Last week, FCC Chairman Julius Genachowski gave a speech at LivingSocial’s Washington, D.C., headquarters about the economic impact of broadband. LivingSocial is a great example of a start-up company that has been empowered by broadband, becoming one of the leaders in the social-buying category and transforming the way consumers discover and buy goods and services.

The Chairman highlighted the economic force that broadband has become in the American economy, especially as a technology that powers job creation, and he cited a recent report by McKinsey which shows that broadband now creates 2.6 jobs for every one lost.

As cable was America’s first broadband provider, I welcome the Chairman’s remarks and enthusiasm about how broadband is sparking a renaissance in America’s economy.  But the irony of the entire speech is that not a single broadband company was even mentioned nor did we hear about the millions of jobs created by broadband providers which have built the networks that are the “indispensible infrastructure for America in the 21st Century.”

Sure, it’s to more fun talk about garage start-ups or cake delivery success stories, but let’s not forget who brought us to the dance.  Broadband is not some mystical force of nature. Broadband is the result of hard work and private investment, first from the cable industry and now many others.

The cable industry launched residential broadband service in the late 1990s and after $170 billion in construction and network upgrades, our broadband service is available to 93 percent of U.S. households – more than 123 million homes.  Cable’s broadband networks offer speeds of 5 Mbps or faster to more than 90 percent of U.S. households. Cable is also now providing next-generation wideband service, with speeds of 50 Mbps or more (in some cases, over 100 Mbps) to more than 90 million American homes.

Currently, 45 million customers rely on cable for their broadband Internet connections. As Chairman Genachowski notes, those broadband connections have become indispensible.

I know it’s been 15 years, but it’s important to remember that it was cable that brought broadband to life and gave birth to everything we delight in today.

But we also help impact the economy. Just this past March, we released the latest study by Bortz Media and Sports Group, Inc. on the economic impact of the cable industry. The study found that the U.S. cable industry supports nearly 1.8 million jobs representing gross economic output amounting to more than $251 billion.

Since 2002, direct and indirect employment attributable to the cable industry has increased by 638,000 jobs.  The industry added 4,700 jobs over the last three years at a time when the U.S. economy’s net loss of jobs was more than seven million.

We deployed broadband first; we offer some of the fastest speeds in the marketplace; we help keep American employed. When you think of the economic impact of broadband, don’t forget the critical role that cable has played.

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.

Yesterday, FCC Chairman Julius Genachowski  delivered remarks about proposed FCC rules to preserve an open Internet; the rules will be voted on at the FCC’s next meeting on December 21.

As I indicated in a statement regarding Chairman Genachowski’s proposal, we are pleased with much of what the Commission will be considering.  One particular aspect of his remarks, however, is worth highlighting.

Chairman Genachowski  noted:

Our work has also demonstrated the importance of business innovation to promote network investment and efficient use of networks, including measures to match price to cost such as usage-based pricing.

This approach reflects a responsible and considered view of a fast-moving and highly dynamic marketplace but it doesn’t assume that there is any one “correct” answer.  I made a similar point last year in an interview conducted by Ars Technica’s Nate Anderson:

…Internet pricing models are now on everyone’s collective mind. Is metered and/or capped Internet the future?

McSlarrow doesn’t defend any model; he’s not even partial to metering, having happily lived under flat-rate plans himself for many years. He also won’t defend particular business plans, like those advanced by Time Warner Cable. But what he will defend is cable’s right to experiment.

“I’ve lived under a flat rate plan,” he said, “but I don’t assume… that’s it’s necessarily impossible to believe that you could have a different model in the future.”

That means experimentation, and lots of it, done in the most transparent way, with full input from consumers. Without even doing the tests, McSlarrow says there’s simply no way to know whether certain business models will work better than others.

I also wrote on this very blog:

None of us knows with certainty what works best for consumers. As broadband providers, we face daunting and ever-changing challenges in ensuring that we do our level best to provide consumers with what they want, when they want it. But our goal has been, is, and will be to communicate with our customers in an open and transparent manner; to try new models that can be used to attract new broadband users and more equitably spread costs among high and low volume users, and – at the end of the day – to let the consumer make the ultimate choice of whether new models survive and thrive or are thrown into the dustbin of history.

Even though the cable industry first rolled out high-speed Internet access in the mid 1990s, this is still a relatively young business.  While 70 million Americans now subscribe, broadband adoption continues to be a key challenge.

Some consumers don’t see the need to go online.  Others are constrained by cost.  Still others want to use the service they have in cutting-edge ways.  And the ability to pigeonhole companies and their business plans as being one thing or another is breaking down, particularly in an environment where Internet applications, content, and services change the way we behave as consumers, provide new opportunities for providers and consumers and alter how we all interact with both traditional and new devices and features.

The key point is that that we need to focus on what best serves consumers.  With all this change, it is necessary to have the flexibility to test new business models – and perhaps new pricing plans – in order to see if they make sense.

A usage-based pricing model, for instance, might help spur adoption by price-sensitive consumers at the lower end of the socioeconomic ladder.  As Sanford Bernstein analyst Craig Moffett noted in a report issued yesterday, “{u}sage-based pricing for broadband would have profound implications.  At the low end, it would allow cable operators to introduce lower priced tiers that could boost penetration and help in efforts to serve lower income consumers.”

As I’ve said before, I’m not arguing for or against any particular model.  All I’m really confident about is that the marketplace is changing and that companies will have to adapt to that change.  Chairman Genachowski should be commended for recognizing the close connection between driving network investment and efficiency, providing consumers more choices, and permitting broadband providers to experiment with different business and pricing models.

Yesterday, during a speech at the Brookings Institute, FCC Chairman Julius Genachowski proposed new rules that would affect Internet access providers.

Saying the FCC must be a "smart cop on the beat preserving a free and open Internet," FCC Chairman Julius Genachowski Monday proposed adding two new Internet access principles to the existing four, and will begin the process of codifying all of them with a Notice of Proposed Rulemaking at the FCC’s October meeting.

In a written statement, NCTA’s President & CEO Kyle McSlarrow applauded Genachowski’s "vision of preserving an open Internet in order to promote entrepreneurship without permission." He reiterated the cable industry’s commitment "to an open Internet that allows consumers to use and enjoy lawful content and services of their choosing."

He also said:

We recognize that we may, however, have a different view about the state of competition and the choices and benefits that flow to consumers from that competition.  While we look forward to working with Chairman Genachowski and his colleagues, we will continue to present facts and data to the Commission that suggest that any regulation in this arena should be approached with great caution and only in the most targeted way, and to advocate policies that avoid government entanglement in operational decisions that could undermine the very dynamism of the Internet we all seek to preserve.

David L. Cohen, on the Comcast Voices blog, also indicated their support for the process.

We welcome the dialogue suggested by the Chairman in his comments, and we completely agree that any consideration of new “rules of the road” begin with notice and an open, public rulemaking proceeding – this is both fair and appropriate.

A tweet from Julian Sanchez yesterday raised an interesting point. There are those who may object to any government regulation at all. There are also those who may reflexively support any regulation that seems to be opposed by "big companies."

Previously, we noted on this blog how the "net neutrality" debate has evolved over time. NCTA has consistently supported our customers’ ability to travel the Internet freely; our Internet access service wouldn’t be of much use without that. But the devil is always in the details and while we have always supported fair rules, it will be critical to move forward carefully.