spot issue in telecom policy over the next 6 months and we will be asking what candidate a or candidate b will do about it. And wireless issues will be fundamental to this debate because a new generation are asking themselves if they even need traditional wireline technologies.

Wireless technologies are the key broadband policy drivers. The “action is moving to spectrum-based broadband.” Ms. Obuchowski cites the industry shift to mobile as well (Google) and she posits that wireless technologies will be the killer app that allows for digital delivery to the world’s disenfranchised.

Policy recommendations: Spectrum is key, but regulators should enable and then get out of the way. “Avoid the political ad-hockery.”

Steve Sharkey, Director, Spectrum and Standards Strategy, Motorola, Inc. As a former FCC employee, Mr. Sharkey recalls the 1st generation technologies that the Commission once dealt with are now in their 3rd or 4th generation. The advances in technology are driven by data demands and advanced iterations of technologies are consistently compressed. He sees exponential growth in wireless and the increasing need for standards bodies (both domestic and international) to seek out and utilize efficient spectrum.

“Technology has advanced to the point where we can use that spectrum very dynamically without interfering with incumbent users.” Motorola is developing the dynamic technologies needed to achieve these gains. One of the key challenges is the need for a stable regulatory environment. As technologies advance and the need for new spectrum increases, the regulatory environment needs to keep up.

Terri Natoli, Vice President of Federal Affairs, Clearwire. Picking up on the talk of advancing technologies and the compression of such advances, Terri says that Clearwire hopes to be moving into 4G by the end of the year. She presents details on the Clearwire/Sprint national wireless network and many of the restrictions and restrains on the network, for example, 60% of spectrum is only available through long-term lease from educational licensees. Reporting on Wimax testing in Portland, Oregon, Terri reports successful results and Atlanta, Grand rapids, and Minneapolis are next.

Ross D. Vincenti, Senior Counsel, Sprint Nextel Corp will “lift the veil” on the processes involved in the Sprint/Clearwire deal. Ross recalls being involved in the early stages of the Wimax deployment and facing an uphill battle in explaining to consumers what Wimax was. Additionally, the deal would require seven companies, billions of dollars, and multiple objectives, aka “the impossible.” The plan began with a joint venture between Sprint and Clearwire that was eventually put on the back-burner. They would have to turn up the heat and work on Christmas day to get everyone in the same room and move the negotiations to the forefront. 80% of the issues all the parties had were cleared up in the early stages, but the last 20% were tough.

In the end, they’ve created a new public company, the first to deploy a nationwide wireless broadband network in the US. This was something that Sprint could not do alone. Costs are estimated at 5 to 8 billion dollars and the time to market for a lone party would be too long given the competition of LTE. And all the parties bring there own value-added: Google brings applications/software and the cable companies bring content.

Q&A With Congressman Stearns

Question from Drew Clark on the Congressman’s thoughts on state video franchising and the intersection with net neutrality on this issue.

The Congressman warned against conflating the issues and feels that there are ample opportunities to enhance state franchising and broadband build-out without compromising on net neutrality.