Part 2:Part 2:

Universal Internet AccessUniversal Internet Access

Robert Cannon

Senior Counsel for Internet Issues

Office of Plans and Policy

US Federal Communications Commission

Standard DisclaimerStandard Disclaimer

Views expressed are Robert Cannon’s and do not necessarily

represent those of the FCC, the Commissioners, or its staff.

““A Nascent Industry”A Nascent Industry”

1991

1997

Sou

rce:

M

atrix

.net

Loga

rithm

ic

Distribution of ISPsSeptember 1996

1996

Distribution of ISPsOctober 1998

1998

Number of Internet Hosts Source: Matrix.Net

100-200%

50-100%

25-50%

Decrease

Sou

rce:

M

atrix

.net

Online PopulationsOnline Populations

0100200300400500600700800900

1000

1997 1998 1999 2000 2001 2002 2003 2004

U.S. W. Europe Non-Japan Asia Japan Latin America

Source: Morgan Stanley Dean Witter, The Global Internet Primer (June 2000)

Mill

ion

North AmericanNorth AmericanBackbone ProvidersBackbone Providers

05

101520253035404550

Source: Boardwatch Magazine

Num

ber

of P

rovi

ders

Backbone MarketBackbone MarketInternational Internet Connections to Countries with One or

Two ISPs

26%

20%

17%

6%

4%

4%

3%3%

3%3%

3%3%3%1%

1%

France Telecom

Cable and Wireless

Teleglobe

Hong Kong Telecom

Telecom Italia

Concert

Telecom Portugal

Interpacket

Telstra

Singapore Telecom

Tele2

Worlcom

Global Crossing

Telkom (South Africa)

Thaicom

Source: OECD

Factors for Internet DeploymentFactors for Internet Deployment

• Telecommunications Pricing• Universal Telecommunications Service• Customer Premises Equipment Market

(Modems)• Computer Inquires: Telecom Safeguards

– Open Platform / Bottlenecks– Anticompetitive Behavior

Telecommunications PricingTelecommunications Pricing

40 Hours US$ PPP (off-peak), September 200040 Hours US$ PPP (off-peak), September 2000

www.oecd.org/dsti/sti/itwww.oecd.org/dsti/sti/it//

0

10

20

30

40

50

60

70

80

90

PSTN fixed charge PSTN usage charge (discounted) ISP charge

Internet subscribers and pricingInternet subscribers and pricing

United States

United Kingdom Sw itzerland

Sw eden

Portugal

Norw ay

New Zealand

Netherlands

Mexico

Korea

JapanItaly

Ireland

Iceland

HungaryGreece

Germany

France

Finland

Denmark

Czech Republic

Canada

Austria

Belgium

Australia

Spain

OECD average

0

5

10

15

20

25

0 10 20 30 40 50 60 70 80 90 100

Internet Subscribers per 100 inhabitants (January 1, 2000)

Average Price for 20 hrs Internet access 1995-2000, in US$ PPP

Internet Development and Pricing Internet Development and Pricing

OECD average

Spain

Australia

Belgium

Austria

Canada

Czech Republic

Denmark

Finland

France

Germany

Greece Hungary

Iceland

IrelandItaly Japan

Korea

Luxembourg

Mexico

Netherlands

New Zealand

Norw ay

PolandPortugal

Sw eden

Sw itzerland

Turkey

United Kingdom

United States

0

50

100

150

200

250

0 10 20 30 40 50 60 70 80 90 100

Internet Hosts (October 2000)

Average Price for 20 hrs Internet access 1995-2000, in US$ PPP

At the beginning of 2000 five countries had unmetered At the beginning of 2000 five countries had unmetered access. At the close of 2000 there will be 12.access. At the close of 2000 there will be 12.

• ‘Traditional’:– Australia, Canada,

NZ, Mexico, US.

• Introduced in 2000:– 24/7: Germany,

Portugal, UK.– Off-peak: Finland,

Hungary, Korea, Spain.

• Close Call:– Japan (NTT for ISDN

and late night)

• Unmetered but not from incumbent:– France, Netherlands,

Ireland, Italy, Poland, Switzerland, Sweden.

Source: OECD

US Telecom Universal ServiceUS Telecom Universal ServiceHistorical Telephone Penetration EstimatesHistorical Telephone Penetration Estimates

0102030405060708090

100

1920 1930 1940 1950 1960 1970 1980 1990

Source: FCC

GreatDepression

Deregulation of CPEDeregulation of CPE

• Carterphone 1959: connects radio to telephone

• FCC overturns AT&T tariff that prohibits interconnection

• Standardize as Part 68• Result in vibrant

modem market

Computer InquiresComputer InquiresRecapRecap

• Separation of Basic and Enhanced– Unregulation of Enhanced Services– Affirmative regulation of carriers

• to meet the needs of data processing• to promote innovation and competition in the data

processing market• to assure equal access for computer service to

essential communications services • to prevent anticompetitive behavior

• Open communications platform

Resulting MarketResulting MarketLow Barriers to EntryLow Barriers to Entry

Telecom

7000+ ISPs

Many 1000s of Content and Application Providers

Mistakes We Have Made...Mistakes We Have Made...

