Untangling the third wire: broadband over power lines, open access, and net neutrality.

• Author: Foley, Paula W.
• Position: Report

1. Introduction

   Today, high-speed Internet access services are provided primarily over coaxial cable in the form of cable modem services offered by cable television providers, and over copper telephone wires in the form of DSL offered by local telephone companies. Electric utility companies providing broadband over existing power lines represent a potential "third wire" to provide high-speed Internet access to homes and businesses and provide competition to the current market leaders. This note will provide an overview of broadband and broadband over power line services and will discuss a discrete regulatory aspect of telecommunications, network access requirements (including the concepts of open access and net neutrality), as it relates to the provision of broadband over power lines.

2. Broadband Overview

   In the Telecommunications Act of 1996, (1) Congress directed the Federal Communications Commission (FCC) to encourage deployment of advanced telecommunications capability in the United States on a reasonable and timely basis (2) and to "promote the continued development of the Internet." (3) The term "broadband" defines a type of advanced telecommunications technology that provides high-speed and high-capacity access to the Internet. (4) Broadband access has been recognized as vital to education, health care, employment, productivity, and homeland security. FCC Chairman Kevin J. Martin has stated that encouraging the deployment of broadband services is his top priority. (5) Furthermore, President George W. Bush has established a national goal of making affordable broadband services available to all Americans by 2007. (6)

   When access to the Internet first became available, the majority of American households with Internet connections subscribed to "narrowband" service provided over local telephone facilities (also known as dial-up Internet access). (7) However, technological limitations of local telephone wires limit the speed at which Internet data may be transmitted through narrowband connections. Therefore, high-speed "broadband" access soon developed. Subscribers to broadband access services can access the Internet at speeds that are significantly faster than telephone dial-up service. (8) As a result of faster access, subscribers can access information with much less transmission delay, can utilize complex "real-time" applications (9) (such as interactive gaming and Voice over Internet Protocol (VoIP) (10)) and view video programming similar to current broadcast and cable television services.

   1. Types of Broadband

      High-speed Internet access services are provided primarily over coaxial cable in the form of cable modem services (11) offered by cable television operators, and over copper telephone wires in the form of digital subscriber line (DSL)12 offered by local exchange carriers (LECs). (13) In addition, mobile and fixed wireless providers provide broadband over wireless radio spectrum (14) and satellite providers provide broadband over satellite radio spectrum. (15) In addition, broadband can be provided by fiber, (16) as well as electric power lines. However, not every home and business has access to every type of broadband service and there are some areas of the country that do not have access to any broadband service. (17)

   2. Broadband Over Power Lines: The Third Wire

      Broadband over power lines (BPL) (18) uses existing electrical power lines as a transmission medium to provide high-speed communication capabilities by coupling low power radio frequency (RF) energy onto alternating current power lines. (19) Given that power lines reach virtually every residence and business in every community and geographic area of the country, BPL has the potential for ubiquitous deployment and to provide additional competition for the existing market leaders, cable and DSL broadband access services. (20) Unlike satellite, fiber, or wireless broadband technologies, BPL uses existing infrastructure for transmission, meaning that no new wires need to be installed in order to distribute the broadband connection to each house in a neighborhood, and BPL can be accessed from any electrical outlet in each house without additional inside wiring. (21) This means that BPL service providers face a low cost of market entry and the potential for quick deployment, possibly providing a broadband option for rural or other markets that may otherwise be expensive to serve. (22)

      BPL also differs from other broadband technologies in that it can be used to provide enhanced services to the underlying electric utility. For example, enhanced services BPL could make available to the underlying electric utility include outage and restoration detection, network security and monitoring, automated meter reading, and transformer overload detection. (23) Such "smart grid" capabilities have the potential to enhance the efficiency and reliability of electric utilities' power operations. (24)

      However, licensed radio service users in both the private and government sectors have expressed the need to ensure that the RF energy from BPL signals on power lines does not cause harmful interference to licensed radio services. (25) Most BPL systems operate in the 2 MHz--80 MHz range; users of this portion of the spectrum also include public safety and Federal government agencies, aeronautical navigation licensees, amateur radio operators, international broadcasting stations, and citizen's band radio operators. (26) The FCC has concluded that BPL systems can be configured and managed to minimize or eliminate the potential for interference with other spectrum users and has established rules to provide operational, administrative, and certification requirements for BPL systems operators. (27) To date, the majority of deployments of BPL by electric utilities have been limited to experimental or "pilot" deployments. Examples of full-scale commercial deployments of BPL are those by Cinergy in Cincinnati, Ohio, and the municipal utility in Manassas, Virginia. (28) While the FCC does not report individual market share data for all technologies, the current BPL market share appears to be less than 1% of existing broadband lines. (29)

      With regard to regulatory oversight, BPL service providers face issues arising from regulation of the underlying electric utility as well as telecommunications regulation. (30) The remainder of this note focuses on one discrete regulatory issue relating to telecommunications, network access requirements, as it relates to BPL.

3. Network Access Requirements

   Network access, as a general term, refers to the ability of a service provider to have access to a competitor's facilities-based network in order to provide a competing service. "Open access" is a regulatory construct that allows competitors to have network access on nondiscriminatory terms and conditions at rates that are "just and reasonable." (31) In the telecommunications context, open access requirements are often referred to as the regulatory obligation to "unbundle" facilities. (32) In the broadband Internet context, unfettered access by subscribers to competing service providers via the Internet is often referred to as "network [or 'net'] neutrality." (33)

   1. The Title Bout

      An evaluation of regulatory requirements for communications services begins with the Communications Act of 1934. (34) The Communications Act contains sections, or titles, which describe the extent of regulation imposed on communications service providers by regulatory agencies depending on what type of service is being provided. (35) For broadband providers, two categories of service provider defined in the Communications Act are of central importance: "telecommunications service provider" (36) and "information service provider." (37) Being placed in one category as opposed to the other determines the degree of regulatory oversight, and therefore has significant implications to service providers. Telecommunications carriers must comply with a number of regulatory mandates set forth in Title II of the Communications Act, such as offering service on a nondiscriminatory basis at just and reasonable rates, (38) interconnecting their networks with the facilities and equipment of other telecommunications carriers, (39) unbundled access requirements, (40) and universal service obligations. (41) The FCC may forbear from applying these mandatory provisions, if it determines that forbearance is in the public interest. (42)

      Conversely, information service providers are not subject to Title II or to rate regulation or state-imposed entry regulation. Rather, information service providers are subject to minimal Federal regulation under the basic public interest principles set forth in Title I of the Communications Act. (43) The FCC may employ jurisdiction under Title I in its discretion, when Title I gives the FCC subject matter jurisdiction over the service to be regulated and the assertion of jurisdiction is reasonably ancillary to the effective performance of the FCC's various responsibilities. (44)

   2. Brand X

      The importance of the statutory designation of information or telecommunications service, as it relates to the issues of broadband network access, was recently demonstrated in a June 2005 United States Supreme Court decision, National Cable & Telecomm. Ass'n v. Brand X Internet Servs. (45) The matter originated with the FCC's designation of cable modem broadband service as an information service rather than a telecommunications service thereby subjecting the service to Title I of the Communications Act rather than Title II.

      1. The FCC's Declaratory Ruling on Cable Modem Services

         In March 2002, the FCC released a Declaratory Ruling and Notice of Proposed Rulemaking, (46) in which the FCC attempted to resolve the lingering questions regarding the legal status under the Communications Act of high-speed access to the Internet provided by cable modem services. Noting that the Communications Act does not...