Tomorrow, the FCC will at long last begin action to transform the existing inefficient and outdated system of universal service subsidies. The need for fundamental reform of these subsidy mechanisms is beyond dispute. For too long, consumers have borne the increasing burdens of a system that is riddled with inefficiency and waste, that ignores modern-day, competitive realities, that misallocates scarce funds, and that is utterly ill-suited to meet our 21st Century challenge of expanding broadband access to all Americans.

Today’s speech by FCC Chairman Genachowski outlining a framework for universal service is welcome sign that the FCC is serious about reform. While we all await the specifics of new rules, the guiding principles outlined today establish a framework that is appropriately premised on the necessity of enacting current reforms to achieve our future goals. In that regard, NCTA welcomes the Commission’s renewed commitment to the following principles:

• Fiscal responsibility. As the Chairman recognized, the transition to a modern, broadband-focused mechanism must be accomplished without significant increases in the overall size of the program. The universal service fund is paid for by American consumers and we believe that any proposal that fails to include meaningful limits on the total size of the program would be a non-starter in the current economic and political climate.

• Targeted support. The key to achieving the Commission’s broadband goals in a fiscally responsible manner is appropriately targeting any new broadband support mechanisms. Unlike the current high-cost support mechanism, which supports multiple providers in some markets and supports incumbents in markets where competitors are providing service without support, any new broadband mechanism should support only a single provider and only in those areas where the market is shown to be ineffective. Focusing support in this manner ensures that funds are used wisely and companies that have invested private capital are not facing unfair competition from providers supported with government money.

• Accountability. One of the biggest problems with the current universal service high-cost mechanism is that the Commission distributes over $4 billion in support every year without establishing specific, measurable goals for the program or imposing any real obligations on the recipients. As the Chairman noted, any broadband support program must start with a clear goal – bringing service to unserved areas – and must include increased disclosures about the operating performance and financial condition of recipients that are designed to achieve the goal of providing broadband access.

The principles highlighted by the Chairman today mesh well with these goals and with the recommendations made almost one year ago in the National Broadband Plan. At that time, the Plan set out a blueprint for a public-private partnership that would rely on limited government funding to bring broadband to areas where the market would not do so, while recognizing that private investment would remain the key component to deploying broadband through the vast majority of the nation. NCTA supported these common sense proposals and we are encouraged to see that the FCC is now setting the stage to start implementing them later this year.

We recognize that USF reform will not be easy. It has proven to be notoriously difficult to implement in the past, and it would be a mistake to gloss over the significant challenges associated with modernizing a multi-billion dollar program that hundreds of incumbent phone companies have grown to depend on. Nevertheless, we remain convinced that reforming universal service support in a manner that remains faithful to these principles will promote access to broadband services across the nation without overburdening consumers that pay into the fund and without harming continued private investment in areas where government subsidies are unnecessary.

If you were one of the 145,000 visitors to the 2011 Consumer Electronics Show, you couldn’t have swung an iPad without hitting one of the thousands of Internet-enabled “smart” TV and other devices that are transforming the consumer video marketplace.

The proliferation of these devices, plus a whole host of new business arrangements between “traditional” video providers and device makers, highlight how consumers are enjoying ways to view video programming on multiple devices when and where they want it.  A previous post on this year’s CES highlighted some of these exciting new choices.

To highlight this remarkable growth and urge the Commission to refrain from adopting new tech mandates that could stifle this innovation, NCTA President & CEO Kyle McSlarrow today sent a letter to FCC Chairman Julius Genachowski on the Commission’s “AllVid” proceeding (see some background here).

In his letter, Kyle pointed to the dozens of recent business announcements which have “emerged to meet consumer demand without any technology mandate or regulatory guarantee.”

The fact that tens of millions of tablets, game consoles, Internet-connected TVs, and other smart, video-capable devices have been sold and will be sold means that the Commission no longer needs to ‘create’ a retail market for navigation devices…  Instead, the Commission should focus on “keeping the runway clear” of impediments and unnecessary rules that could slow these exciting developments.

The growing list of marketplace developments is impressive, and getting longer each week:

• Video services from Comcast, Time Warner Cable and Verizon are being offered as retail applications on televisions, tablets, PCs, and gaming devices, including those manufactured by Samsung and Sony.
• More than 118 million Internet-connected TVs are expected to be sold by 2014, and competing smart video devices and game consoles offer video services from MVPDs and over-the-top video providers including Netflix, YouTube and Hulu.
• Several video providers are now offering “TV Everywhere” online services for Internet-connected devices without the need for a “gateway,” and MVPD set-top boxes are beginning to combine TV and web content.
• Secure home networks are being used to collect video content from a variety of sources to be shared with Internet-connected TVs, game consoles, PCs, and mobile devices.
• New video interfaces are emerging as smart phones are blurring the lines between the mobile and big screen experience, and new digital rights technology will provide consumers new ways to buy content from multiple vendors and enjoy it on a variety of Internet connected-devices.
• Video providers, including Charter, Cox and Suddenlink, and device manufacturers like TiVo are working together on unique programming distribution agreements, combining the retail device and MVPD service experience.

This combination of strong competition between multichannel video providers –which includes cable, DirecTV & DISH, AT&T’s U-verse & Verizon’s FiOS – and the emergence of so many new ways of viewing video through broadband – Hulu, Netflix, Roku, Boxee, Apple TV – means that the pace of innovation will likely continue. But McSlarrow warned that we must ensure that this diversity of choice not be “undermined by unnecessary one-size-fits-all and other harmful government technology mandates.”