I think there is room in the world for maybe five computers.

- Thomas Watson Sr.,Chairman of IBM Corp

1943

This 'telephone' has too many shortcomings to be seriously considered as a means of communication. The device is inherentlyof no value to us.

- Western Union, 1876.

Sou

rce:

M

atrix

.net

Internet

BitnetARPANet

Community NetworksCommunity NetworksBandwidth v. ContentBandwidth v. Content

• Training

• Community Empowerment

• Promote Local– Communication

– Economy

– Health

• E-Democracy

• Not a global shopping mall

• Creators not Consumers

www.afcn.netTelecommunity Resource Center

www.tcrc.net Gene Crick

AC

LU v

. Ren

oA

CLU

v. R

eno

(Com

mun

ica t

ions

Dec

enc y

Act

)(C

omm

unic

atio

ns D

ecen

cy A

ct)

It is no exaggeration to conclude that the Internet has achieved, and continues to achieve, the most participatory marketplace of mass speech that this country -- and indeed the world -- has yet seen. The plaintiffs in these actions correctly describe the "democratizing” effects of Internet communication: individual citizens of limited means can speak to a worldwide audience on issues of concern to them. Federalists and Anti-Federalists may debate the structure of their government nightly, but these debates occur in newsgroups or chat rooms rather than in pamphlets. Modern-day Luthers still post their theses, but to electronic bulletin boards rather than the door of the Wittenberg Schlosskirche. More mundane (but from a constitutional perspective, equally important) dialogue occurs between aspiring artists, or French cooks, or dog lovers, or fly fishermen. . . . [T] the Internet may fairly be regarded as a never-ending worldwide conversation. The Government may not, through the CDA, interrupt that conversation. As the most participatory form of mass speech yet developed, the Internet deserves the highest protection from governmental intrusion. -- ACLU v. Reno, CA No. 96-963 (E.D.Pa June 11, 1996), affirmed, No. 96–511(S.Ct. June 26, 1997)

Strategy of Universal AccessStrategy of Universal AccessThrough Local Access PointsThrough Local Access Points

E-rateE-rate

Schools and Libraries Schools and Libraries ProgramProgram

Discount MatrixDiscount MatrixINCOME

Measured by % ofstudents eligible for theNational School Lunch

Program

URBAN LOCATION

Discount

RURAL LOCATION

Discount

If the % of students in yourschool that qualifies for the

National School LunchProgram is…

…and you are in an URBANarea, your

discount will be…

…and you are in aRURAL area, yourdiscount will be…

Less than 1% 20% 25%1% to 19% 40% 50%

20% to 34% 50% 60%35% to 49% 60% 70%50% to 74% 80% 80%

75% to 100% 90% 90%

Schools and Libraries Schools and Libraries ProgramProgramProcessProcess

Contra

ct

Forms

Money

School

Service ProviderUniversal Service

Administrator

Schools and Libraries ProgramSchools and Libraries ProgramWhat is CoveredWhat is Covered

• Covered– Wiring– Routers– Hubs– Network File Servers– Necessary Software– Installation– Maintenance– LANs

• Not Covered– Computers

– Hardware

– Non-network software (applications)

– Fax Machines

– Modems

– Teacher Training

– Upgrades to Electrical System

– Asbestos Removal

– SecurityEligible Services Listhttp://www.sl.universalservice.org/Reference/eligible.asp

Schools with Internet AccessSchools with Internet Access

010

2030

40

5060

70

8090

100

1994 1996 1998 1999

Classrooms

All Public Schools

Per

cent

E-Rate School and Library Internet Access Subsidies:84% funding has gone to public schools

$4B has been distributed

www.sl.universalservice.org

TimelineTimeline

1970 1980 1990 2000

TCP/IPInvented

DNS

IAB

W3C

TCP/IP

Comp III

Concluding Thoughts...Concluding Thoughts...

• Internet Growth is Robust• Telecommunications Policy is a key

factor to Internet Deployment– Focus on bottlenecks

• Government Partnership– Research & Development– Universal Service

• Net is more than a global shopping mall

Potential Policy SolutionsPotential Policy SolutionsTexasTexas

Ab

ility

to P

ay

Population Density

Low

Low

High

High

Technology,Demand

AggregationCompetition

Loan and Tax Incentive Programs,

Community Networking, Social

Contracts

Grant Development, Economic and

Community Development

Initiatives

Source: Brett Perlman, Texas Public Utility Commission

Thank You . . .Thank You . . .

Robert CannonSenior Counsel for Internet Issues

FCC Office of Plans and Policyrcannon@fcc.gov

Schools and Libraries Schools and Libraries ProgramProgram

ResourcesResources• FCC School & Libraries Program website

www.fcc.gov/ccb/universal_service/schoolsandlibs.html

• Universal Service Administrator’s SL Website http://www.sl.universalservice.org/

• Merit.Net http://www.merit.edu/k12.michigan/usf/

• The New Universal Service: NTIA's Guide for Users http://www.ntia.doc.gov/opadhome/uniserve/univweb.htm