|
REMARKS OF SEEMA M. SINGH, ESQ,
RATEPAYER ADVOCATE
PRESENTED BY
CHRISTOPHER J. WHITE, ESQ.
DEPUTY RATEPAYER ADVOCATE
NEW JERSEY DIVISION OF THE RATEPAYER ADVOCATE
BROADBAND TELECOMMUNICATIONS AND MULTI-CHANNEL
VIDEO PROGRAMING COMPETITION IN NEW JERSEY
PUBLIC HEARING
Board of Public Utilities
Newark, New Jersey
February 26, 2004
2:00 P.M.
Good Afternoon. My name is Christopher J. White and I am an attorney
representing the New Jersey Division of the Ratepayer Advocate. I am pleased
to be here today to voice the Ratepayer Advocate’s thoughts on how
high-speed Internet services should be classified, and the role of the
New Jersey Board of Public Utilities in such classification process. High-speed
internet access is essential for the provisions of a variety of broadband
services including Voice over Internet Protocol (VOIP), video, and e-mail.
All these services involve communications. The Communications Act of 1934
( the “Act”) established dual jurisdiction between the states
and the Federal Government regarding communications by various technologies.
Section 2(b) of the Act in general carves out the jurisdiction of states
to regulate the charges, classifications, practices, services, facilities,
or regulations for or in connection with intrastate communication services
by wire or radio of any carrier.
Whether a particular service is labeled as a “Telecommunications”
service or an “Information” service has a significant impact
on who can regulate it and how it is regulated. One need only look at
cable modem service which the FCC has declared as an information service
and not a cable service. As a result of that classification in March 2002,
cable operators who provide cable modem service are not subject to regulation
Under Title VI of the Act, nor as a common carrier under Title II of the
Act, but rather under Title I of the Act. Title I of the Act is far less
stringent than either Title II or VI of the Act. On October 6, 2003, the
Ninth Circuit Court of Appeals vacated the FCC’s decision and remanded
the matter to the FCC. Specifically, the Court found that cable modem
service was part “telecommunications” and part “information”
services. At the same time that the FCC classified cable modem service
as an “information” service, the FCC issued a Notice of Proposed
Rulingmaking seeking comment on:
• the implications of the classification for the FCC’s parallel
rulemaking on Digital subscriber lines (“DSL”) service;
• the scope of the FCC’s jurisdiction to regulate cable
modem service, including whether there are constitutional limitations
on that jurisdiction;
• the need, if any, to require cable operators to provide access
to competing Internet Service Providers (“ISPs”);
• the effects of the regulatory classification on the marketplace
for and the continued deployment of broadband service;
• the role of state and local franchising authorities in regulating
cable modem service; and
• the relationship between the FCC’s classification determination
and statutory or regulatory provisions concerning pole attachments,
universal service, and the protection of subscriber policy.
The Ratepayer Advocated filed comments with the FCC and those comments
supported that local franchising authorities should exercise jurisdiction
over cable modem service quality and that open access should be required.
The Ratepayer Advocate is also concerned that revenues from regulated
cable services do not subsidize cable modem service and cable telephony.
Ratepayers should only pay fair, just and reasonable charges for cable
service. For the most part, cable customers do not have choice and adequate
competition. Therefore, there exists the real possibility that cable service
rates are being maintained at high levels to subsidize other services
such as cable modem and cable telephone which the cable operators refer
to as “information” services.
In our public hearing statement given on February 24, 2004 concerning
proposed changes to Chapter Seventeen to Title 14 of the New Jersey Administrative
Code, the Ratepayer Advocated noted that given the recent competitive
environment in which cable operators have made significant headway in
the broadband and telephone markets, the potential for cross-subsidization
is even more pronounced. In order to combat this potential problem, the
Ratepayer Advocate recommends that the Board require cable operators to
identify all employees and costs that are allocated between cable and
non-cable services and to provide descriptions of all services shared
or exchanged between cable and non-cable operations. Such vital information
will assist the Board in assessing whether or not the cable operator is
misallocating costs between cable and non-cable services. Providing such
data will serve the public interest.
The complexity with defining a service as a telecommunications service,
a cable service or an information service is clearest as it relates to
VOIP. The FCC held a public forum on December 1, 2003 in Washington, D.C.
with representatives from Government and industry. Technical and market
issues surrounding Voice Over Internet were addressed. There was general
consensus that Voice Over Internet can be used to offer customers lower-cost,
innovative services with capabilities previously unavailable in voice
communications. Voice Over Internet has the potential to offer residential,
large and small business customers the prospect of lower cost alternatives
for local, long distance and international services while promoting increased
efficiency.
Voice Over Internet essentially turns voice into digitized data and then
transmits it over the internet. The technology to transmit voice is less
expensive than traditional telephone technology and also makes it possible
to provide a wide range of features, including video phones and being
able to monitor phone activity and listen to voice mail from over the
internet.
Public policy questions were also addressed such as if and how Voice Over
Internet should be regulated and what affect Voice Over Internet may have
on social policy such as access by persons with disabilities, universal
service, and Enhanced 911. As a matter of fact, just a couple of weeks
ago, various phone companies announced plans to roll out consumer Voice
Over Internet service over high-speed connections, potentially providing
a boost in demand for broadband service.
The cable TV industry sees an opportunity here as well. In December 2003,
Time Warner announced that it signed a deal with Sprint and MCI to provide
this service. Time Warner said it expected to offer this service by the
end of 2004. In addition to Time Warner, cable giants Comcast and Cablevision
have begun deployment of Internet phone services. This move shows how
competitive the telecommunications market has become.
Many states, currently fourteen, are now actively involved in determining
whether Voice Over Internet should be regulated at the state level as
another form of telecommunications service. Unless the proper regulatory
approach is adopted, a level playing field cannot exist between the telephone
networks and the Voice Over Internet networks.
There are important public policy issues such as whether access charges/intercarrier
compensation should apply to VOIP. Access charges support the Public Switch
Telephone Network, and universal service, and 911. There are important
questions concerning whether and how Communications Assistance for Law
Enforcement Act (CALEA) will apply to VOIP. There are also questions whether
various federal and state charges should apply equally to cable modem
and VOIP services.
The Ratepayer Advocate applauds the BPU and the Office of Cable Television
(“OCTV”) for the proactive steps they are taking to look at
these issues. As FCC Commissioner Adelstein noted at the National Governors
Association winter meeting in Washington this week, Governors need to
guard against the FCC overreaching jurisdictionally on VOIP issues into
realms best left to state control. He noted “ I have already heard
from governors and other state officials who are very concerned about
this push for federalization for at least one big reason- the future of
a state’s economy can depend on the quality of its communications
infrastructure.”
In conclusion, the Ratepayer Advocate thanks the Board for the opportunity
to comment today and the Ratepayer Advocate is confident that New Jersey
ratepayers will greatly benefit from this public forum and the Board’s
subsequent considerations of these most important issues. Thank You.
|
