Beyond the fact that the Federal Communications Commission (FCC) decided to release the executive summary of its long awaited National Broadband Plan via a PDF of a scanned printed copy, there are other reasons to be concerned about the agency’s ability to centrally plan one of the most important, fast-moving sectors of our economy. In this video clip, I discussed some of my general reservations with the idea of a gargantuan government industrial policy for the broadband sector, and in this essay I noted how, from what we’ve see of the plan thus far [Executive Summary], the FCC appears to be engaged in some creative accounting techniques to fund the scheme.
Not everything in The Plan troubles me, however, and I hope to touch on some of the more sensible elements in a future post. But, as I was reading through it, I flagged 5 regulatory hot potatoes in the plan that threaten to derail the entire thing. In this regard, the parallels between the National Broadband Plan and the debate over health care “reform” are really quite striking. Indeed, it appears the Administration has once again settled upon a “go for broke” (potentially quite literally!) strategy. In both cases, they appear hell-bent and trying to do it all in the form of One Big Plan. Now, I won’t lie to you; such everything-plus-the-kitchen-sink public policy gambits make me nervous based simply on the sheer scale of the undertaking. When Washington tries to regulate massive chunks of the economy using bloated bills and bureaucracies inside the Beltway, it troubles me greatly. But even if the sound of Big Government on Steroids doesn’t raise your blood pressure, one would hope that the prospect of political gridlock and litigation hell would force advocates to scale back their ambitions a tad bit. After all, what good is a plan that can never pass or be implemented?
That’s why I was rather surprised to see these 5 regulatory initiatives teed up in the National Broadband Plan:
(1) Return of the Forced Access Regulatory Nightmare? The Plan says the FCC will, “Undertake a comprehensive review of wholesale competition rulesto help ensure competition in fixed and mobile broadband services.” As my friend Randy May of the Free State Foundation notes: Continue reading →
After working my way through the Executive Summary of the Federal Communications Commission’s (FCC) National Broadband Plan, there are a number of things I find troubling that I will get to in a subsequent post. But here’s the thing about “The Plan” that I found most surprising — even audacious — in its arrogance: The FCC wants us to believe the whole scheme is costless. The agency bases this astonishing claim on the following assumptions:
Given the plan’s goal of freeing 500 megahertz of spectrum, future wireless auctions mean the overall plan will be revenue neutral, if not revenue positive. The vast majority of recommendations do not require new government funding; rather, they seek to drive improvements in the government efficiency, streamline processes and encourage private activity to promote consumer welfare and national priorities. The funding requests relate to public safety, deployment to unserved areas and adoption efforts. If the spectrum auction recommendations are implemented, the plan is likely to offset the potential costs.
Let me translate: “Pay no attention to all the bills we are racking up, because spectrum revenues shall set us free!”
Perhaps that logic works in the reality-free zone we call the Beltway, but back in the real world this simply doesn’t add up. Regardless of how well-intentioned any of these goals and proposals may be, it should be equally clear that there is no free lunch, even with spectrum auction proceeds fueling the high-tech gravy train. The proposals and programs the FCC sets forth will impose serious economic costs that shouldn’t be so casually dismissed, especially using the weak reasoning that “improvements in the government efficiency” will magically manifest themselves thanks to massive new government intervention in the field. (If you think you’ve heard this one before, you have. See: The current health care debate.)
Moreover, if everything really does hang on the promise of spectrum auction revenues covering the broadband spending binge, well, bad news: The agency is never going to bring in enough to cover what they’ve proposed here. The reason is simple: Most of the spectrum they want to grab is currently occupied by someone else! Continue reading →
Details are starting to trickle out about the Federal Communications Commission’s (FCC) National Broadband Plan, which is due out tomorrow. Someone just posted the Executive Summary here. I haven’t had a chance to go through it all yet, but I’m looking forward to learning more about what the agency’s plans are on this front.
On Friday (again, before seeing any details), I offered some fairly mushy comments about the idea of national “plan” to the gang over at the excellent new site, FiveQsOnTech.com. The site has a great format: Five questions on technology and policy asked and answered (usually on tape) by technology policy wonks. I’m honored to be among the first couple of experts featured on the site, along with Markham Erickson of the Open Internet Coalition and Rob Atkinson of ITIF.
