A Chat with FCC Chief Genachowski

A Chat with FCC Chief Genachowski
FCC Chairman Julius Genachowski on broadband access, net neutrality, a spectrum gap, innovation, competition, and consumer empowerment

A day after the Federal Communications Commission voted to explore new rules to prevent Internet service providers from blocking certain services and content, the agency’s chairman, Julius Genachowski, stopped by BusinessWeek’s offices to discuss regulations for an open Internet as well as other media, telecom, and technology issues. A final decision on so-called net neutrality regulations isn’t expected for months.

But the unanimous FCC vote on Oct. 22 is a significant early victory for Genachowski in what is a major—and controversial—policy priority for the chairman, who has been on the job for just three months. Below are edited excerpts from Genachowski’s conversation with BusinessWeek staff members, compiled by senior writer Tom Lowry.

Q: You support a sweeping plan to make broadband more accessible in this country, an initiative that will require lots of private investment. At the same time, new regulations for a neutral Internet will certainly antagonize many of the companies that will be needed to make those investments. How do you reconcile that?
A: First of all, we are not regulating the Internet. What we did yesterday was launch a rule-making process where over the months ahead, we will be getting a lot of public input on what are fair, common-sense rules of the road to ensure that any small business, any entrepreneur, any speaker engaging in a lawful activity can have access to the Internet and the ability to reach an audience.

Q: When talking about net neutrality, is it a good idea to allow companies to charge more for better services on the Internet?
A: We need to make sure that our rules allow for business-model experimentation. Who knows exactly at this point how that will work? We want to make sure what we do welcomes technological changes, because the last thing we want to do is freeze anything in place.

Click here to read the rest of the interview.

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Opening the Wireless Internet: The Importance of Carterfone

Federal Communications Commission chairman Julius Genachowski has come out swinging. You have to applaud his boldness. In the FCC’s first major inquiry since Genachowski took over the agency on June 29, the FCC has launched an inquiry into AT&T Inc. and Apple Inc. over the rejection of Google’s voice application for the Apple iPhone and App store.

On Friday, the FCC sent letters to executives at Apple, Google and AT&T, which is the exclusive carrier for the iPhone in the United States, saying it was “interested in a more complete understanding of this situation.”

The future of the wireless Web may be at stake. As Erick Schonfeld noted in a good TechCrunch post, there are two different Internets: the open landline Internet and the controlled wireless Internet. In the letter, the FCC’s acting Chief of its Wireless Telecommunications Bureau said that the inquiry was being made in conjunction with the FCC’s “ongoing proceedings regarding wireless open access and handset exclusivity.” In those inquiries, companies, including Skype, have asked the FCC to issue a declaratory ruling that the FCC’s so-called Carterfone rules apply to the wireless Internet.

In November of 2007, I wrote about Carterfone and the law professor, Columbia’s Tim Wu, who is trying to get the FCC to follow its landmark precedent requiring that communications networks remain open to any device or application. Wu is the professor who helped inspire Google to form its wireless strategy and petition the FCC to get it to force new wireless spectrum to follow rules of openness.

In February 2007, Wu published a paper in the International Journal of Communication proposing that the FCC apply the industry’s “Carterfone” rules to wireless.

It’s a fascinating case that carries huge implications for today. For decades, AT&T had prohibited consumers from attaching anything but its own phones to its network. In 1968, AT&T tried to bar the use of a “Carterfone”, which linked a mobile radio to a telephone.

But the FCC labeled AT&T’s move “unduly discriminatory” and allowed consumers the right to install devices of their choice. That decision enabled the creation of the fax machine and the Internet modem. Wu wrote: “The same rule for the wireless networks could…stimulate the development of new applications and free equipment designers to make the best phones possible.”

Now it looks AT&T could be getting embroiled in another historic shift. And history, and perhaps popular opinion, do not seem to be on their side once again. Decades ago Carterfone changed the future of communications. Today, Google Voice could stand for another watershed moment.

New Sheriff in Town: Exclusive with Obama Trustbuster Christine Varney

Check out my BusinessWeek story, based on the first extensive interview with the Obama Administration’s new head of antitrust enforcement, Christine A. Varney. Techies haven’t quite come to grips with the fact that there are new sheriffs in town. Big changes are coming with the way this and other industries are regulated, as you can see with the reaction to the Microsoft-Yahoo search deal and the FCC action on Apple. Read on.

The Antitrust Cop and the Tech Industry
Christine Varney aims to reinvigorate antitrust policy without stifling U.S. business, but Google and Intel could be among her targets

By Spencer E. Ante

Christine A. Varney, the nation’s top antitrust cop, is trying to pull off a delicate balancing act. She wants to reinvigorate antitrust policy after the laissez-faire years of the Bush Administration. Yet she also wants to avoid interfering with companies that compete vigorously but fairly. “This job is making sure the competitive marketplace is free from obstacles and barriers,” says Varney, whose official title is Assistant Attorney General at the Justice Dept. “We are thinking a lot about where bottlenecks might be in certain industries. If we can break through them it would be good for consumers.”

