January 2008

Reforming the system of heavy subsidies for rural telephone service, which dates back to the Great Depression, has long been a topic of discussion for telecom policy wonks. The Universal Service program is proof-positive that subsidies grow like weeds. Universal Service has spawned a constituency of more than 1,000 small telephone companies who’ve waged a Jihad to preserve their entitlement.

Politicians have always found it expedient to look the other way. This may be changing. In recent years, wireless companies have set up shop in rural areas. Although their costs are generally far less than those of the incumbent wireline providers, one of the FCC’s brilliant “pro-competitive” policies bestows a subsidy for wireless service which is identical to the subsidy for wireline service that’s more expensive to provide. Cable companies who provide telephone service are also entitled to identical support. So guess what? As competing providers have demanded their fair share, the overall cost of Universal Service has exploded. Even some politicians are finding the size of the fund harder to ignore.

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FCC Chairman Kevin Martin’s desire to impose a la carte mandates on cable operators is well-known. But his advocacy has always lacked specifics regarding how such regulation of the multi-channel video world would work in practice.

Ted Hearn of Multichannel News points to this fact in his article today, “FCC Chairman Vague On Capping A La Carte Prices: Martin Has Yet To Spell Out How Mandate Would Work.” Ted notes that, “At least in theory, programmers could set a la carte prices so high that the only rational option would be the purchase of the bundle.” Thus, Ted wants to know “how so-called wholesale a la carte mandates would be effective if the FCC won’t police the per-channel rates being sought”?

Excellent question, Ted, and one that all analysts who follow this issue want the Chairman to answer. After all, almost all the serious economists and Wall Street analysts who have studied this issue have reached a consistent conclusion: Unless you only subscribe to a few channels, your bill will likely go UP, not down, under a la carte regulation. [Here’s a concise explanation of why that will be the case.] So, what’s the FCC going to do if those prices start going up once their plan backfires?

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Back in 2005, I released a report entitled “Risky Business” about Philadelphia’s muni wi-fi plan, which was then in the planning stages. In that report and some subsequent blogs, I laid out a few possible scenarios for what might unfold as problems developed with the municipalization plan, as they always do. I predicted that, as those problems developed and costs grew, it wouldn’t be surprising to find the city proposing a bailout for the plan, or look to selling it off to some other established provider at fire sale prices.

At the time, I got a bunch of grief from pro-muni wi-fi advocates for that prediction. They tried to paint me as some sort of enemy of the people and anti-progress, but I just explained to them that the government’s track-record on the municipalization front was consistent; consistently disappointing that is. That’s usually because the best laid government plans can’t keep pace with marketplace / technological developments in this fast-moving field.

Anyway, I felt strangely vindicated today after I read this blurb from Broadband Reports under the title, “Philadelphia Makes Back-Up Plan In Case Earthlink Bails: The city is prepared to take over if need be“:

Terry Phillis, Chief Information Officer for Philadelphia’s Mayor’s Office, has stated that the city expects EarthLink to bail on its construction of a citywide wireless system. He says that more will be known within the next sixty days but the city is making back-up plans for municipal Wi-Fi based on the belief that EarthLink will sell (or entirely abandon) the system. They would prefer if EarthLink sold the system to another provider but are prepared to take it over themselves if need be. Phillis was vague about the city’s plans but stated that the city sees the network as a valuable asset for residents as well as for their tourist economy.

Valuable for the tourist economy? Yeah, I know I make all my travel plans according to which government’s offer muni wi-fi systems. Please.


Tennessee has a proposal to create a “Tennessee community conscious Internet provider” seal to be awarded by the consumer affairs division. A bill introduced in the Tennessee General Assembly – HB 2530 – would award a seal to ISPs that:

1) retain IP addresses for 2 years;

2) take down communications that are obscene or harmful to minors;

3) prohibit customers from publishing communications obscene or harmful to minors; and

4) comply and cooperate with law enforcement requests and court orders.

Granted, Tennessee is the “volunteer state”, but if this bill were to pass would ISPs really participate?

Note how the bill links “obscenity” – which is not protected speech under the 1st Amendment – with material harmful to minors –  which could be almost anything, most of which would be protected speech.

This is a trend we’re seeing–using child porn and child online safety as a “trojan horse” into regulating the online behavior of everybody through rules on ISPs. Adam Thierer calls it “deputizing the middleman” — an apt phrase for the kinds of policing that ISPs may be doing in the future based on the regulatory and market pressures they’re seeing today.

Hawaii has a bill pending that would make it a felony for ISPs to knowingly fail to report subscribers who acquire, possess, solicit or transmit images of child pornography.