In the first 3 minutes of this second of the two videos I appear in, I offered some thoughts about “The Plan”:
As we’ve noted here before in our ongoing series on “Problems in Public Utility Paradise,” municipal wi-fi experiments and local government fiber investments don’t have a very impressive track record. The Philadelphia experiment, which I have discussed here before many times, has been particularly instructive. As Dan P. Lee documented in this spectacular Philadelphia magazine article last year, the city’s subsidized wi-fi system, Wireless Philadelphia, was a political and technical fiasco of the highest order right from the start. It unraveled fairly quickly after its 2005 launch and now, according to The Philadelphia Business Journal:
The city of Philadelphia said Wednesday it intends to purchase, for $2 million, the wireless network constructed by EarthLink Inc. to turn the entire city into a Wifi hotspot. The city said it intends to exercise an option in an agreement signed in August to buy the network from Network Acquisition Co. LLC, which took the network over from Atlanta-based EarthLink in June 2008. The city said the purchase will be the first in a series of steps to create a wireless network it will use to enhance public safety, improve government efficiency and provide Internet access in targeted public places. The city said creating that network will require it to spend nearly $17 million over its 2011 through 2015 fiscal years. The money would go to building out both the core fiber network it already owns and the wireless mesh network it intends to purchase from Network Acquisition Co…
In other words, taxpayers are stuck picking up the tab for this failed experiment and now have to hope that the city can somehow manage it into profitability. Well, good luck with that. Even Karl Bode of Broadband Reports, someone who usually has nothing but nice things to say about Big Government high-tech projects and regulation, is forced to admit that the script for muni wi-fi paradise didn’t quite play out as expected:
Network Acquisition Corporation purchased the network from Earthlink back in 2008, when Earthlink bailed (and we really mean bailed) on their muni-fi ambitions. The buyers briefly tinkered with free access and claimed they’d expand the network, but ultimately wound up being only a stepping stone between Earthlink and Philadelphia control. Philadelphia’s use of Wi-Fi as a municipal efficiency and communications tool is a growing trend among cities, many of which found that broad, free Wi-Fi for all simply wasn’t sustainable.
Do you mean to say that there is no such thing as a free lunch? I am shocked, shocked! Well, actually, I’m not. Continue reading →
I’ve spent a lot of time here deconstructing and criticizing the proposals set forth by the Free Press, the radical media “reformista” group founded by the prolific Marxist media theorist Robert McChesney. I have been trying to shine more light on their proposals and activities because I believe they are antithetical to freedom of speech and a free society. That’s because, as media scholar Ben Compaine has noted, “What the hard core reformistas really want, it seems, is not diversity or an open debate but a media that promotes their own vision of society and the world.” That’s exactly right and, more specifically, as I argued in my 2005 Media Myths book, the media reformistas want to impose this control by taking the fantasy that “the public owns the [broadcast] airwaves” and extending it to ALL media platforms and outlets. In other words, McChesney and the Free Press want an UnFree Press. To cast things in neo-Marxist terms that they could appreciate, they want to take control of the information means of production. And it begins, McChesney argues, by all of us having to give up this “sort of religious attachment to the idea of a ‘free-press’” from which we all suffer.
Some people accuse me of “red-baiting” or “McCarthyite” tactics when I use the “M-word” (Marxism) or the “S-Word” (socialism) to describe McChesney, the Free Press, and the movement they have spawned. But these are labels with real meaning and ones that McChesney himself embraces in his work. In his 1999 book Rich Media, Poor Media, he says that “Media reform cannot win without widespread support and such support needs to be organized as part of a broad anti-corporate, pro-democracy movement.” He casts everything in “social justice” terms and speaks of the need “to rip the veil off [corporate] power, and to work so that social decision making and power may be made as enlightened and as egalitarian as possible.” What exactly would all that mean in practice for media? In his 2002 book Our Media, Not Theirs: The Democratic Struggle against Corporate Media with John Nichols of The Nation, McChesney argues that media reform efforts must begin with “the need to promote an understanding of the urgency to assert public control over the media.” They go on to state that, “Our claim is simply that the media system produces vastly less of quality than it would if corporate and commercial pressures were lessened.”
If you want additional proof of his intentions, then I encourage you to read this lengthy interview with McChesney that appears in the new edition of The Bullet, an online newsletter produced by the Canada-based “Socialist Project.” (If you ask me, there’s something strangely appropriate about a socialist newsletter named “The Bullet” in light of the millions of people who diedwhile living undersocialist tyranny!) Anyway, let’s ignore that and focus on what neo-Marxist media reform entails according to McChesney. Because never before has he laid his cards on the table as clearly as he does in this interview. Continue reading →
The advocates of regulation pay lip service to the importance of advertising in funding online content and services but don’t seem to understand that this quid pro quo is a fragile one: Tipping the balance, even slightly, could have major consequences for continued online creativity and innovation.
Who is this handsome young man and why does he have “Mr. Yogato Stamped Me!!!” on his forehead? More importantly, why does he look so darn happy?
Flashback: Earlier this week, my partner Michael (pictured) and I visited Mr. Yogato, a frozen yogurt shop in Washington’s Dupont Circle neighborhood which describes itself as ”the FUNNEST yogurt experience you’ll ever have.”
Apart from serving exceptionally tasty frozen yogurt and letting customers play a vintage Nintendo, Mr. Yogato is famous for the eight “Rules of Yogato,” which offer discounts if users achieve certain feats, including:
Answering devilishly difficult trivia (10% off—or extra if you fail)
Reciting the Stirling battlefield speech from Braveheart in a great Scottish accent (20% off)
But the best discount, which Michael does every time (unless I’m there to help identify, say, countries that end in ‘L’), is offered for wearing the Yogato stamp on your forehead. Being stamped is, of course, almost as much fun as singing along to “Mr. Roboto” if you’re lucky enough to hear that played while you’re in the shop (10% off). But the real fun is in engaging passersby on the street about the icy-sweet joys of Yogato. It’s also, of course, probably the most effective advertising Mr. Yogato could ever want.