Instead of the Commission mandating specific technical requirements that could stifle innovative in this dynamic marketplace, McSlarrow argued that cable’s consumer device video principles – which were first submitted to the FCC in March 2010 – could be used to assess and assure innovation and progress in the video service and video devices markets.

The iPad analogy at the beginning of this post may be an exaggeration but when the National Broadband Plan was adopted last year, the iPad hadn’t even been released.  If that doesn’t demonstrate how fast the marketplace changes, I don’t know what does.

As we’ve argued before, during a period of such innovation and experimentation, it’s unclear what approaches lie on the horizon or which ones will ultimately succeed.

Today, the FCC voted on rules that would apply to Internet access providers. We issued a statement from NCTA’s President & CEO Kyle McSlarrow.

“Our consistent view has been that the current ‘openness’ of the broadband marketplace can be preserved while simultaneously fostering the innovation and massive private investment needed to ensure the future growth and vitality of the Internet. While we agree entirely with Commissioners McDowell and Baker that new regulation is not necessary to accomplish that goal, it has been clear for some time that there were three votes at the Commission for rules that would go much farther than those adopted today. Thus, the question before us has been whether rules could be drafted in a manner that avoids a raft of unintended consequences and that preserves broadband providers’ ability to innovate and invest in a marketplace that justly represents a great American success story.

“As I have stated previously, months of negotiations and discussions have led to a rough consensus of rules that we believe can accomplish those goals and avoid the extreme and counterproductive demands for rate regulation, unbundling of networks, and reclassification under Title II. While we will reserve final judgment until after we have an opportunity to closely review the text of the Order once it is released, it appears that the rules themselves contain that compromise consensus.

“We would like to commend Chairman Genachowski and his staff for working in good faith toward a workable compromise on this set of issues. While, like apparently everyone else in America, this would not be the Order we would have written, we do appreciate the attempt to provide certainty and to balance the openness of the Internet with the preservation of an incredibly dynamic and successful marketplace.”

Here’s just a sample of the immediate news coverage.

• FCC Adopts First Open Internet Regulations (Multichannel News)
• F.C.C. Approves Net Rules And Braces For Fight (NYT‘s Media Decoder blog)
• FCC makes Net neutrality rules official (CNet)

Yesterday, the FCC held the Generation Mobile forum, which brought together teens, parents, educators and experts to discuss the opportunities and challenges around mobile technology use (Read about it on the FCC’s blog or the NYT‘s Bits blog).

If you have kids, you’re most likely aware that cell phones are increasingly prevalent in their lives, which then raises concerns about privacy invasions, cyberbullying, sexting, and addictive behavior. Some statistics were offered:

• 12% of teens can have a cell phone at school at all times
• 63% of teens say they’ve sent a text message in class
• 43% of kids have sent mean messages via text
• 33% of teens have received a sext message

The event is a timely reminder that technology can be very empowering, but it requires savviness and, at times, some caution.

As the cable industry has become a leader in delivering broadband to 42 million consumers, we’ve also taken on the responsibility to help parents and teachers educate our children how they can be smart and safe in this increasingly complex digital world.  Cable in the Classroom, the cable industry’s education foundation, is leading this effort; yesterday, they re-launched their website, which better represents their new focus on digital citizenship.

What is digital citizenship?

Digital citizenship brings Internet safety and security together with digital literacy, ethical behavior and civic engagement in a holistic package of curricular resources, lesson plans, activities, and research.

This concept of digital citizenship is a new one and CIC is working closely with the experts in the field to help define this idea and help deliver the resources that teachers and parents need to instill it in children.

FCC Commissioner Mignon Clyburn applauded CIC’s focus saying that:

The inclusion of a Digital Citizenship initiative is another step in the right direction, as the awareness of essential online techniques is crucial as more and more children and new users venture into the connected universe.

Working together, we can make our children responsible citizens in our newly digital world.

“Averages don’t always reveal the most telling realities. You know , Shaquille O’Neal and I have an average height of 6 feet.” – former U.S. Labor Secretary, Robert Reich.

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We continue to get new data that helps spell out the state of broadband in America, but sometimes we have to sift through the numbers to see what’s actually being captured.

While some coverage of this week’s FCC Report on Broadband Internet Access Services seems to have opted for a glass half-empty approach, (“more than two-thirds (68%) of… U.S. broadband connections tracked were too slow… to technically qualify as high-speed service”), there’s a decidedly different story if you look more closely at the numbers.

First, the report focuses on what broadband speeds consumers elect to purchase, not on availability. Second, the Report includes all available means to connect to the Internet – including wireless and DSL – in addition to fiber and cable broadband deployments.

Cable broadband is available to 93% of U.S. households, offering speeds of 5 Mbps or faster to more than 90% of U.S. households. With continued investment in the rollout of ultra-fast access built on DOCSIS 3.0, the future will only get brighter for those consumers with the need for speed. A report earlier this year forecast that D3 would reach approximately 92% of homes by 2013.

The Report’s findings do mean that many consumers have higher speeds available to them but are opting to subscribe to lower speed tiers. In part, this is just a reflection of the choices that are available. While cable is busy deploying faster speeds, we offer multiple options. Some people elect to connect to the Internet through their mobile devices. Others to want to save money by opting for slower connections. It’s important to make sure that consumers can select the scenario that works best for their needs.

As we all work together to promote broadband adoption and to expand the reach and capabilities of next-generation broadband networks, it’s good to get beyond the averages of the marketplace and take stock of some of the good news.