Unfazed, FCC plods ahead with Broadband Plan, starts a flame war with Verizon

In a ceremonial flexing this morning of a muscle the Court said the FCC shouldn't have, Commission Chief of Staff Edward Lazarus posted a blog entry taking Verizon CEO Ivan Seidenberg to task for comments he made last Tuesday in a speech to the Council on Foreign Relations. In recent months, the FCC has suggested the presence of a looming spectrum crisis, citing recent comments from attorneys and executives of Verizon's rival AT&T, warning of an apocalyptic event some call the exaflood. In that terrible time, demand for bandwidth would become so huge that the Internet would literally run out of spectrum like a desert lake runs out of water.

The Commission had been leveraging those warnings to make its case for potentially reclaiming bandwidth from US broadcasters and repurposing it for wireless Internet communications. For their part, broadcasters argue they may still make use of unused spectrum allocated to them, perhaps for becoming Internet service providers themselves.

But in his speech Tuesday, Verizon's Seidenberg said there was no such crisis on this, or potentially any, horizon. He used that proclamation as leverage for Verizon's ongoing argument that technology problems are best resolved by market forces rather than by regulation.

"Now, of course, if I took the self-serving approach, it would be okay, screw the broadcasters. Let's get their spectrum and we can put it to use in our wireless and cellular business or broadband business," said Seidenberg in response to a question from the audience. "My reaction is going to surprise you. I don't think the FCC should tinker with this. I think the market's going to settle this. So in the long term, if we can't show that we have applications and services to utilize that spectrum better than the broadcasters, then the broadcasters will keep the spectrum.

"Cable companies have bought spectrum over the last 10 or 15 years that's been lying fallow. They haven't been using it," the Verizon CEO continued. "So here the FCC is out running around looking for new sources of spectrum, and we've got probably 150 MHz of spectrum sitting out there that people own that aren't being built on. I don't get that. This annoys me...Not to leave the broadcasters out of the debate, there are lots of issues that we have with retransmission and things of that nature we need to solve. But basically, confiscating the spectrum and repurposing for other things, I'm not sure I buy into the idea that that's a good thing to do."

But is there a spectrum crisis looming, the questioner persisted? Sure, responded Seidenberg, if we decide to put the equivalent of a transmission tower in everyone's back pocket: "If video takes off, could we have a spectrum shortage in five or seven years? Could be, but I think that technology will tend to solve these issues. And...I happen to think that we'll advance fast enough that some of the broadcasters will probably think, let me cash out and let me go do something different. So I think the market will settle it. So I don't think we'll have a spectrum shortage the way this document [the Broadband Plan] suggests we will."

The FCC's Lazarus saw Seidenberg as somewhat of a turncoat, abandoning what he had thought was a team effort to prove a spectrum crisis existed. Citing prior efforts by Verizon to promote the identification of new spectrum that could be allocated for broadband, Lazarus wrote, "The recent statements by Verizon's CEO are rather baffling. The fact is, Verizon played a major role in building an overwhelming record in support of more mobile broadband spectrum, consistently expressing its official view that the country faces a looming spectrum crisis that could undermine the country's global competitiveness...The National Broadband Plan record contains widespread agreement and a solid foundation of factual evidence on the need for the FCC to pursue policies that would free up 500 MHz for mobile broadband by 2020. We hope to work with Verizon and other companies across the communications sector on ways to achieve the important goal of ensuring that the United States has world-leading mobile broadband infrastructure."

In other words, hopefully Verizon will come back around and rejoin the Plan, writes Lazarus. In recent months, the FCC had used the spectrum crisis as a way of tying the Internet to the concept of the airwaves (which the FCC does regulate statutorily) as opposed to private pipelines (which it does not). If it could focus public attention on the airwaves and wireless as the homebase of the Internet, then it could prove it has more than ancillary authority to serve as its "cop-on-the-beat." But that argument may have already been choked off earlier this week.

Any authority for the FCC to regulate the Internet directly will need to be mandated by Congress, and not with existing law but with new law. Any effort to produce that new law will inevitably confront opponents sounding the battle cry against "big government." Market forces, unfortunately, will not resolve that looming crisis.