So, the next time you hear Adam Thierer and I talk about the benefits of advertising, especially online, just remember that while there is no free lunch (nor free frozen yogurt), there isdiscounted frozen yogurt. It’s a simple, obvious quid pro quo: 10% off in exchange for spreading the Gospel of Yogato. Continue reading →
Adam Thierer and I havebeentryingtodrive home a simple message in the ongoing debate about targeted online advertising and privacy: ”There is no Free Lunch!” We don’t have a lot of friends in this debate, since nearly everyone else seems to assume that online content and services will just continue to fall like manna from heaven if politicians strangle advertising online. So I was particularly heartened to read the following from Shelly Palmer:
This is the most serious question facing content producers today. Content costs money to produce. Third-party advertising/sponsor support is one model, promoting your own products is another, subscription is a third. At the end of the day, there are only three ways it works: I pay, you pay or someone else pays. Unfortunately, there is no business model called “no one pays.” In the case of MediaBytes, the model is “I pay.” It works for me as stated above. But, apparently, a fairly large number of people in my audience are uninterested in seeing even relevant product offerings. Is advertising over? If so, what’s next?
Amen! Shelly hosts a daily Internet talk show on technology and media called MediaBytes. He recently tried inserting a short ad at the beginning of the show to cover the significant costs of production:
The show is produced every business day and requires a research staff, a writer (me), an editor, an encoding/distribution manager and an affiliate relations staff. The reason for the production overview is that, this particular two-minutes may look like a talking head combined with some graphics and clips, but the work flow for any given show takes approximately 6 hour and all of the people involved in the production are on salary here at Advanced Media Ventures Group. And, for the record, MediaBytes, and the associated production materials, takes up approximately 25% of my day.
Unfortunately, Shelly’s audience seemed to feel entitled to receive the fruit of his hard work for free—without suffering the agony of watching… horror of horrors: advertising!. Continue reading →
Internet policy Shame Artist extraordinaire Chris Soghoian has struck again! Chris recently shamed the online advertising industry into improving their privacy practices with his Targeted Advertising Cookie Opt-Out (TACO) plug-in for Firefox. Now Chris has set his sight on the security practices of cloud service providers.
A letter released this morning, signed by 37 leading online security experts (and organized by Chris), calls on Google to offer persistent SSL (HTTPS) encryption by default for all Google services—or at the very least, to make more visible the option currently given to users to opt-in to use SSL for all communications. Google, in its response, indicated that it was already “looking into whether it would make sense to turn on HTTPS as the default for all Gmail users.”
While Google’s response identifies some clear problems with implementing persistent SSL for all users (esp. connection speed), few would deny that it makes sense for webmail providers to encrypt all traffic using SSL, rather than sending email data “in the clear,” which risks interception by hackers. We at PFF hold no brief for Google, in fact we have found ourselves disagreeing with them on many other occasions on a range of issues (most notably net neutrality mandates). Nonetheless, on this front, Google has long been a leader, having offered SSL since Gmail launched and having begun providing the persistent HTTPS option last summer while most of their competitors still use SSL only for the initial authentication that occurs when a user first signs in. While the letter focuses on Google and webmail in particular, this issue has far broader implications for all online cloud service providers.
No Free Lunch: The Costs of Encryption
Gmail, Yahoo! Mail, Hotmail, etc. are, of course, “free” (i.e., ad-supported). Google in particular has lead the way in increasing the functionality offered in Gmail, not just constantly increasing the total storage space provided to every user (now over 7GB), but regularly adding innovative new features—at no charge to users. Continue reading →
Over at TechDirt, Tom Lee has a sharp critique of Muayyad Al-Chalabi’s much-circulated paper (via GigaOm) opposing bandwidth caps. Make sure to read Tom’s entire essay, but here’s the key take-away:
this whitepaper merely amounts to a complaint that a free lunch is ending. Bandwidth is clearly an increasingly limited resource. And in capitalist societies, money is how we allocate limited resources. The alternate solutions that Al-Chalabi proposes to the carriers on pages 6 and 8 — like P2P mirrors, improved service and “leveraging… existing relationships with content providers” — either assume that network improvements are free, would gut network neutrality, or are simply nonsense.
Indeed. But Tom generally agrees that “Comcast’s bandwidth cap is a drag” and that “Instead of disconnection, there should be reasonable fees imposed for overages. They should come up with a schedule defining how the cap will increase in the future. And the paper’s suggestion of loosened limits during off-peak times is a good one.”
Well, those are three different things but I generally agree with all of them. Let me just repeat, however, my strong endorsement of the first option — metering at the margin — and again highlight the optimal way to do it from an economic perspective. As I noted in one of my many previous articles about metering for bandwidth hogs:
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Posted in: Broadband & Neutrality Regulation, Tech Pork 
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.