In her first extensive interview since taking office in April, Varney described an antitrust philosophy that is clearly more aggressive than in the recent past yet also less ideological than many businesspeople may expect. Varney says her goal is to bring antitrust law back to its historical center, not simply to go after giants because of their size. “We are not anti-big in any way, shape, or form,” says Varney, a former Federal Trade Commissioner who spent the past 12 years representing corporations as a partner at the Washington law firm Hogan & Hartson. “But with enormous success comes responsibility.”

Varney says the Justice Dept. will be taking a look at a range of industries including transportation and technology. Antitrust officials have also opened inquiries in agriculture, financial services, telecom, and health care, say sources familiar with the Justice Dept.’s activities.

Check out the rest of the story here.

Qwest: We Don’t Block Internet Traffic

At the Democratic National Convention on Tuesday, I had the opportunity to meet Steve Davis, Qwest’s senior vice president of public policy. I asked Steve about the company’s policy with respect to the management of Internet traffic.

The issue has been in the news recently as Comcast, the nation’s largest cable operator, has come under fire from the Federal Communications Commission for secretly blocking the peer-to-peer file trading service BitTorrent.

“We are for everything that prohibits blocking of Internet traffic,” said Davis. “But we don’t support regulation of transport.”

I asked Davis if Qwest blocks or constricts any Internet applications as Comcast has done in the past. His response: “We don’t engage in the type of constriction that Comcast does.” (Since Comcast announced on Thursday that it will impose a monthly cap of 250 gigabytes on their customers, I didn’t have a chance to ask Davis about this new policy.)

Rather than blocking or constricting Web traffic, Davis said Qwest’s approach is to offer consumers several different flavors of bandwidth. Qwest, which serves about 13 million customers in 14 Western states, offers four different speeds at the moment, said Davis, including options for 1.5 megabytes (Qwest Connect Silver)), 7MB (Qwest Connect Platinum) , 12MB (Qwest Connect Titanium) and 20MB (Qwest Connect Quantum). Prices start at $46.99 per month.

The Denver-based phone company is able to offer beefier bandwidth because it recently began rolling out fiber optic cables in certain parts of its territory. Qwest is pursuing a strategy called “fiber-to-the-node,” which means it is laying cable from its central offices to nodes in various neighborhoods. That contrasts with Verizon’s more aggressive and expensive strategy of installing fiber optic cables directly into people’s homes.

Even so, Davis noted that offering consumers pay-what-you-drink options “doesn’t necessarily solve all problems” when it comes to U.S. broadband policy. “You could have back-haul problems too,” said Davis.

And it won’t help Americans living in rural areas who have no access to the Internet. To help solve that problem, Davis said Qwest is in favor of providing government subsidies for areas with no service to one low-cost provider that could wire the locale. “You wouldn’t subsidize competition,” said Davis.

My own take: Generally speaking, it’s better to have a solution come from the marketplace rather than government regulators. And while Om Malik and others have criticized the idea of tiered broadband, I believe some version of tiered pricing is the best solution to the bandwidth shortage.

Om makes a good point when he notes that cheap broadband has been a key factor in fueling the growth of the Internet. The broadband revolution has helped give birth to YouTube, MySpace and a host of other innovations that have energized the Web, creating new demand for Internet services.

And since Internet service has become a critical utility of our age, I agree that Internet providers should offer basic level service for a reasonable price. But let’s face it: Some people use more broadband than others and they should probably pay for it. I think it’s a very American idea: pay for what you use. And it’s economic 101.

That’s why competition should be a hallmark of our broadband policy–not government regulation of pricing. Competition will spur communications providers to offer higher and higher speeds at lower and lower prices. The battle between cable companies and phone companies has helped lower Internet service prices and raise entry-level speeds. But we need to find more ways to promote competition in future mediums, such as wireless broadband–especially since our appetite for bandwidth continues to grow with the rise of high definition video content.

What do you think?

Can Jerry Seinfeld Save Microsoft Vista?

In this week’s Digital Dish, the BW tech crew examines Hewlett Packard’s earnings, Comcast’s reaction to the Federal Communications Commission’s request for a new Internet traffic management system, and whether Microsoft’s new ads starring Jerry Seinfeld will solve Vista’s perception problems. (Hint: not a chance.)

Check out the video by clicking here.

FCC Slaps Comcast; So Long, Scrabulous?

In this week’s Digital Dish, BW’s tech crew discusses Apple’s cash hoard, the FCC’s order smackdown of Comcast, the fate of Scrabulous and the social networking-inspired phenom Twilight.

Check out the video by clicking here.