Forget a “seal of approval” – may as well just throw ISPs a badge.

McCain for President?

by on January 30, 2008 · 8 comments

Neat! Through the magic of Google, we seem to have John McCain ads on our website. This seems like a good time to note for the record that we don’t exercise any editorial control over the ads that appear on the site, and the appearance of a candidate’s ads on our site certainly don’t constitute an endorsement. So please do watch Sen. McCain’s warmongering advertisements, but feel free to head over here for a different perspective on foreign policy issues. (And in the interests of fairness, you can also check out the warmongering articles from our friends at Heritage.)

The ACLU of Northern California is looking for someone to fill a “two-year (September 2008- September 2010) Technology and Civil Liberties Fellowship to help develop legal and policy papers about emerging technologies and implement an innovative campaign to educate consumers of all ages, policymakers, and businesspeople about privacy and free speech rights.”

Two thoughts:

1) They should pick someone who writes shorter sentences than the one I just quoted.

2) Let’s get a libertarian in there! Dress kinda sloppy and have a sense of humor – they’ll think you’re one of them! 😉

I’ll soon have a paper out on “electronic employment eligibility verification.” This is the idea of requiring every employer in the country to check the immigration status of employees against Department of Homeland Security and Social Security Administration databases.

A nationwide EEV program, building on the current Basic Pilot/”E-Verify” program, was treated as a matter of near consensus at the beginning of this past summer’s immigration debate, and the Department of Homeland Security continues to promote it.

My paper goes into the practical and technical problems with a full-fledged EEV system, as well as the question whether such a thing is appropriate for a free country. But I’ve already become aware of problems I didn’t think of.

A law went in to effect in Arizona January 1st requiring all employers to use the E-Verify system. The Arizona Republic reports that just 17,000 of the state’s 150,000 businesses have signed up for E-Verify. (January is a slow month for hiring, but employers may be holding off on hiring too. And a lawsuit has been brought challenging the Arizona law.)

Among employers using E-Verify, the question has arisen what to do when an employee has worked for a few days, but then is deemed ineligible by the database. Should the employee who is either an illegal immigrant are a citizen with bad paperwork be paid? “[E]mployers could look for workers who are at risk of failing E-Verify, the online database that checks employment eligibility, and fire those workers without paying them for up to three days of labor,” says the report.

The simple idea of “internal enforcement” of immigration law using employers as Border Patrol agents turns out not to be so simple. E-Verify puts fair-minded employers between a rock and a hard place, while facilitating unscrupulous behavior by others.

“Please note that participation in the grant proposal effort does not constitute a commitment by your jurisdiction to be REAL ID compliant.”

That’s an assurance the heads of the American Association of Motor Vehicle Administrators give to state DMV bureaucrats in a January 14 letter asking them to participate in a grant proposal for REAL ID implementation money.

This means that motor vehicle bureacrats in states that have categorically refused to participate in the national ID system may go ahead and build it anyway, thanks to AAMVA and “free” federal money.

Then they will wait around for the political alignments to change. They may not even wait, as they’ve trained up to lobby for it.

Your tax dollars at work.

It’s amazing the pernicious nonsense you can find over at NRO:

My understanding, from talking to experts like Andy McCarthy is that if FISA is not reformed, our entire ability to monitor foreign communications — which makes up about 95 percent of what NSA does and probably 50 or more percent of what CIA and DIA do — will be compromised. Which is why my senior administration official said today: “There’s no reason in the world [Congress] shouldn’t stay here and get it done” … “now.”

This is so amazingly off-base that it’s hard to know where to begin. Well, let me just give you a list:

  • FISA has never governed, and does not currently impact, eavesdropping activities that occur overseas.
  • FISA has never governed the interception of wireless communications, even if it occurs in the United States.
  • “Authorizations” under the PAA don’t expire with the sunsetting of the PAA. Any programs “authorized” by the administration over the last six months will continue to be legal until at least August
  • After the PAA expires, the NSA will still be able to seek warrants from the FISA court for eavesdropping activities that aren’t covered by existing “authorizations.”
  • The only reason FISA hasn’t been “reformed” is because the president has threatened to veto reform legislation passed by the House in November in order to hold out for retroactive telco amnesty.
  • The president, who is supposedly so concerned about losing the ability to eavesdrop on terrorists, actually threatened to veto legislation extending the PAA in order to increase the pressure for amnesty.

I’m not sure what business Kathryn Jean Lopez thinks she’s in, but dispensing warmed-over White House talking points certainly ain’t journalism.

The Department of Homeland Security will increase document checks at the border starting Friday. The costs of doing this outweigh the miniscule security benefits, as I discuss in today’s Detroit News.